Top ten reasons why April is Financial Literacy Month

April April has been declared Financial Literacy Month. Because
today is April 1, I thought we could start off with a list of the reasons why
April has been dedicated to financial literacy, following the example of other
famous top ten lists.


Top ten reasons why April is Financial Literacy Month:

  1. Because
    financial literacy is important!
  2. Because
    what else would you rather do in April?
  3. Because
    years, centuries, and millennia were already taken.
  4. Because
    April was not dedicated to another topic yet.
  5. Because
    a week would not have been enough.
  6. Because
    choosing a financial literacy day would have been really difficult (which
    one out of 365?).
  7. Because
    the spring- with good weather and longer days- is when we are inclined to
    start new things.
  8. Because
    financial literacy can blossom like a spring flower.
  9. Because
    in April we have to pay taxes and we can take some comfort in thinking of something
    worse than taxes: the statistics about financial illiteracy!
  10. If we
    dedicate a month to financial literacy, we do not have to do anything else
    for it.

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Free Daily and Weekly Stock Market Prediction and Forecast for August 2010 : 9th August 2010 to 13th August 2010

Free Daily and Weekly Stock Market Prediction and Forecast for August 2010 : 9th August 2010 to 13th August 2010
Planetary position during August 2010
Sun will transit from Cancer. Sun will transit from Leo from 18th August 2010.
Mercury will transit from Leo sign.
Venus will transit from Virgo.
Moon will transit from Cancer, Leo and Virgo.
Mars will transit from Virgo.
Rahu will transit from Sagittarius .
Jupiter will transit from Pisces.
Saturn will transit in Virgo.
Ketu will transit in Gemini.

Astro Alert
See the Power of Astrological calculation we will see big fall in Indian Stock Market. Looking at planetary position Indian Stock Market would be heavily volatile. Perhaps, there may be correction upto 10% to 15% During last quarter of 2010. exit all long position. which month, Week and dates would be crucial for Indian Stock Market, that would be given only to Paid Subscribers.

We are only forecaster in Stock Market Astrology and Stock Market Prediction, who has given numbers of 100% accurate Astro Alert.

Past Astro Alert
1. 22/07/2007
2. 16/09/2007
3. 16/10/2007
4. 31/03/2008
5. 01/05/2008
7. 05/05/2008
8. 02/06/2008
9. 23/08/2008
10. 13/12/2008
11. 05/04/2009
12. 16/05/2009
13. 23/05/2009
14. 12/10/2009
15. 23/10/2009
16. 09/05/2010

Mile Stone Prediction

Will Indian Stock Market Crash During 2010 ?

BSE Down by 512.01 Points and NSE Dips By 154.10 Points between 20/10/2009 and 23/10/2009

Bulls will back – BSE Sensex will touch 12,000 between April – May 2009

Astro Alert – BSE Sensex and NSE will down by 5% to 15% during June 2008

Stock Market Prediction for 9th August 2010

Transiting Moon will be passing through Cancer Zodiac sign. Moreover, there would be Somvati Amavasya on 9th August 2010 after 12.16, which indicates Market may volatile. Market may touch both extremes. Nevertheless Market would go up gradually. Market may try to go up between 09.58 and 10.31. Market trend would change after 11.25. Market may go up or nearer to previous closing during last trading session, but be careful because of Amavasya.

Stock Market Prediction for 10th August 2010
Transiting Moon will be passing through Cancer Zodiac sign. Moreover, Moon is void of course; Moon would make any aspect with any planet only after changing sign, which indicates Market may volatile. Market may touch both extremes. Market may try to go up between 9.42 and 10.12. Market may gradually go up. Market trend may change after 13.50. Market may go up or nearer to previous closing during last trading session.

Stock Market Prediction for 11th August 2010

Transiting Moon will be passing through Leo Zodiac sign. Transiting Moon will be in applying aspect with Transiting Mercury, which indicates Intraday trader are advised to enter in Market after see the Momentum. Market may volatile during first trading session. Market trend may change after 10.45. Market may go up between 12.30 and 12.55. Market may go up or nearer to previous closing during last trading session.

