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View Full Version : Consumer Credit: Disaster, Down $12 billion



zamochit
10-07-2009, 08:55 PM
Consumer Credit: Disaster, Down $12 billion
*U.S. AUGUST CONSUMER CREDIT WAS FORECAST TO DROP BY $10 BILLION
*U.S. AUGUST NON-REVOLVING BORROWING FALLS BY $2.07 BILLION
*U.S. AUGUST CREDIT CARD, OTHER REVOLVING DEBT FALLS $9.91 BLN
*U.S. JULY CREDIT FALLS $19 BLN, REVISED FROM $21.6 BLN DROP
*U.S. AUGUST CONSUMER CREDIT FALLS $12.0 BILLION, FED SAYS

Without "cash for clunkers" it would have been significantly worse of course. Best guess non-revolving would have been down close to $10 billion, so roughly equal to July.

There's no possible good way to spin this. There is no sign that credit expansion has reappeared, there is no sign that we have seen a turn in employment, and there is no evidence that we are seeing real improvement in final demand.

To those who have said that "the recession ended this summer", how do you make that case when the consumer is not spending? When credit continues to contract even with programs like cash-for-clunkers?

This is not a "trivial amount of money" either, especially when one considers that historically this has been positive by roughly the same amount, meaning that the swing is roughly double that, or about 2% of GDP.

The real economy is effectively dead. What's worse is that the idiots at The Fed the Washington are still refusing to force the insolvent to take their marks and clear the credit markets.

As a consequence there is no meaningful evaluation of what constitutes a reasonable credit risk being made - the answer is simply "no" both for borrowers and lenders, as borrowers (correctly) see a deeply deteriorating economy while the government continues to lie.

This is not how to build confidence, yet confidence is everything. Confidence that the numbers you see printed every month in statistics are truthful. Confidence that when things suck, you'll be told they suck so you can prepare and try to do your best for your family, your employees, and your friends.

Instead we keep hearing cries of a false dawn, but these cries are not errors - they are intentional acts designed to do the same thing George W. Bush did after 9/11 - "Go out and SHOP!"

What the government and media crooners forget is that you rarely get to screw the same person more than once, and unlike the circumstances of the 1930s, the people who got hosed in 2001 are still alive and remember it.

Wake up folks; there's a hard rain coming and it's time to put up the storm shutters.

zamochit
10-07-2009, 11:44 PM
In other words we are close to a great time to short the market, although yesterday was good for a 5% gain.

telecast
10-08-2009, 07:46 AM
Wake up folks; there's a hard rain coming and it's time to put up the storm shutters.


Exactly. So, go out and buy something. Big. Spend a lot of money on it.

If you do and you stay financially healthy, you'll have a nice new toy and you'll have helped the economy.

If you do and you lose your job, you're not going to give a fuck about paying it off anyway. You'll still have helped the economy.

Typically, the media has much more to do with the economy than does Washington. If they tell people times are good, you can spend without worry, people spend and things stay strong.

If the media says "thing suck, hold onto your money, we're entering into an economic crisis", people listen and it becomes a self-fulfulling prophecy.

The big difference this time is there is no credit. The reason there's no credit is because credit was given to those who didn't deserve it, couldn't afford it, and had no notion of how to handle it. They gave credit cards to people without jobs. They gave home loans to people who had no idea how much they could really afford, if the bank said they could swing it, they listened. After all, it's a bank, right? They wouldn't lie. Most of these people never even sat down with a simple calculator to see where their money was going before they signed the papers.

Yeah, the banks, the government, the Fed, they're all to blame. Partially. The bigger problem lies in the stupidity of people and their inability to govern their own finances.

vortech302
10-09-2009, 06:28 AM
In other words we are close to a great time to short the market, although yesterday was good for a 5% gain.

I hope not, I need 25 more cents out of my Ford stock to break even. I don't even want to say how far my Sirius is down (impulse buy damn it).

zamochit
10-10-2009, 09:23 PM
Don't expect too much from Ford, now that the clash for clunkers is done with sales will suck for awhile.