Americans are set to feel economic pain as Federal Reserve and private banks increase interest rates, says the Financial Times.
You can take the FT report with a pinch of salt. The FT presents massaged figures and propaganda of the banksters.
TransUnion, which keeps an anonymised database of 220m borrowers, claims the monthly increase of 0.25% will come to only $6.45 per month.
That would be true only for those Americans who have loans of 250o dollars.
1% of 2,500 is 250 dollars and a quarter of 1% or 0.25% is about 645 a year or 6.45 a month.
In fact, many Americans have loans of about 250,000 dollars on consumer credit cards, subprime mortgages and student debt etc etc
That means every 0.25% increase in interest rates costs them about 645 dollars a year. A full 1% increase is going to cost them about 2,500 dollars a year.
So, someone who earns 25,000 dollars a year in the USA is going to lose 10% of their income for every 1% increase in the interest rate.
That is money that will not be available to purchase goods and services, spelling recession.
Someone who owes a million dollars in mortgage, student and consumer debt, is going to lose about 10,000 dollars for every 1% increase in the Fed interest rate.
The FT suggests that interest rates could rise by a full 2 or 3% soon, which will be an economic disaster for the USA and the Trump presidency.
The Trump team needs to get a grip on economics.
I have added a running commentary in capital letters of the FT article below to try to nail the biggest lies from an economic point of view.
Subprime borrowers are set to feel the pinch as US banks nudge interest charges up in response to the Federal Reserve’s rate rise, threatening to sour more credit card loans and some other types of debt.
ECONOMIC CRISIS WILL HIT TRUMP VOTER IN JANUARY AS HIS VOTERS FEEL THE PAIN WHICH WON’T OR BE BARELY BE OFFSET BY TAX CUTS.
While most of the population will take the higher outgoings in their stride, millions of Americans with weak credit scores, high debt burdens or low incomes are expected to struggle to make loan repayments.
MOST OF THE POPULATION WILL NOT TAKE THE HIGHER INTEREST RATE IN THEIR STRAIDE AS THEY HAVE WEAK CREDIT SCORES, HIGH DEBT BURDENS AND LOW INCOMES.
Lenders including JPMorgan Chase, Bank of America and Citibank said immediately after the Fed’s move that they would increase so-called prime rates, which are used to determine the prices of several types of loan.
BANKS ARE PREPARING TO FORECLOSE ON THOUSANDS MORE PROPERTIES.
The Fed on Wednesday raised interest rates for the second time in a decade, delivering an as-expected 25 basis point increase, and signalled a faster pace of tightening.
THE ECONOMIC CRISIS IS SET TO ACCELERATE, FUELLING DISCONTENT WITH TRUMP WHO PROMISED PROSPERITY.
About 92m consumers who have taken out loans with variable rates, such as credit cards, face higher monthly debt service payments as a result, according to TransUnion, which keeps an anonymised database of 220m borrowers.
TRANSUNION FIGURES ARE FAKED? MISLEADING?
On average, the monthly increase comes to $6.45 per month.
NOT CREDIBLE FIGURE. FULL IMPLICATIONS FOR REAL ECONOMY NOT SPELLED OUT.
NO MONEY IN THE POCKETS OF AMERICANS MEANS NO MONEY TO BUY GOODS AND SERVICES.
A FUNCTIONING ECONOMY NEEDS PEOPLE WHO ARE WELL PAID ENOUGH TO BUY PRODUCTS MANUFACTURED IN THAT COUNTRY.
ROBOTS WITH ZERO PAY CANNOT CREATE A STRONG DOMESTIC ECONOMY AS THERE WILL BE NO ONE WITH MONEY TO BUY THEIR PRODUCTS OR SERICES.
Some customers will find it more difficult to make the payments. A group of about 9.3m borrowers may be at risk of defaulting on at least one type of loan as a result of the rate increase, according to TransUnion.
REAL FIGURE FOR BORROWERS DEFAULTING ON LOANS IS MUCH HIGHER.
The forecasts highlight the fragile financial state of many US consumers despite the economic recovery.
