Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Surging Household Debt Is Forcing More New Yorkers To Rely On Food Pantries

Courtesy of ZeroHedge. View original post here.

As US stock benchmarks smash through one record high after the next – a central-bank driven phenomenon that disproportionately benefits the wealthy at the expense of the middle-class and working poor – booming credit-card debt is forcing more New Yorkers to seek assistance at the city’s food pantries this holiday season, according to a report in the New York Post.

As revealed by the latest New York Fed data – which we cited earlier this monthUS household debt has grown by $605 billion in the 12 months through the end of the third quarter. Q3 marked the thirteenth consecutive month of expansion as $116 billion was added to consumers’ aggregate debt pile. And while credit debt is climbing aggressively – it jumped 3.1% in Q3 alone – mortgages, student loans and auto loans are also swelling. To put this in context, consumers’ aggregate debt burden, which is just under $13 trillion, is equivalent to 66% of GDP, and has also surpassed its peak from the run-up to the crisis.

The result is that more New Yorkers are forced to rely on food pantries while dodging calls from debt collectors.

“We’ve seen a large increase in credit card debt for the population we are serving in New York,” said Laine Rolong, senior manager at the financial empowerment program at the Food Bank for New York City.

Rolong noted that many food pantries it serves in the city have had to turn hungry people away lately in the face of rising demand for limited emergency food stocks.

One expert says the credit card binge reminds him of the buildup to the financial crisis of 2007 and 2008. And this, say other experts, could be the telltale sign of an imminent recession.

Furthermore, the Fed data reveal a troubling rise in delinquencies for credit-card and auto debt that has befuddled central bankers (though regular working people might be able to think of a few factors driving this trend).

Unsurprisingly, this is forcing consumers to resort to patterns of behavior that debt-relief experts say they haven’t seen since the crisis.

“I would say this is very similar to what I saw 10 years ago – people using their credit cards quite a bit,” said Kevin Gallegos, a senior vice president at Freedom Debt Relief, a debt settlement company for consumers.

Back then, when total household debt was heading toward a peak of $12.68 trillion (which ended in disaster), debt-burdened consumers were addicted to cards — often those offering a tantalizing zero-percent monthly interest rate for as long as 12 months or more.

That strategy, now back in vogue, often ends in tears as the debt piles up. “By the time the consumer has moved their balances to the fourth card at zero percent, companies eventually cut them off for the next card,” said Gallegos.

The fallout can be dreadful. “We’ve had clients tell us they are on the verge of suicide, their marriages are breaking up, or ‘I don’t have enough to put food on my table,’” said Gallegos. “We hear sad stories all the time.”

Gallegos’s words echo a warning issued by the New York Fed three months ago.

“While relatively low, credit card delinquency flows climbed notably over the past year,” said Andrew Haughwout, senior vice president at the New York Fed. “This is occurring within the context of loosening lending standards, as borrowers with lower credit scores recover their ability to access credit cards. The current state of credit card delinquency flows can be an early indicator of future trends and we will closely monitor the degree to which this uptick is predictive of further consumer distress.”

What makes this trend particularly troubling is that, if the last crisis taught consumers anything, it’s that they can’t depend on the federal government to bail them out if things go south in a hurry. The Fed and Congress will probably stick to the tried-and-true playbook of bailing out the banks, while millions of Americans are forced from their homes and into impecunity in a retread of the financial crisis. Only this time, it’ll be subprime credit card debt and auto debt – not mortgages – that sink the economy.


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a FREE Daily News membership or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!