Comments on: Consumer credit down, but does it show deleveraging? http://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html a finance news and opinion site Mon, 22 Mar 2010 06:53:58 +0000 hourly 1 By: Chart of the Day: Financial, Household and Government Debt-to-GDP ratios - Credit Writedownshttp://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-10562 Chart of the Day: Financial, Household and Government Debt-to-GDP ratios - Credit Writedowns Wed, 17 Mar 2010 00:20:16 +0000 http://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-10562 [...] of all, what this chart shows you is that the consumer is not deleveraging significantly (see Consumer credit down, but does it show deleveraging? and Why is everyone saying consumer credit is falling? It’s not). Sure revolving debt (read: [...] [...] of all, what this chart shows you is that the consumer is not deleveraging significantly (see Consumer credit down, but does it show deleveraging? and Why is everyone saying consumer credit is falling? It’s not). Sure revolving debt (read: [...]

]]> By: randolphkinneyhttp://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7710 randolphkinney Mon, 09 Nov 2009 20:45:30 +0000 http://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7710 How does defaults and foreclosure figure into debt to GDP and deleveraging?<br><br>Home prices have fallen and a significant number of homes have been taken by the banks. How does the debt "forgiveness" through the foreclosure process get accounted for in consumer debt? Or is the consumer debt level partially offset when the home is sold by the bank to a new consumer who then takes a new mortgage?<br><br>What about mortgage modifications?<br><br>What about deed in lieu of and renting back to the consumer? How does defaults and foreclosure figure into debt to GDP and deleveraging?

Home prices have fallen and a significant number of homes have been taken by the banks. How does the debt “forgiveness” through the foreclosure process get accounted for in consumer debt? Or is the consumer debt level partially offset when the home is sold by the bank to a new consumer who then takes a new mortgage?

What about mortgage modifications?

What about deed in lieu of and renting back to the consumer?

]]> By: randolphkinneyhttp://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7113 randolphkinney Mon, 09 Nov 2009 13:45:30 +0000 http://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7113 How does defaults and foreclosure figure into debt to GDP and deleveraging?<br><br>Home prices have fallen and a significant number of homes have been taken by the banks. How does the debt "forgiveness" through the foreclosure process get accounted for in consumer debt? Or is the consumer debt level partially offset when the home is sold by the bank to a new consumer who then takes a new mortgage?<br><br>What about mortgage modifications?<br><br>What about deed in lieu of and renting back to the consumer? How does defaults and foreclosure figure into debt to GDP and deleveraging?

Home prices have fallen and a significant number of homes have been taken by the banks. How does the debt “forgiveness” through the foreclosure process get accounted for in consumer debt? Or is the consumer debt level partially offset when the home is sold by the bank to a new consumer who then takes a new mortgage?

What about mortgage modifications?

What about deed in lieu of and renting back to the consumer?

]]> By: RHondohttp://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7112 RHondo Sun, 08 Nov 2009 20:46:57 +0000 http://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7112 You could make a case for the NSA non-revolving credit increase been the result of CFC. Besides debt/gdp in the short term is going to be influenced more by gdp than debt. Individuals can't deleverage that fast......only to the extent they realign consumption, income and debt reduction. A very slow process at first. You could make a case for the NSA non-revolving credit increase been the result of CFC. Besides debt/gdp in the short term is going to be influenced more by gdp than debt. Individuals can't deleverage that fast……only to the extent they realign consumption, income and debt reduction. A very slow process at first.

]]> By: Pangea Joelhttp://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7111 Pangea Joel Sun, 08 Nov 2009 13:58:59 +0000 http://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7111 Hours worked has declined by ~5% annually, and presumably that translates into lower income, but GDP doesn't reflect that. in fact, GDP could still be positive while hours and income decline, ie higher productivity.<br><br>Isn't it possible to get credit card credit balances related to income?<br>And if not, couldn't we use concrete proxies? Say high-end retail store credit cards or AmEx for wealthy and gas cards<br> and home mortgage debt related to income?<br>For housing, it should be easy to get data for mortgage debt amounts for different price classes of homes, which we could infer roughly correlates to income levels. <br>And maybe similarly for car notes. Hours worked has declined by ~5% annually, and presumably that translates into lower income, but GDP doesn't reflect that. in fact, GDP could still be positive while hours and income decline, ie higher productivity.

