Delinquent loans soar to record levels

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Some 8.2% of consumer loans are either delinquent by at least 30 days, or in default -- meaning that the lender has written off the debt.

The Federal Reserve reports that 4.2% of loans are 30 days past due and 4% are in default. The culprit is, not surprisingly, unemployment. But this time around, home mortgages are taking a backseat to credit cards and car loans in America's game of debt roulette. The reason? Borrowers who are upside down on mortgage correctly see that there is no real reason to keep dumping cash into the black hole of insolvency.

Given all this, you might think that the United States government would be looking for ways to help consumers get back on the "accounts current" bandwagon. But you'd be wrong. Instead, the economic stimulus plans passed by Congress and signed by President Obama explicitly seek to prevent Americans from making payments on their debts.

One Springfield Republican summarized the rationale behind replacing $300-$600 economic stimulus payments with withholding changes providing workers with an absurd $10.25 cents per week in extra-take home pay. The larger one-time payments seemed great but "Problem was, too many people took that money and saved it, or used it to pay down debt."

So now we've given people so little money per week that they'll just spend it mindlessly and the result will be this: a tiny, barely detectable bump in consumer spending combined with growing bank write-offs jeopardizing the future of our capital markets and ever-compounding consumer debt loads threatening people's retirement security.

But other than that, this should end fantastically.

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