Stock Market Prediction for 12th August 2010

Transiting Moon will be passing through Leo Zodiac sign. Transiting Moon will be in separating aspect with Transiting Sun, which indicates Market would make new high. Market may do business in green signal during first trading session. Market may go up between 10.02 and 10.36. Market trend may change after 13.20. Market would gradually go up. Market may go up or nearer to previous closing during last trading session.

Stock Market Prediction for 13th August 2010

Transiting Moon will be passing through Virgo Zodiac sign. Transiting Moon will be in applying aspect with Transiting Venus, which indicates Market may go up during first trading session. Market may go up between 09.24 and 10.10. Market trend may change after 10.45. Market would gradually go up during last trading session.

For advance one month paid Prediction Kindly contact stocksensex @gmail .com. More then 500 person has taken Advance one month prediction. We are really thankful to all of you, who has subscribed and has visited our blog.

Is Reliance Industries looking weak in coming trading session ? The only one stock that looks weak technically is Reliance because it’s again coming back to Rs 980 support and we all wonder what it is doing so certainly Reliance is not a good chart to look at. Beyond that there are stocks that have been moving up like Kotak Mahindra and Lanco Infratech, these stocks yesterday made reversal and that is the first sign that perhaps some of the big strong stocks maybe ready for some correction.”

The company’s trailing 12-month (TTM) EPS was at Rs 53.26 per share. (Jun, 2010). The stock’s price-to-earnings (P/E) ratio was 18.83. The latest book value of the company is Rs 392.41 per share. At current value, the price-to-book value of the company was 2.56. The dividend yield of the company was 0.7%.

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26/2/15: ‘Kermit The IMF’ on Irish Growth: It’s Not Easy Being Greeen…

This is an unedited version of my column in the Village Magazine for February 2015

January IMF review
of the economic situation in Ireland rained a heavy dose of icy water over the already
overheating Government spin machine, and much of the IMF concerns centre around
exactly the same themes that were highlighted in these very pages last month.
Top of the IMF
worries list is growth.
Budget 2015
assumed GDP expansion of 3.9 percent in 2015, with 3.4 percent average growth from
2016 through 2018. The IMF forecasts growth of 3.3 percent in 2015, 2.8 percent
in 2016 and “about 2.5 percent thereafter”. In simple terms, over 2015-2018,
cumulative growth forecast discrepancy between IMF and the Government is now
just shy of 3.3 percent. Put differently, based on IMF forecasts, Irish
Government may be significantly overestimating economic prospects of the

