2015: Subprime debt and the looming default waves…

Student loan debt levels have reached the $1.273 trillion level (2015 Q2), and these loans are taking on a subprime flavor (Huffington Post – Sep 2015: Student loans looking a lot like subprime).

The U.S. auto loan debt level is approaching the $1 trillion level, with subprime auto loans comprising a growing share (Bloomberg – June 2015: Subprime auto loans stoke debt concerns).


Fed G-19

Historical Data

Consumer Credit Outstanding (Levels)

(Millions of dollars; not seasonally adjusted)


Date                         Student Loans Motor Vehicle Loans
2014 Q1 1,177,837.15 892,316.12
2014 Q2 1,187,017.58 918,247.28
2014 Q3 1,221,134.10 943,387.87
2014 Q4 1,230,070.17 957,815.40
2015 Q1 1,265,107.16 972,177.09
2015 Q2 1,272,874.66 998,142.41


MyBudget360.com:  Subprime lending at highest level since financial crisis hit: The three leading subprime categories are auto loans, credit cards, and student debt. $189 billion in subprime loans made in 2014.                                        Excerpts:

non-housing debt

What is telling is that a good portion of the consumer spending that is happening is coming from marginal borrowers.  What happens when the economy hits its next recession?  People are living on the marginal edge and we already know half of Americans are living paycheck to paycheck.  Do you think giving people access to subprime debt is going to make their financial future more secure?  All it is doing is allowing them to consume future income (which in many cases is in the form of low wages) and making any ability for financial security disappear.  Keep in mind what subprime debt means:

“(WSJ) Almost four of every 10 loans for autos, credit cards and personal borrowing in the U.S. went to subprime customers during the first 11 months of 2014, according to data compiled for The Wall Street Journal by credit-reporting firm Equifax.

That amounted to more than 50 million consumer loans and cards totaling more than $189 billion, the highest levels since 2007, when subprime loans represented 41% of consumer lending outside of home mortgages. Equifax defines subprime borrowers as those with a credit score below 640 on a scale that tops out at 850.”


Question:  When the next round of subprime default waves roll in, will taxpayers once again be ‘on the hook’ to bail out lenders?                                                                      Answer:  Yes

It is time to get proactive and eliminate debt.  And revive real economic growth in America.

The Leviticus 25 Plan 2015 –  $70,000 per U.S. citizen                                                  The Leviticus 25 Plan 2015 (1178)

Government has created a system where ‘welfare’ is preferable, and more profitable, than work. And this, in the long run, is not sustainable…

The U.S. government’s growing national debt, coupled with massive corporate and personal debt loads are a severe drag on economic growth and vitality.  .

The entitlement state system that the government has erected is an iron-clad disincentive for work avoidance and low economic productivity.


Why Do So Many Working Age Americans Choose Not To Enter The Workforce?

ZeroHedge  7-30-15 – Excerpts:

Here are the numbers, as of the most recent Employment Situation report:

  • 250 million: the total number of people of working age in the United States.
  • 149 million: the total number of people in that population that have a job.
  • 8 million: the number of people who want a job but do not have one.
  • 93 million: the number of people who don’t work, and don’t want work.


Of course, when work is punished in the Entitlement State Americans live in… what else should we expect but 30% of the employable to sit at home? As we previously explained,

 This is the painful reality in America: for increasingly more it is now more lucrative – in the form of actual disposable income – to sit, do nothing, and collect various welfare entitlements, than to work.


This is graphically, and very painfully confirmed, in the below chart from Gary Alexander, Secretary of Public Welfare, Commonwealth of Pennsylvania (a state best known for its broke capital Harrisburg). As quantitied, and explained by Alexander, “the single mom is better off earnings gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045.


America needs an economic plan that restores the virtues of work and self-reliance, in place of the current system that punishes work and industriousness.

America needs an economic plan that will promote genuine economic growth and generate trillions of dollars in new tax revenue, and set our country back on the track to fiscal strength.

The Leviticus 25 Plan 2015 –  $70,000 per U.S. citizen                                                   The Leviticus 25 Plan 2015 (1175)


“Willing slaves of the welfare state” – C.S. Lewis

C.S. Lewis is one of the most famous literary critics / Christian apologists in modern history.  A widely acclaimed writer, he held academic positions at two of the great universities of England, Oxford and Cambridge.

One of the famous essays by C.S. Lewis – Willing Slaves of the Welfare State:

“I believe a man is happier, and happy in a richer way, if he has ‘the freeborn mind’. But I doubt whether he can have this without economic independence, which the new society is abolishing. For economic independence allows an education not controlled by Government; and in adult life it is the man who needs, and asks, nothing of Government who can criticise its acts and snap his fingers at its ideology….”


