We are all being collectively "Gaslighted" every single day into questioning our own lying eyes about what's really happening by all of the mainstream sources of information. Guys wearing ties on TV regularly trot out a bunch of officials that tell us things like: 'the banks are sound" and "No downturn on the horizon". Yet, looking at the data, and I mean even the manipulated data, it is overwhelmingly obvious to anyone watching what the situation actually is right now:
Anyone reading this who knows anything at all about Jim Cramer's record of predictions will run for the hills when they see this:
We're not supposed to notice that the vast majority of small business owners and regular consumers are struggling every single day to meet the ever increasing costs required just to maintain their lifestyle.
We're not supposed to notice that it takes two jobs and then some to cover costs for an average standard of living in most cities.
"As wages fail to outpace the cost of living, many consumers have burned through savings and resorted to credit cards. The latest revolving credit data shows consumers appear to be 'strong,' but that's only because they use their plastic cards more than ever to survive."
Some reddit comments are downright depressing:
"I had to cut my 401k contribution to give myself a raise. I have no roth ira. I don't have 10k in savings. I have to work 60+ hours a week to even get ahead. Almost 40. Been working like this since I started. I expect to die in about 10-15 years."
Meanwhile, the Fed is raising and maintaining interest rates at the highest levels in 40 years despite every metric pointing to a banking meltdown and a collapse in overall consumer demand. To me, this is proof they're doing it on purpose. They're also doing it fast; this is the fastest and most aggressive hiking campaign the Fed has ever done. Ever:
“I think the Fed screwed up by allowing zero interest rates to go on too long, I think we are just beginning to pay the price for that. It would be nice to say that it would be great if the Fed got lucky. I’ve been around for 50 years and I’ve never seen the Fed get lucky.” - Sam Zell, April 2023
"Screwed up" is inaccurate IMHO. As I have argued many times they are NOT "screwing up"; they are implementing a plan to purposefully crash the economy, consolidate all the banks into a few large ones, introduce digital currency and trash the value of the dollar to zero eliminating all dollar debt. But what do I know?
"It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong."
Lending conditions are being stressed by the interest rates and I expect they will become even more stressed over the coming months. Private lenders are busier than normal mostly because a higher number of quality credit profiles are requesting quotes than normal probably because banks aren't approving as much financing as before.
Refinance business isn't very attractive now because rates are more than double the original terms. Who want's to refinance a $300k 4% loan with an 8% loan just to extract $50k in cash?
There is some "sticker shock" for folks when they see what unsecured capital costs when it comes from lenders who actually need to get their money back. Bank interest rates have been subsidized by Uncle Sam for so long there is an entire generation of people who don't know any other reality.
Here are some interesting articles about issues of interest to business owners:
"And as I talk to these banks, they’re really, really scared. One local bank here in Nevada, they literally just hired 400 collection agents,"
"that depositors in the Cayman Islands’ branch of Silicon Valley Bank had their deposits seized by the Federal Deposit Insurance Corporation (FDIC), which they are unlikely to ever see again."
Consumers have record card debt and ultra-low savings rates and are paying some of the highest borrowing costs in a generation (the average interest rate on cards now exceeds 20%). This debt is becoming insurmountable for some as delinquencies rise.