Source: IMF and Department of Finance

The drivers behind
IMF’s skeptical view of our prospects are exactly in line with those discussed
in this column before. Exports growth is likely to be much shallower than the
Government anticipates, while the domestic demand is still subject to massive
debt overhang carried by households and companies.
As an aside, the
IMF assessment of the Budget 2015 measures is far from confirming the
mainstream Irish media and Irish Left’s view. The IMF had this to say about the
measures: “
Income tax cuts that increase the already strong
progressivity of the system are the main items. While not significant to the
revenue intake, reductions in property taxes by 14 local authorities, including
Dublin, are a setback for collections from this recent broadening of the tax
base.” Doing away with the tax breaks is fine, if it is done in the environment
of falling distortionary taxes. Still, coupled with elimination of the property
capital gains relief, the entire Budget 2015 was hardly a transfer from the
poor to the rich, but rather a net tax increase on the upper earners,
especially the self-employed professionals, relative to lower waged.
But back to the
impact of growth risks on our Government’s balance sheet. Consider the IMF
estimates for public debt dynamics.
Firstly, note that
public debt fell from 123 percent of GDP in 2013 to 111 percent of GDP at the
end of 2014. Impressive as this change might be, it is driven by one-off
changes and not by any significant debt drawdowns. Consolidation of the IBRC
into General Government accounts and its subsequent liquidation first pushed
Irish Government debt up by 6.2 percent of GDP (EUR12.6 billion) in 2013 and then
cancelled most of the same in 2014. All in, IBRC liquidation shaved off 6
percentage points off our 2014 debt to GDP ratio. In between, change in the EU
accounting rules raised our 2013 GDP by 6.5 percent. Stronger economic
conditions and smooth exit from the Troika Programme have meant that the Irish
Government was free to spend some of the borrowed cash reserves on buying out
IBRC-linked bonds held in the Central Bank. This drawdown of previously
borrowed cash contributed to some 4 percentage points drop in Irish debt to GDP
ratio. For all the Government’s bravado, last year’s economic recovery
contributed only 1.75 percentage points to the debt decline or roughly one
sixth of the overall improvement.
Still, barring
adverse shocks, we remain, for now, on course to drive debt to GDP ratio below
100 percent of GDP before the end of 2019.
As IMF notes, however,
a temporary drop of 2 percentage points in 2015-2016 forecast nominal GDP
growth rates would push our debt to GDP ratio to 117 percent in 2016. And on
the balance side, a one percent rise in primary spending by the Government can
push public deficit to 3.6 percent of GDP in 2015 and 3.0 percent in 2016
instead of Government projected 2.7 percent and 1.8 percent, respectively.
The IMF is
concerned that the Irish Government is suffering from the ‘adjustment fatigue’,
especially once the upcoming political pressures of the general election start
looming on the horizon. The danger is that “…
fiscal consolidation is at risk from spending pressures, requiring the adoption
of a clear strategy to enable the restraint envisaged to be realized. … As the
public investment budget is already low, current expenditures will have to bear
the brunt of spending restraint, while ensuring the capacity to meet demands
for health and education services from rising child and elderly populations.
Nominal public sector wages and social benefits must be held flat for as long
as feasible and the authorities will need to continue to seek savings across
the budget.”
Somewhat predictably, the Irish authorities offered no
strategy for fiscal management beyond 2015 and no expenditure policy solutions
that can address such risks. Instead of sticking to promised costs moderation,
the authorities told the IMF that increased current spending, including on
higher public sector wages, can be offset by “discretionary revenue measures”.
In other words, should the Government want to fund pre-election giveaways to
its preferred social partners (aka public sector wage earners) it can simply
hike taxes on less favoured groups. A slip of the veil revealing the ugly
nature of our politics-captured economic strategy.
Politics is now firmly displacing economics in both, the way
we set our forecasts, as well as interpret the existent data.
Take, for example our reported nearly 5 percent growth over
2014. Various recent ministerial statements extoled the virtues of the
Government that made Ireland “the envy of Germany” as the best performing
economy in Europe. Largely ignored in the official rhetoric was that much of
this growth came from the “contract manufacturing outside Ireland that is
dominated by a few companies”. The problem is that none of it has any real
connection to Ireland and, as IMF notes, much of it “could quickly turn”.
Private domestic demand,
aircraft leasing and investment in tech services-linked intangibles