There is only one plan to set America to revitalize “economic independence.”

This Plan provides for massive debt reduction among the general citizenry.                  It  dramatically reduces the scope of big government and its control over citizens.         It recharges the power of free market dynamics in the daily decision-making of families.

It yields enormous savings in government costs and generates massive growth in tax revenues.  It pays for itself over a 10-15 year period.

The Leviticus 25 Plan 2015 –  $70,000 per U.S. citizen                                                   The Leviticus 25 Plan 2015 (1168)




Global debt – fresh visualization 2015

The current $59.7 trillion global debt level reflects the best efforts of the world’s Central Banks to orchestrate economic vitality in their respective countries.  Debt is deflationary and massive debt service obligations significantly repress economic growth.


ZeroHedge 8/6.2015:   $60 Trillion Of World Debt In One Visualization


“Today’s visualization breaks down $59.7 trillion of world debt by country, as well as highlighting each country’s debt-to-GDP ratio using colour. The data comes from the IMF and only covers external government debt.  

It excludes the debt of country’s citizens and businesses, as well as unfunded liabilities which are not yet technically incurred yet. All figures are based on USD.”



The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan 2015 –  $70,000 per U.S. citizen                                                   The Leviticus 25 Plan 2015 (1166)

Sep 30, 2015 budget deficit $435 billion – crushing debt woes on the horizon, and the U.S. government has no credible answer for anything..

Bloomberg, Oct 7, 2015                                                                                                         “The U.S. budget deficit for the fiscal year that ended in September was higher than previously expected, the Congressional Budget Office estimated.

The shortfall was $435 billion in fiscal year 2015, compared with $483 billion a year earlier, according to a CBO forecast released on its website Wednesday in Washington. The agency previously estimated the gap to be $426 billion….”


You can see the CBO’s $426 billion projection for 2015 in the chart below – which turned out to be $435 billion (the CBO always uses the ‘rosey scenario’ in their forecasting).

They also project annual deficits through 2025 that will add $16.581 trillion to the current $18.2 trillion national debt – which will blow the projected national debt up to a hefty $$34.781 trillion.

CBO's Baseline Budget Projections

As sobering as the CBO projections are, the real fiscal situation is far more serious according to Boston University Economics Professor Laurence Kotlikoff.

Kotlikoff has estimated America’s current ‘fiscal gap’ at $210 trillion.

Brookings Institution, April 8, 2015:                                                                                “…[The] CBO’s debt estimates do not take into account the full financial obligations the government is committed to honor, especially for future payments of Social Security, Medicare, and interest on the debt.  [Kotlikoff] asserts that the federal government should help the public understand the nation’s true fiscal situation by using what economists call “the infinite-horizon fiscal gap,” defined as the value of all projected future expenditures minus the value of all projected future receipts using a reasonable discount rate.

….CBO tells us that the national debt was a little less than $13 trillion in 2014. But the fiscal gap in that year as calculated by Kotlikoff was $210 trillion, more than 16 times larger than the debt estimated by CBO and already judged, by CBO and many others, to be unsustainable. If a $13 billion gap is unsustainable, what term should we apply to a $210 trillion gap?”


America needs a new economic plan,  one that starts with repowering financial health at ground level  –  for American families.

It is time to grant U.S. citizens the same direct access to liquidity that was provided to Wall Street’s financial sector – during the ‘big bailout.’

The Leviticus 25 Plan 2015 –  $70,000 per U.S. citizen                                                   The Leviticus 25 Plan 2015 (1163)













Government bailouts did the trick: profits have been soaring at major U.S. banks

The Federal Reserve and U.S. Treasury showered major U.S. and foreign banks with trillions of dollars in bailout funding at the height of the financial crisis – and they emerged with positively glowing balance and income sheets.  Thank you U.S. taxpayer.

The largest transfer of wealth from tax payers to Wall Street – in our nation’s history bailed out the very perpetrators of the financial crisis – to rescue them from their own stupidity and greed.  The bailout was so effective, recipients like J.P. Morgan, Citigroup, Bank of America, Goldman Sachs and Morgan Stanley are doing even better now – than they had been doing prior to the crisis.

Reuters – Oct 7, 2015: Profits at big U.S. banks soar since crisis: New York Fed

“Profits have soared since the global financial crisis at the five biggest U.S. banks with market-making dealing operations, New York Federal Reserve economists said in an article released on Wednesday. From 2009 to 2014, the combined net income of J.P. Morgan, Citigroup, Bank of America, Goldman Sachs and Morgan Stanley annually averaged $41.73 billion, up from annual average of $25.08 billion from 2002 to 2008.”

