Comments on: Consumer credit falls 4.4% from year ago levels http://www.creditwritedowns.com/2009/10/consumer-credit-falls-4-4-from-year-ago-levels.html a finance news and opinion site Sun, 21 Mar 2010 15:11:29 +0000 hourly 1 By: The Wikinvest Daily Angle » Consumer Credit Falls 4.4% From Year Ago Levelshttp://www.creditwritedowns.com/2009/10/consumer-credit-falls-4-4-from-year-ago-levels.html#comment-6748 The Wikinvest Daily Angle » Consumer Credit Falls 4.4% From Year Ago Levels Fri, 09 Oct 2009 07:04:11 +0000 http://www.creditwritedowns.com/2009/10/consumer-credit-falls-4-4-from-year-ago-levels.html#comment-6748 [...] Today’s Daily Angle comes from Wikinvest Wire member Edward Harrison of CreditWritedowns.com. You can read thefull article on Edward’s blog. [...] [...] Today’s Daily Angle comes from Wikinvest Wire member Edward Harrison of CreditWritedowns.com. You can read thefull article on Edward’s blog. [...]

]]> By: Data on past consumer deleveraging during recessions - Credit Writedownshttp://www.creditwritedowns.com/2009/10/consumer-credit-falls-4-4-from-year-ago-levels.html#comment-6745 Data on past consumer deleveraging during recessions - Credit Writedowns Fri, 09 Oct 2009 05:01:18 +0000 http://www.creditwritedowns.com/2009/10/consumer-credit-falls-4-4-from-year-ago-levels.html#comment-6745 [...] increase in consumer credit. I suspect this divergence has a lot to do with cash-for-clunkers (post here), but we can’t be 100% sure until we get another month or two of data.Let’s delve into this [...] [...] increase in consumer credit. I suspect this divergence has a lot to do with cash-for-clunkers (post here), but we can’t be 100% sure until we get another month or two of data.Let’s delve into this [...]

]]> By: kellen56http://www.creditwritedowns.com/2009/10/consumer-credit-falls-4-4-from-year-ago-levels.html#comment-7782 kellen56 Thu, 08 Oct 2009 21:55:10 +0000 http://www.creditwritedowns.com/2009/10/consumer-credit-falls-4-4-from-year-ago-levels.html#comment-7782 Look closer at revolving consumer credit - credit cards - to see first-ever y-o-y declines this year, down 7.8% in August to slighly less than $900bn.<br><br>Considering revolving credit grew at annual 5.5% pace this decade through 2008, and 11.0% annually since 1979, it effectively represents about $160 billion, 1.2% of GDP, of purchases foregone.<br><br>Non-revolving credit down far less, and this year largely due to automobile credit companies back in the mix after being bailed out (GMAC) and the impact of cash-for clunkers, about $18 billion of new non-revolving debt in August alone.<br><br>Collapsing revolving consumer credit will weigh heavily on this year's holiday shopping season, along with unemployment and foreclosures. Look closer at revolving consumer credit – credit cards – to see first-ever y-o-y declines this year, down 7.8% in August to slighly less than $900bn.

Considering revolving credit grew at annual 5.5% pace this decade through 2008, and 11.0% annually since 1979, it effectively represents about $160 billion, 1.2% of GDP, of purchases foregone.

Non-revolving credit down far less, and this year largely due to automobile credit companies back in the mix after being bailed out (GMAC) and the impact of cash-for clunkers, about $18 billion of new non-revolving debt in August alone.

Collapsing revolving consumer credit will weigh heavily on this year's holiday shopping season, along with unemployment and foreclosures.

]]> By: Is the consumer really deleveraging? « naked capitalismhttp://www.creditwritedowns.com/2009/10/consumer-credit-falls-4-4-from-year-ago-levels.html#comment-6734 Is the consumer really deleveraging? « naked capitalism Thu, 08 Oct 2009 20:15:25 +0000 http://www.creditwritedowns.com/2009/10/consumer-credit-falls-4-4-from-year-ago-levels.html#comment-6734 [...] credit card limits. But, non-revolving credit is up over $11 billion.  It was decreasing and is down 4.4% year-on-year (see the section highlighted in green above), but that ended this [...] [...] credit card limits. But, non-revolving credit is up over $11 billion.  It was decreasing and is down 4.4% year-on-year (see the section highlighted in green above), but that ended this [...]

]]> By: kellen56http://www.creditwritedowns.com/2009/10/consumer-credit-falls-4-4-from-year-ago-levels.html#comment-6730 kellen56 Thu, 08 Oct 2009 15:55:10 +0000 http://www.creditwritedowns.com/2009/10/consumer-credit-falls-4-4-from-year-ago-levels.html#comment-6730 Look closer at revolving consumer credit - credit cards - to see first-ever y-o-y declines this year, down 7.8% in August to slighly less than $900bn.<br><br>Considering revolving credit grew at annual 5.5% pace this decade through 2008, and 11.0% annually since 1979, it effectively represents about $160 billion, 1.2% of GDP, of purchases foregone.<br><br>Non-revolving credit down far less, and this year largely due to automobile credit companies back in the mix after being bailed out (GMAC) and the impact of cash-for clunkers, about $18 billion of new non-revolving debt in August alone.<br><br>Collapsing revolving consumer credit will weigh heavily on this year's holiday shopping season, along with unemployment and foreclosures. Look closer at revolving consumer credit – credit cards – to see first-ever y-o-y declines this year, down 7.8% in August to slighly less than $900bn.

Considering revolving credit grew at annual 5.5% pace this decade through 2008, and 11.0% annually since 1979, it effectively represents about $160 billion, 1.2% of GDP, of purchases foregone.