by closer to 3 percent. Again, according to the IMF this figure may be a more
realistic estimate of the real recovery. In other words, somewhere between 30
and 40 percent of the recorded growth in 2014 was down to just one an
accounting trick. And multinationals had plenty other accounting tricks up
their sleeves that no one is bothering to count.
Even the 3 percent domestic growth estimate stands inconsistent
with the data on household finances. Stripping out gains in household net worth
attributable to the property markets, households’ financial positions hardly
improved in 2014. Mortgages in arrears accounted for 23.7 percent of all house
loans outstanding, when measured by the balance of loans, down from 25.6
percent a year ago. Based on the Central Bank data, at the end of Q3 2014, some
244,816 mortgages accounts (amounting to EUR46.1 billion) were either in
arrears, in repossession, or at risk of arrears – a number that is roughly
4,500 higher than a year ago. Based on the Department of Finance data, 85
percent of all accounts in arrears ‘permanently restructured’ at the end of
November 2014 involved arrears solutions that result in higher debt over the
life time of mortgage than prior to restructuring.
Based on the Central Bank data, Q3 2014 household deposits
in the Irish banking system stood at EUR85.9 billion, slightly down on EUR86.0
billion a year ago.
In part, the above
figures translate into the improvement in banking sector performance at the
expense of households. In the first half of 2014, Irish banks recorded their
first positive return on assets since the beginning of the crisis, and the net
interest margin (the difference between the bank lending rate and the cost of
funding) rose to a crisis-period high of 1.5 percent. But credit growth
remained negative, contracting at a rate higher than in 2011. Put this in
simple terms, the banks continued to bleed their clients dry at a faster rate
than the recovery was making them stronger, and there was preciously little
observable improvement in households’ financial positions compared to 2013.
Certainly not enough to claim the picture to be consistent with rapid economic
The IMF isn’t
undiplomatic enough to say that, but the Fund is clearly concerned more than
the Irish authorities at this state of imbalances. As they should be: the
Central Bank internal stress-testing for new mortgages being issued by the
banks today is for the interest rates rising to over 6-6.5 percent over the
life time of the loan.
Of course, the
Central Bank is a myopic institution when it comes to telling us what effects
such rates would have on existent corporate and household loans. But give it a
thought. Currently, average existent mortgage on the market is priced at
interest rates below 2 percent per annum. And with that, 17.3 percent of all
mortgages accounts are officially in arrears, and 34.3 percent of all balances
relating to mortgages loans are either in arrears, in repossessions or
Should the
interest rates double, let alone triple, what mortgages default rates on
currently performing mortgages can we expect? What amount of economic growth do
we need to shore up our household finances sufficiently enough to escape the
interest rate squeeze that even the Central Bank admits might arrive in the
foreseeable future? Can the current trends in the recovery – the ones that are
leaving households out in the cold, while superficially inflating official GDP
figures – deliver any sense of sustainability of our economic performance
across the financial, fiscal and economic areas in this country should even
mild shocks take place?
One can only
wonder as to the answers to these questions, as well as to the silence of our
authorities on these topics.

6/3/2013: Reality v PR Spin – Irish Economy

“It is not true that people stop pursuing dreams because they grow old, they grow old because they stop pursuing dreams.” Gabriel Garcí­a Márquez

Nassim Nicholas Taleb was asked whether public protests in Athens is a Black Swan Event. He replied: “No. The real Black Swan Event is that people are not rioting against the banks in London and New York.”

“Getting worse more slowly is not the same as getting better”, Prof. Brad DeLong

27/05/2012: Residential Property Prices: April 2012

Much has been made in the media on the foot of the latest (April 2012) data for residential property prices in Ireland.

In light of this, let’s do some quick analysis of the data. The core conclusions, in my opinion are:

  1. Data from CSO – the best we have – only covers mortgages drawdowns reflecting actual sales. So this is tied to mortgages issuance activity and is of limited use in the markets where cash sales are significant.
  2. If increases in prices are sustained, mortgages drawdowns might be reflective of improved credit flows or credit flows fluctuating along the bottom trend.
  3. The above two points strongly suggest that we need to see more sustained trend to draw any conclusions on alleged ‘stabilization’ of the market.
  4. Aside from seasonality, the data shows patterns of false bull-runs or ‘stabilization’ episodes in the trends that usually were followed by downward acceleration on the pre-stabilization trend. Not surprisingly, the core improvements in March-April 2012 are in exactly the segments of the markets where such false starts have been more pronounced in the past.

So caution is warranted. 