Now compare how U.S. citizens have been faring during the same period (2009-14), and remember, and remember, working Americans are the ones who funded, directly or indirectly, the massive bailout schemes and credit facility conduits that channeled the liquidity flows..

median household income

American families have ‘lost’ ground over the past 7 years.


There is a simple, clean remedy to this imbalance, and that is to grant U.S. citizens the same direct access to liquidity that was provided to Wall Street’s financial sector.

The Leviticus 25 Plan provides the mechanism for that liquidity access – through a  Fed-based Citizen’s Credit Facility.

The plan provides for massive debt reduction/elimination at the family level, reduced scope of government, economic revitalization, and economic liberty.  And the Plan pays for itself over a 10-15 year period.

The Leviticus 25 Plan 2015 –  $70,000 per U.S. citizen                                                   hThe Leviticus 25 Plan 2015 (1152)





8 years later, Bernanke speaks: bumper stickers ‘hurt’ …

USA today, October 5, 2015, reports that Ben Bernanke is willing now to confess:  “Every time I saw a bumper sticker that said, ‘Where’s My Bailout,’ it hurt.”

Oh really, Ben?  After executing the largest transfer of wealth from taxpayers to Wall Street in the history of the country – to rescue the largest U.S. and foreign banks from their own sheer stupidity and greed-laced subprime gambling addictions – it was bumper stickers that caused your ‘hurt?’

How did it feel when Goldman Sachs, after receiving $69 billion in Fed secret liquidity funding (according to Bloomberg), announced $111 million in bonuses at the end of 2010 – with chief executive Lloyd Blankfein and president Gary Cohn on the receiving end of $24 million?

Well here’s a clean way to heal your hurts, Ben.  Grant the same direct access to liquidity to American citizens that you granted to the likes of Morgan Stanley, Citigroup, RBS, Bank of America, Goldman Sachs, JP Morgan Chase, State Street, UBS AG, Deutsche Bank, Barclays, Merrill Lynch, Lehman, Credit Suisse... and many, many others.

You named your memoirs, “The Courage to Act.”  Here’s another question:  What was it that took all that ‘courage?’  Did you have any of your own personal wealth at stake?  Or did it take all that courage to… release Fed records in response to Bloomberg’s FOIA requests revealing who received all of the the trillions of dollars in Fed ‘secret liquidity lifeline’ emergency loans?

And finally, you declared that there was “a reasonably good chance that, barring stabilization of the financial system, that we could have gone in to a 1930’s-style depression.”

OK. you did what you thought you had to do.  At the same time, millions of working Americans lost their jobs.  Some 14 million families lost their homes to foreclosure action.

The very banks that you bailed out turned right around and foreclosed on millions of American families. Nice work, Ben.  You saved the system.  And we’re all sorry that your feelings were ‘hurt’ by some bumper stickers.


That being said — it is now high-time to reset the field.  It is time to grant direct access to liquidity to U.S. citizens – and restore financial health to American families.

The Leviticus 25 Plan 2015 –  $70,000 per U.S. citizen                                                  The Leviticus 25 Plan 2015 (1148)


“Central Banks Made the Rich Richer” – and here is a simple ‘fix’ to level things back out (which does not involve redistribution..)

Central Banks ‘padded’ the coffers of Wall Streets financiers with trillions of dollars in bailout funds, emergency loans, credit guarantees, and discount window liquidity access during the 2008-2010 global economic crisis.

They showered the very ‘players’ who blew up their own balance sheets with leveraged speculation schemes with trillions of dollars in liquidity.

Meanwhile on main street, millions of Americans lost jobs… and with 14 million real estate foreclosures (2008 – 2012), millions lost their homes.


Financial Times: “Central Banks have made the rich richer”

Quantitative easing, as this policy is known, has bailed out bonus-happy banks and made the rich richer. 


Banks have been the biggest beneficiaries, with their 20- or 30-times leveraged balance sheets. Asset managers and hedge funds have benefited, too. Owners of property have made out like bandits. In fact, anyone with assets has grown much richer. All of us who work in financial markets owe a debt to QE.


There is a very simple ‘fix’ to this liquidity imbalance. 

Grant U.S. citizens the same access to liquidity that was granted to the likes of Morgan Stanley, Bank of America, Citigroup, Goldman Sachs, JP Morgan Chase, State Street, Wells Fargo, UBS, Barclays, Deutschebank… and others.

There is one plan that levels the playing field back out:

The Leviticus 25 Plan 2015 –  $70,000 per U.S. citizen                                                  The Leviticus 25 Plan 2015 (1143)