Thursday, September 24, 2009
Consumers Using Credit Cards Then Not Paying and S & P 500 to drop to 400
Ever wonder why iPhone sales are through the roof? It might have to do with this. Consumers are once again using their credit cards, however taking a cue from the Chairman's promotion of moral hazard to a state-sponsored nationwide doctrine, they have decided simply not to pay their bills. Moody's Credit Card Index confirms this, after hitting an a new record Charge-off Rate in August of 11.49%, a 68.5% increase year over year. And where charge offs rule, delinquencies are not far behind: August delinquency rate hit 5.8%, a 26.2% increase YoY. August was a sharp reversal in prior improving trends, indicating that the consumer weakness is not getting any better, and in fact, just the opposite. Read below from Moody's:
After improving over the past several months, credit card performance broadly deteriorated in August, according to metrics tracked by our Credit Card Index. Notably, the charge-off rate index advanced resoundingly to a record-level high 11.49%. Accompanying the rise in charge-offs was an increase in the delinquency rate. Even early-stage delinquencies rose, ending a trend of four consecutive months of improvement.
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Japan Exports plunge, China trade surplus disappears:
ReplyDeleteIf Japan's exports are STILL plunging, it means the U.S. is not importing - and not growing.
Japan's exports tumbled 36 percent in August -- with car shipments falling by half -- and imports also contracted sharply, the government said Thursday, showing the world's No. 2 economy remains mired in a deep slump.
Declines in automobile and steel exports were especially pronounced, the Ministry of Finance said. Exports fell for the 11th straight month to 4.5 trillion yen ($49 billion).
"We are not seeing an improvement in exports due to a continued slump in global demand," said Hiroshi Watanabe, an economist at Daiwa Institute of Research. "Japan's exports were particularly hit hard by stagnant demand in Asia and China."
Imports, meanwhile, dropped 41.3 percent from a year earlier to 4.3 trillion yen, reflecting weak consumption within Japan, where the jobless rate is at a record high as companies shed workers. Consumer finance company Aiful Corp. said Thursday it will cut 2,000 jobs, or about 44 percent of its work force.
This is not the stuff of expansions.
And the hits keep coming...
China's prodigious trade surplus appears to be coming to an end, and with it China's ability to fund the U.S. trade deficit.
But as import growth continues to outpace the nation's export growth after bottoming out earlier this year, the world's largest foreign-exchange accumulator is now on a path to start reporting trade deficits soon, according to Eric Fishwick, head of CLSA Asia-Pacific Markets' head of economic research.
"China will be recording, at the current run rate of exports and import growth, monthly trade deficits early next year or the turn of the year," Fishwick said Monday at the CLSA Investors' Forum 2009. "What is remarkable about its composition of imports is not just the pace, but the breadth. Nearly everything is going up at more or less the same sort of rate."
Official data released earlier this month showed that China's exports slumped a larger-than-expected 23.4% in August from the same period a year earlier, while imports narrowed by a margin of 17%
This explains the Treasury's Tic Data (hat tip to the Mad Scientist) which clearly shows China's lack of appetite for U.S. Treasuries of late. After all, if China does not have the DOLLARS that would naturally accumulate from a TRADE SURPLUS how can they buy U.S. Treasuries? They can't.
http://americanenergycrisis.blogspot.com/2009/09/japan-exports-plunge-china-trade.html
Great post and it puts things in perspective. Some doom on the horizon!
ReplyDeleteA guy on a YouTube video bought $100k in silver coins off his credit cards and doesn't intend to pay it back. I had mix feelings about that, but I guess stealing from thieves may not technically stealing!
ReplyDeleteIn the future, many straight and narrow folks with have great credit ratings and will starve. Their reward for playing by the banker rules.
Haha.... people are so delusional. in my industry ( luxury countertops) i see people throwing 3, 5, 8 thousand dollars into kitchen countertops, thinking that will guarantee them a sale when they try to bail out of their homes next year ( after the dow comes back to 12000 - lol ). They are just throwing good money down the drain.... the housing market is easily in a 10 to 15 year abyss..... only bad part, is i'll be out of a job before long too!!!!
ReplyDeleteYou might consider charging 100,000 in silver coins but the Govt might also consider that fraud, or obvious intent to buy something and not pay it back. Don't think they wouldn't come after you for that nice big price tag to confiscate your assets. If I did that I would be disappearing somewhere in South America.
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