Non-revolving credit down far less, and this year largely due to automobile credit companies back in the mix after being bailed out (GMAC) and the impact of cash-for clunkers, about $18 billion of new non-revolving debt in August alone.

Collapsing revolving consumer credit will weigh heavily on this year's holiday shopping season, along with unemployment and foreclosures.

]]> By: duratekhttp://www.creditwritedowns.com/2009/10/consumer-credit-falls-4-4-from-year-ago-levels.html#comment-6709 duratek Thu, 08 Oct 2009 01:07:33 +0000 http://www.creditwritedowns.com/2009/10/consumer-credit-falls-4-4-from-year-ago-levels.html#comment-6709 Consumer is trying to retrench and pay down debt, yet gov with klunkers, housing tax crddit , low rates etc is trying to get them to lever up....it isn't working, we are trying to deleverage...unwind.<br><br>But we are witnessing the most PROLIFIC expansion of money in history of the world, US and CHINA leading the way. But the banking system is holding nearly $800 B in excess reserves....you have to wonder WHY!! WHY bail them out, and have then NOT LEND....a dime!<br><br>If they got more enthusiastic they might....and add normal velocity of 7X and you have potential for about $6 TRILLION into economy...bond bubble would burst (longest running bull since 1980) yields would crush ANY recovery....has anyone seen the recovery...send it my way!<br><br>The FED has a plan to drain the swamp of liquidity...NOT to worry, NO INFLATION FEARS, yet gold at $1,040 (this is happeneing with only 3-4% US $ bulls and ober 90% EQUITY BULLS) AN ACCIDENT IS WAITING TO HAPPEN.....when the buying historic in nature by its 60% rise.....is all momo and liquidity bases....when the music stops....and in meantime the maladjusted screwed up economy has been whithering away and MILLIONS in despeair have given up looking for jobs....what is recovery without them? A WALL STREET PONZINOMIC SCHEME ...the too big to fail now BIGGER BANKS make policy, run the country....laugh all the way to bank..and NO INDICTMENTS...its all BS<br><br>Duratek Consumer is trying to retrench and pay down debt, yet gov with klunkers, housing tax crddit , low rates etc is trying to get them to lever up….it isn't working, we are trying to deleverage…unwind.

But we are witnessing the most PROLIFIC expansion of money in history of the world, US and CHINA leading the way. But the banking system is holding nearly $800 B in excess reserves….you have to wonder WHY!! WHY bail them out, and have then NOT LEND….a dime!

If they got more enthusiastic they might….and add normal velocity of 7X and you have potential for about $6 TRILLION into economy…bond bubble would burst (longest running bull since 1980) yields would crush ANY recovery….has anyone seen the recovery…send it my way!

The FED has a plan to drain the swamp of liquidity…NOT to worry, NO INFLATION FEARS, yet gold at $1,040 (this is happeneing with only 3-4% US $ bulls and ober 90% EQUITY BULLS) AN ACCIDENT IS WAITING TO HAPPEN…..when the buying historic in nature by its 60% rise…..is all momo and liquidity bases….when the music stops….and in meantime the maladjusted screwed up economy has been whithering away and MILLIONS in despeair have given up looking for jobs….what is recovery without them? A WALL STREET PONZINOMIC SCHEME …the too big to fail now BIGGER BANKS make policy, run the country….laugh all the way to bank..and NO INDICTMENTS…its all BS

Duratek

]]> By: hblhttp://www.creditwritedowns.com/2009/10/consumer-credit-falls-4-4-from-year-ago-levels.html#comment-6708 hbl Thu, 08 Oct 2009 00:23:07 +0000 http://www.creditwritedowns.com/2009/10/consumer-credit-falls-4-4-from-year-ago-levels.html#comment-6708 <i>"It is still not clear to me that debt levels, when measured as a percentage of GDP are decreasing significantly. I am, therefore, much less sold on the prospect of a secular deleveraging in the household sector than I was yesterday."</i><br><br>I'm not quite so reassured by the current data... During the onset of the Great Depression (from 1929 to 1932) nominal private sector debt declined 18% while at the same time the private sector debt-to-GDP ratio spiked from 175% to 235% (see <a href="http://www.debtdeflation.com/blogs/wp-content/uploads/2009/05/IMG0008_16465078.PNG" rel="nofollow">graph</a> and <a href="http://www.debtdeflation.com/blogs/2009/05/04/debtwatch-no-34-the-confidence-trick/" rel="nofollow">source</a>). This was of course because nominal GDP fell so dramatically, and our fall in GDP so far has thankfully been much less dramatic. But if the private sector's reduction in nominal debt continues (beyond blips in any given quarter), I don't think there's any avoiding an outcome somewhere on the spectrum of Japan through Great Depression, whatever happens to the debt-to-GDP ratio at first. “It is still not clear to me that debt levels, when measured as a percentage of GDP are decreasing significantly. I am, therefore, much less sold on the prospect of a secular deleveraging in the household sector than I was yesterday.”

I'm not quite so reassured by the current data… During the onset of the Great Depression (from 1929 to 1932) nominal private sector debt declined 18% while at the same time the private sector debt-to-GDP ratio spiked from 175% to 235% (see graph and source). This was of course because nominal GDP fell so dramatically, and our fall in GDP so far has thankfully been much less dramatic. But if the private sector's reduction in nominal debt continues (beyond blips in any given quarter), I don't think there's any avoiding an outcome somewhere on the spectrum of Japan through Great Depression, whatever happens to the debt-to-GDP ratio at first.

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