Top stats:

  • Residential property price index has fallen from 66.1 in February and March 2012 to 65.4 in April implying m/m change in overall prices of -1.06% – the shallowest monthly decline since July 2011, other than zero change in m/m prices recorded in March 2012. 
  • This m/m pattern of slower decline (to near zero rate of fall) from a steep previous drop, followed by re-acceleration in decline is something that is traceable to October 2010-January 2011, June-August 2011, July-September 2010, February-April 2010, October-December 2009, so caution is warranted in interpreting short-term ‘stabilization’ episodes.
  • Y/y index fell 16.37% in April, an acceleration on March 2012 y/y decline of 16.32%, but a very slight one. Current y/y decline is the second shallowest since November 2011, so no signs of stabilization here either. In fact, April 2012 y/y rate of decline was the 5th sharpest for any month since January 2010.
  • Index reading continues underperforming its 3mo MA which currently stands at 65.87.
  • Relative to peak, the index is now down 49.89%.
  • Thus, overall, by both, its absolute level, and its 3mo MA, as well as relative to peak, the index is at its new historic low. Stabilization is not happening anywhere at the levels terms.

Chart below shows sub-indices performance for houses and apartments. While it is clear that houses sub-index is the driver of overall prices, the apartments sub-index received much of attention in recent months. The reason for it is two consecutive months of increases in apartments prices. Details are below:

  • Overall, House prices fell in April 2012 to index reading of 68.1 from 68.9 in March, registering a m/m drop of 1.16%. This represents an acceleration from -0.14% m/m decline in March 2012. However, April m/m drop is the shallowest since July 2011. 
  • Despite the above, bot the index and the 3mo MA have again hit their lowest point in history of the series.
  • Y/y house prices are down 16.24% and this is the fastest y/y decline since November 2011. 
  • Relative to peak house prices are now down 48.41%.
  • Apartments prices index has improved from 48.6 in March 2012 to 49.6% in April 2012 (m/m rise of 2.06% following a 0.41% rise in March 2012).
  • However, m/m rises are not rare for the sub-index. Apartments prices subindex rose – in m/m terms – in November 2011 (+2.68%), December 2010 (+0.31%), December 2007 (+0.50%) and posted falt or near-flat (1/4 STDEV from zero reading) in February 2008, January 2011, May 2011, and December 2011. 
  • 3mo MA is now at 48.87% and this is the lowest on the record 3mo MA reading for the sub-index.
  • Y/y the decline in April was 17.88% while March 2012 y/y decline was 20.33%. This is the lowest y/y decline reading since January 2012. However, back in April 2011, y/y decline was ‘only’ 15.29% – shallower than in April 2012.
  • Relative to peak apartments prices are now down 59.97%.

Conclusion: any talk about ‘price trends improvement’ in apartments will have to wait for further confirmation of the upward trend.

Chart below shows trends for prices in Dublin – another focal point of attention for those claiming substantive change in property prices trends.

  • Dublin property prices sub-index has improved from 58.0 in march 2012 to 58.3 in April 2012, reaching exactly the same level as in January 2012. Thus, m/m index rose 0.52% which is slower than March 2012 m/m rise of 0.69%. Last time the sub-index posted non-negative m/m change was in July 2011 when it remained unchanged m/m and last time sub-index actually posted positive growth was in May 2011.
  • To see two consecutive monthly rises in the index, however, is rare. We would have to go to January-February 2007 for that. However, index posted a number ‘near trend reversals’ in the past marked on the chart. All turned out to be false calls and virtually all led to re-acceleration of the downward momentum compared to pre-event.
  • Y/y sub-index posted a decline of 17.30% against 18.31% in March 2012. In April 2011 y/y change was 12.96% – much shallower than current y/y decline.
  • 3mo MA is unchanged in April 2012 at 57.97 compared to March 2012, and is much lower than 71.27 registered in April 2011.
  • Relative to peak, house prices in Dublin are now 56.65% down which is identical to their position in January 2012.

Overall, all data points to potential stabilization that is in a very nascent state. However, this is certainly a local phenomena for now – with Apartments and Dublin properties showing some potential signs of improvement. Only the future can tell if:

  1. we are witnessing actual flattening of the trend, and/or
  2. we are witnessing a reversal of downward trend toward a positive (sustained) trend.