Isn't it possible to get credit card credit balances related to income?
And if not, couldn't we use concrete proxies? Say high-end retail store credit cards or AmEx for wealthy and gas cards
and home mortgage debt related to income?
For housing, it should be easy to get data for mortgage debt amounts for different price classes of homes, which we could infer roughly correlates to income levels.
And maybe similarly for car notes.

]]> By: Edward Harrisonhttp://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7110 Edward Harrison Sun, 08 Nov 2009 13:57:40 +0000 http://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7110 key word 'healthy.' I certainly don't see continued high leverage as healthy. It does sow the seeds for more pain to come. key word 'healthy.' I certainly don't see continued high leverage as healthy. It does sow the seeds for more pain to come.

]]> By: Terryhttp://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7109 Terry Sun, 08 Nov 2009 13:37:45 +0000 http://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7109 "...it is still not clear to me that the scale of deleveraging is great enough to induce a recessionary relapse."<br><br>Maybe so, but how does a lack of deleveraging help sustain a healthy economic growth? I certainly don't consider a debt-driven recovery to be "healthy" in any sense of the term, just the promise of another financial collapse down the road. “…it is still not clear to me that the scale of deleveraging is great enough to induce a recessionary relapse.”

Maybe so, but how does a lack of deleveraging help sustain a healthy economic growth? I certainly don't consider a debt-driven recovery to be “healthy” in any sense of the term, just the promise of another financial collapse down the road.

]]> By: Edward Harrisonhttp://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7108 Edward Harrison Sun, 08 Nov 2009 11:35:12 +0000 http://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7108 credit to personal income would do about the same thing, yes. But, Debt to GDP is a more generally recognized statistic.<br><br>Getting credit by class would indeed be revealing, but that data is not available. credit to personal income would do about the same thing, yes. But, Debt to GDP is a more generally recognized statistic.

Getting credit by class would indeed be revealing, but that data is not available.

]]> By: Edward Harrisonhttp://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7107 Edward Harrison Sun, 08 Nov 2009 11:26:57 +0000 http://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7107 yes. I will change that. yes. I will change that.

]]> By: ozajhhttp://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7106 ozajh Sun, 08 Nov 2009 09:32:50 +0000 http://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7106 Shouldn't that be "<b>revolving</b> credit lines (credit card lines) are being cut"? Shouldn't that be “revolving credit lines (credit card lines) are being cut”?

]]> By: Pangea Joelhttp://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7104 Pangea Joel Sun, 08 Nov 2009 03:42:04 +0000 http://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7104 Wouldn't the most appropriate way to determine whether this was supportive of a recovery from a consumer standpoint via looking at the ratio of credit to personal income?<br><br>Furthermore, since we live in a class-based society wouldn't it be important to look at the levels of credit compared to income for various income quintiles, whose disposable income levels will vary widely even though an aggregate or average number will disguise this? Wouldn't the most appropriate way to determine whether this was supportive of a recovery from a consumer standpoint via looking at the ratio of credit to personal income?

Furthermore, since we live in a class-based society wouldn't it be important to look at the levels of credit compared to income for various income quintiles, whose disposable income levels will vary widely even though an aggregate or average number will disguise this?

]]> By: Pangea Joelhttp://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7103 Pangea Joel Sun, 08 Nov 2009 03:41:38 +0000 http://www.creditwritedowns.com/2009/11/consumer-credit-down-but-does-it-show-deleveraging.html#comment-7103 Wouldn't the most appropriate way to determine whether this was supportive of a recovery from a consumer standpoint via looking at the ratio of credit to personal income?<br><br>Furthermore, since we live in a class-based society wouldn't it be important to look at the levels of credit compared to income for various income quintiles, whose disposable income levels will vary widely even though an aggregate or average number will disguise this? Wouldn't the most appropriate way to determine whether this was supportive of a recovery from a consumer standpoint via looking at the ratio of credit to personal income?

Furthermore, since we live in a class-based society wouldn't it be important to look at the levels of credit compared to income for various income quintiles, whose disposable income levels will vary widely even though an aggregate or average number will disguise this?

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