THERE HAS BEEN NO ECONOMIC RECOVERY AS THE CONTROLLED MEDIA CLAIM. THE FINANCIAL STATE OF MANY US CONSUMERS IS FRAGILE. A TINY INTEREST RATE INCREASE CAN LEAD TO MASSIVE DEFAULTS ON CREDIT CARDS AND SUBRIME MORTGAGES.
Consumers who fail to pay off their credit card balances each month already face average interest rates of between 12-14 per cent — and considerably more if they are deemed higher risk.
PUNISHING INTEREST RATES ARE DESTROYING AMERICANS CAUGHT IN A LEGAL AND REGULATORY TRAP.
Sean McQuay, credit expert at NerdWallet, said some households are in for an unpleasant surprise since banks are not required to notify customers that their rates have ticked up in response to a rise in prime rate
BANKS WILL TAKE ADVANTAGE OF THE INTEREST RATES TO SLAP AMERICANS WITH HIGHER CHARGES WITHOUT GIVING THEM AN OPPORTUNITY TO BUDGET.
“A lot of Americans are in debt not because they’ve made major life decisions or planned investments — it’s just a mismatch between income and spending,” he said.
Subprime loans have been the fastest-growing part of the credit card market. In the third quarter, the number of subprime credit cards expanded almost 15 per cent, although they still accounted for only about a tenth of the near-400m in issue.
HUGE NUMBERS OF FORECLOSURES EXPECTED AS STEVE MNUCHIN WHOSE INDY MAC BANK TURNED INTO A FORECLOSURE MACHINE KNOWS VERY WELL.
Savers, meanwhile, are unlikely to benefit from the Fed’s rate increase. Banks are already awash with deposits, and there is limited competition on these savings rates.
THERE ARE NOT MAY SAVERS LEFT IN THE USA.
THE BANK DO NOT NEED DEPOSITS. THEY NEED ONLY A 3% CAPITAL RESERVE TO LEND 97% OF THAT AMOUNT AND MORE IN RETURN FOR INTEREST WITHOUT GIVING ANYTHING OF VALUE.
Greg McBride, chief financial analyst at Bankrate.com, said he expected “very little in the way of improvements” on deposit and savings offers in response to the Fed’s move.
JPMorgan Chase, the biggest US bank by assets, is typical of the sector. It said it would increase its prime lending rate 25 basis points to 3.75 per cent, effective on Thursday — but leave deposit rates unchanged.
THE CONSUMERS WILL SUFFER AND THE SAVERS WILL GAIN NOTHING BY THE INTEREST RATE INCREASES.
The higher rates are expected to be good for banks, since they improve profit margins from lending. Even so, banking executives will be keeping a watchful eye on bad loans.
BANKERS EXPECT TO BE ABLE TO RIP OFF AMERICANS IN A NEW SCAM, GET MORE BONUSES AND FORECLOSE MORE, CREATING BIGGER PROFITS FOR THE LIKES OF BANKRUPTCY VULTURES WILBUR ROSS AND STEVE MNUCHIN.
Analysts said the impact of the rate rise this week should be negligible for most consumers, although that picture could deteriorate as the Fed gears up for more increases next year — especially if they are not matched with an improvement in the economy.
IT S ALL GOING TO GET MUCH WORSE FOR THE AMERICAN PEOPLE AS THE FED PREPARES TO INCREASE INTEREST RATES BY TWO OR THREE PER CENT AND SUCK OUT MORE MONEY FROM THE REAL ECONONY.
Loan delinquency rates have been running near historic lows but are expected to creep up as monetary policy tightens.
“It’s not at crisis levels by any stretch of the imagination, but most of the big banks are a bit worried about consumer credit,” said Dan Ryan, head of PwC’s financial services advisory practice.
IT S AT CRISIS LEVELS.
Delinquencies on mortgages, whose interest rates tend to be fixed, are expected to remain at historic lows.
EXPECTED TO REACH HISTORIC HIGHS.
However, TransUnion projects that the credit card delinquency rate — the proportion of customers at least 90 days behind on repayments — will next year reach 1.82 per cent, its highest level since 2011.
That is up almost a quarter from post-crisis lows reached in 2014, although it remains significantly beneath 2009 levels of 2.97 per cent.