4/7/2014: Q1 2014: GDP & GNP dynamics

In the previous posts I covered the revisions to our GDP and GNP introduced by the CSO and sectoral decomposition of GDP. The former sets out some caveats to reading into the new data and the latter shows that in Q1 2014, four out of five sectors of the economy posted increases in activity y/y. These are good numbers.

Now, let’s consider GDP and GNP data at the aggregate levels.

First y/y comparatives based on Not Seasonally-Adjusted data:

  • GDP in constant prices came in at EUR44.445 billion in Q1  2014, which marks an increase of 4.14% y/y and the reversal of Q4 2013 y/y decline of 1.15%. 6mo average rate of growth (y/y) in GDP is now at 1.49% and 12mo average is at 1.14%. Over the last 12 months through Q1 2014, GDP expanded by a cumulative 1.13% compared to 12 months through Q1 2013.
  • Net Factor Income outflows from Ireland accelerated from EUR7.013 billion in Q1 2013 to EUR7.584 billion. Given the lack of global capes, this suggests that MNCs are booking more profit out of Ireland based on actual activity uplift here, rather than on transfers of previously booked profits. But that is a speculative conjecture. Still, rate of profits expatriation out of Ireland is lower in Q1 2014 than in Q1 2012, Q1 2011 and Q1 2010, which means that MNCs are still parking large amounts of retained profits here. When these are going to flow to overseas investment opportunities (e.g. if, say, Emerging Markets investment outlook improves in time, there will be bigger holes in irish national accounts).
  • GNP in content prices stood at EUR36.861 billion in Q1 2014, up 3.35% y/y and broadly in line with the average growth rate over the last three quarters. This marks the third consecutive quarter of growth in GNP. Over the last 6 months, GNP expanded by 2.98% on average and cumulative growth over the last 12 months compared to same period a year before is 2.67%.

Two charts to illustrate:

The above clearly shows that the GDP has been trending flat between Q2-Q3 2008 and Q1 2014, while the uplift from the recession period trough in Q4 2009 has been much more anaemic than in any period between 1997 and 2007.

The good news is that in Q1 2014, rates of growth in both GDP and GNP were above their respective averages for post-Q3 2010 period. Bad news is that these are still below the Q1 2001-Q4 2007 averages.

GNP/GDP gap has worsened in Q1 2014 to 17.1% from 16.4% in Q1 2013. The same happened to the private sector GNP/GDP gap which increased from 18.3% in Q1 2013 to 19.1% in Q1 2014. This implies that official statistics, based on GDP figures more severely over-estimate actual economic activity in Ireland in Q1 this year, compared to Q1 last.

Chart to illustrate:

Switching to Seasonally-Adjusted data for q/q comparatives:

  • GDP in constant prices terms grew by 2.67% q/q in Q1 2014, reversing a 0.08% decline in Q4 2013 and marking the first quarter of expansion. 6mo average growth rate q/q in GDP is now at 1.30% and 12mo at 1.26%. 
  • GNP in constant prices terms grew by 0.48% q/q in Q1 2014, a major slowdown on 2.24% growth in Q4 2013. Q1 2014 marked the third quarter of expansion, albeit at vastly slower rate of growth compared to both Q3 2013 and Q4 2013. 6mo average growth rate q/q in GNP is now at 1.36% and 12mo at 1.34%. 

Chart to illustrate:

Finally, let’s re-time recessions post-revisions.

Red bars mark cases of consecutive two (or more) quarters of negative q/q growth in GDP and GNP:

1/11/15: Digital City Index: What’s Up With Dublin?..

Digital City Index ranks European cities in terms of their ecosystem ability to sustain digital entrepreneurship.

Full data and rankings are accessible here:

While one can be sceptical in looking at the data, there are several things jumping out when it comes to Dublin ranking.

