Markets continue their unsteady ways ostensibly because of the European debt crises when in reality it is almost uniformly a global debt crises. Here at home in the good ol US of A, late Friday brought the December Consumer Credit report, outstanding credit balances fell for a record 11 consecutive months, dropping 1.7 billion.
The latest data from Fitch’s ratings of Prime Jumbo RMBS is that the delinquency rate is nearly 10% following a 32nd consecutive month of higher delinquency rates as January hit 9.6%. The Fed’s senior Loan officer Survey shows not only tightening lending standards and falling loan demand nearly across the board and that these trends have been fairly consistent over the last 2-years or so. The one exceptions being an increase of late for residential loans compliments of bargain hunting consumers and the homebuyer tax credit.
Of late the data shows that despite the extension of said credit mortgage lending is falling again. As per the commercial bank loans and leases data breaking the upward trend started mid 4th quarter. Through all of the data regarding lending, foreclosures and defaults the discussion of excessive leverage has been studiously avoided for the most part. The government desperate to restart the economy at all costs is doing everything it can to reinflate the real estate bubble.
If demand for loans is steadily decreasing as per the senior loan officer survey, consumer credit and related reports, delinquencies and foreclosures steadily increasing. It stands to reason that the problem here is too much debt and borrowing more isn’t the solution.
Politicians have played kick the can down the road 30-odd years and now the chickens are coming home to roost because the ability to borrow yet more money, and play kick the can again is no longer viable. As the Federal, state and municipal budget mess clearly illustrates. It is the modern version of Nero fiddling whilst Rome burns, except this time Nero doesn’t fiddle by himself.
Hi and welcome to The Profit Motive, I’m your host Caleb Lawrence. Once upon a time in America the media acted as the watchdog of the corporations and the state. In the modern era it’s all about ratings and profits, opinion has been substituted for news and frequently is presented as fact. Much like my daily radio show on KPIG 107.5 FM in Santa Cruz California and KPYG FM 94.9 Cayucos/San Luis Obispo California. A thousand Blogs were able to spot the current problems and many began discussing it years before it reached crises proportions. While there were exceptions, and these exceptions are becoming more common, the mainstream media failed to get it and largely continue to do so.
