The markets enter the final hour about even following volatile early trade despite a lack of significant news. 4th quarter annualized consumer credit use increased 7.5%, non-revolving credit gained 4.5% while revolving credit jumped 9%. Surprising trends as the current bust was caused by the excessive use of credit and current Fed data shows that consumer debt burdens have fallen just 4% since the 2006 bust, most of that through default and foreclosure. Usually the period of deleveraging is quite protracted and takes about 20-years, ala Japans two lost decades. So a resumption in debt fueled consumer spending at this juncture is both highly unusual and I seriously doubt sustainable without a continuation of significant job growth and a resumption of income growth. Absent these two items and consumers will collectively hit the wall again very quickly.
MBA reports that its activity index jumped 7.5% last week as refis gained 9.4% and purchase apps increased .1% as the 30-year contract rate slipped to a new record low of just 4.05%.
The lamestream media is starting to notice that Fed critics who loudly and widely predicted terrible inflation and worse compliments of the Feds money printing and monetization of debt, aka the asset purchase programs were wrong as inflation remains subdued and deflation a threat. No surprise there as credit busts are inherently deflationary and if you’re going to claim that money printing etc. causes inflation, hyper or otherwise you need to include credit in the equation. Something the gold bugs never seem to do except perhaps very briefly. When you look at money and credit you find that besides composition post bust they haven’t really changed that much. Further on this subject Japan provides a very educational example relative to inflation trends, or more accurately deflation trends.
I wonder if the banksters are panicking yet? With the deadline past for the robosigning and fraudclosure settlement past, negotiations are ongoing. The NY AG’s lawsuit against MERS has been joined by the Missouri AG who has filled a 136-count criminal complaint against DOCX and some of their top executives, alleging robosigning, fraud and forgery. This marks the first time that a top bank executive faces criminal charges since the crisis began in 2006. In case you have forgotten DOCX was the company that for a small fee, would happily supply various missing documents to the banksters in their rush to foreclose, essentially papering over the defects created by MERS and the banksters. This isn’t the first time DOCX finds itself in hot water over the fraudclosure scandal. Nevada’s AG filled a civil suit against the company and its executives alleging similar charges in December of last year.
Like yesterday’s oil and gasoline usage data we have information out of China showing a substantial drop in electricity consumption. Seems Chinese electricity use plunged 7.5% in in January according to the China Securities Journal. One month does not make a trend but sharp declines in energy consumption will rapidly translate into reductions in economic activity if they continue. Further China’s property market appears to be well on its way to a hard landing, once again, “it’s never different this time”.
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. 