  1. Overall ranking for the city is 8th. Not too bad, but not too great either, especially given the hoopla usually accompanies our self promotion as the world’s leading tech hub.
  2. In Access to Capital terms, we rank 11th. Not great either.
  3. In Business Environment – 17th – oh dear…
  4. In Digital Infrastructure – 27th… no comment necessary
  5. In Skills – 10th. Again, respectable, but surely not exactly world’s most educated workforce thingy…
  6. In Entrepreneurial Culture – third.  Which is great and suggests that it is not our enterprising that is poor, but the supports systems and institutions. Guess which bit is the remit of our policymakers?
  7. In Knowledge Spillovers we ranked 14th. Recall all the talk about the alleged great benefit from the MNCs in terms of knowledge spillovers? Spot it anywhere in these figures?
  8. Lifestyle – a proxy for quality of life, that is cost-adjusted… well 26th we are. Great place to attract top notch human capital to.
  9. Dublin Market system is 9th ranked – respectable.
  10. We rank excellent 3rd in terms of Mentoring & Managerial Assistance. 
  11. We rank 21st in terms of Non-Digital Infrastructure. No comment here.

So, overall, let’s cut the hype and start facing the music, shall we? We are – by some distance – not ranked as the best place to start digital business in Europe. No matter how many posters saying otherwise we plaster on the walls of Dublin Airport.

19/5/17: U.S. Household Debt: Things are Much Worse Than Headlines Suggest

Those of you who follow this blog know that I am a severe/extreme contrarian when it comes to median investor perceptions of the severity of leverage risks. That is to say, mildly, that I do not like extremely high levels of debt exposures at the macroeconomic level (aggregate real economic debt, which includes non-financial corporations debt, household debt and government debt), at the financial system levels (banking debt), at the microeconomic (firm) level, and at the level of individual investors own exposure to leverage.

With this in mind, let me bring to you the latest fact about debt, the fact that rings multiple bells for me. According to the data from the U.S. Federal Reserve, household debt in the U.S. has, as of the end of 1Q 2017, exceeded pre-2008 peak levels and hit an all-time high by the end of March.

Let’s crunch some numbers.

  • Total Household Debt in the U.S. stood at USD 12.725 trillion at the end of 1Q 2017, up on USD 12.576 trillion in 4Q 2016. Previous record, reached in 3Q 2008 was USD 12.675, while the pre-Global Financial Crisis average was USD 10.112 trillion.
  • During pre-crisis period, Mortgage Debt peaked at USD 9.294 trillion in 3Q 2008. In 1Q 2017 this figure remained below this peak levels at USD 8.627 trillion. As flimsy as house price valuations can be, this means that there is no ‘hard’ asset underlying the new debt peak. If anything, the new overall household debt mountain is written against something far less tangible than real estate.
  • Student loans are up on previous peak (4Q 2016 at USD 1.310 trillion) at USD 1.344 trillion, as consistent with continued growth in the student loans crisis in the U.S.

Chart below illustrates the trends for total household debt:

Another key trend in household debt relates to debt defaults and risks. Here too 1Q 2017 data is far from encouraging. Pre-Global Financial Crisis average delinquencies (120 days or more overdue loans and Severely Derogatory delinquencies) average 2.07 percent of total debt outstanding. In 1Q 2017, some 29 quarters of deleveraging later, the comparable percentage is 3.0 percent. This is bad. Worse, take together, all household debt that was in delinquency in 1Q 2017 was 4.8 percent, which is still above 4.56 percent average for pre-2008 period. 

While overall delinquencies are not quite at problematic levels, yet, we must keep in mind the underlying conditions in which these delinquencies are taking place. Prior to the onset of the Global Financial Crisis, interest rates environment was much less benign than it is today toward higher levels of debt exposures: debt origination costs (direct cash costs) and debt servicing costs (income charge from debt) were both higher back in the days of the pre-2008 boom. Today, both of these costs are lower. Which should have led to lower delinquencies. The fact that delinquencies still run above pre-2008 levels implies that we are witnessing poorer underlying household fundamentals against which the debt is written.

Sadly, you won;t read this view of the current debt and debt burden issues from the mainstream media and analysts.