Tuesday, October 27, 2009

Possible Credit Dislocation: Be Warned


I have reason to suspect that the "monetary transmission mechanism" is full of rocks (again), and we are about to have another instance of what could colloquially be called "fun." (Yes, that's sarcasm.)

Here's what we know and what I can deduce from it:

JP Morgan's "cash position" was analyzed by a writer who published on SCRIBD, which showed that actual cash held has deteriorated radically. By more than half in the last year. The deterioration is continuing, not slowing.

I am hearing repeated anecdotes from multiple areas that foreclosed property held by banks with multiple full-price offers that include a financing requirement are being sold instead to people with actual cash at radical reductions from that price. This implies that these financing contingencies are regarded as not only potentially no good but factually no good, as if the banks know for a fact that the credit pipeline will (not might), within weeks or months (in the time required to close), disappear. There is no other rational explanation for this behavior.

Citibank's credit-card terms change implies a willingness to accept and even provoke a complete and intentional destruction of their credit card business as a very high probability outcome, given that nobody in their right mind will accept a 30% interest rate who has an alternative. The obvious implication is that only those who can't transfer balances out will remain and if your credit is that impaired there's a good chance you will default - either intentionally or otherwise. This too implies foreknowledge of a near-complete impending freeze in the credit markets.
LINK HERE

9 comments:

  1. If this happens look for gold to go back to $600/oz.

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  2. I can verify this story to be 100% true. I have in my hand a Citibank notice of a whopping increase to 29.95%.

    Holy shit!

    It has started. The banksters are beginning to openly loot the public trust. They can't be stopped since they own the President, Congress, and the Courts.

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  3. Oh no! It gets better my friends. Look at the little print! Now they are charging 5% - yes sir 5% for any cash advance amount. It is hidden and described as a finance charge! Includes ATM withdrawal. LOL.

    Still amazed! No wait - even better. The minimum charge is $10. So when you withdraw $100 you pay an up-front 'finance fee' of $10 plus whatever the ATM charges you.

    It must be great to be a bankster.

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  4. Remember when banks charged $10-$15 to stop payment on a check? Not anymore - $39.00

    If you are one day late on your payment you get dinged another $39.00. No grace period. Remember when Citibank had a 10-day grace period? No more of that shit. They want your blood.

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  5. Just rack them out and default. Screw them. Buy gold and silver and tell them to go F themselves.

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  6. Economic Analyst finally posted a picture of himself! :D

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  7. Long live the Chupacabras!

    ReplyDelete
  8. That rabid animal served me at McDonalds the other night. It said on the third full moon of the witching hour the world will be devoured like a Big Mac sucked through the straw of a third world mouth.

    ReplyDelete
  9. Then next thing I knew I woke up in a cold sweat, crying.

    ReplyDelete

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