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[Tyrone Slothrop]

Originally Posted by sebastian_dangerfield

Since 2007, I've looked at the US consumer. I've seen portfolios of his debt in auctions - charged off debt sold by credit issuers. All lending is ultimately consumer lending, as he's the seed of all economic activity. And he's a deeply sick man.

You realize why credit card defaults have not jumped as much as anticipated in this downturn, right? You understand the American middle class is so fucked it's been forced to preserve lines of liquidity while it defaulted everywhere else? Why? Because it can't even afford most of its essentials. Every time you see analyses touting the strength of consumer debt, you should be scared. It is not a sign of strength, but a canary in the coal mine. Every time you see a jump in consumer debt, it should scare you, rather than cause you to think, stupidly, as most fools will, "Yay! The consumer's back! Banks are lending!" Look at what people are buying. Look at how essentials are being recharacterized as discretionary purchases.

I nearly gagged when I did a payment run once and discovered how much bad debt was paid off with other credit cards. (75%) The other 25%? Most of that was refis, when banks would still lend to the middle class on r/e.

No savings, no hope of wage increases, terrible cash flow, and one crisis from bankruptcy... That's the American middle and lower middle class. Pardon me if I don't share your optimism. I actually happen to have seen the subject we're discussing. You haven't, or you wouldn't argue the rosy assumptions you have.

Have you not considered possible selection bias?