Total Consumer Credit Outstanding: The Consumer Credit Bubble Has Popped.
By CIGA Eric, 10/8/09
TOTALSL, Total Consumer Credit Outstanding for September was $2462.7B. This represents the sixth consecutive negative year-over-year (YOY) contraction. Also, the -4.5% contraction (logarithmic) is the largest YOY contraction since the inception of the series in 1943. Please do not be fooled by the MOPE, spin, or green shoots rhetoric. The historic deterioration in total consumer credit outstanding strongly suggests that the consumer credit bubble has popped. The often cited rhetoric, “never bet against the American consumer” will certainly be challenged in the coming years.
Source: http://www.federalreserve.gov/releases/g19/Current/
Click chart to enlarge
Dear Jim,
In connection with the following article, "Concerns Growing About Another Mortgage Giant," I’d like to offer the following general time line of how important issues are reported here on JSMineset and in the mainstream media:
Day 1: JSMineset contributors note there is a serious problem with a particular company or institution.
Day 366: JSMineset contributors conclude problems with company or institution are probably beyond repair.
Day 731: JSMineset contributors report that company or institution is completely under water and explain how this will contribute to the need of US monetary authorities to engage in endless, infinite quantitative easing.
Day 1096: Mainstream media reports there may be a problem with particular company or institution.
Best wishes,
CIGA Richard B.
Concerns Growing Over Another Mortgage Giant
By LOUISE STORY
WASHINGTON — First it was Fannie Mae and Freddie Mac. Now concern is growing that another government mortgage giant might teeter, just as the nation’s housing market is stabilizing.
A year after Fannie and Freddie were effectively nationalized, problems at the Federal Housing Administration are raising worries among industry executives and Washington policy makers.
In testimony before a House subcommittee on Thursday, the F.H.A. commissioner, David H. Stevens, assured lawmakers that his agency would not need a bailout and that it was taking steps to manage its risks.
“I’ve already begun to improve portfolio analysis and risk management,” Mr. Stevens said. “We’ve made more significant credit policy changes in my first two months here than F.H.A.’s made in decades.”
But he acknowledged that some 20 percent of F.H.A. loans insured last year — and as many as 24 percent of those from 2007 — faced serious problems including foreclosure, offering a preview of a forthcoming audit of the agency’s finances.
Jim,
Armstrong says it is happening faster than anyone thought. 31 days to go.
CIGA BJS
U.S. small business loans in arrears rise: PayNet
Thu Oct 1, 2009 6:02am EDT
CHICAGO (Reuters) – Delinquencies among small and medium-sized U.S. businesses on the loans, leases and lines of credit they use to finance investment in capital equipment rose in August, PayNet Inc reported on Thursday.
Accounts in moderate delinquency, or those behind by 30 days or more, rose to 4.40 percent in August from 4.36 percent in July, said PayNet, which provides risk-management tools to the commercial lending industry.
Accounts 90 days or more behind in payment, or in severe delinquency, improved modestly, slipping to 1.51 percent in August from 1.52 percent in July. But those that were 180 days behind, or considered to be in default, rose to 0.81 percent in August from 0.78 percent in July.
The report is the latest to suggest the U.S. economy, which slipped into recession in December 2007, is experiencing a patchy rebound.
"The recovery that seems to be under way for large corporations and the stock market and certain parts of the economy doesn’t seem to have arrived yet for these companies," said Bill Phelan, president and founder of Skokie, Illinois-based PayNet.
Dear Jim,
Hey, Jim, what is this 31 days to go on the US dollar all about? Why do you say things like this.
CIGA Critic
Dear Critic,
Has this countdown not kept your attention on the weakest link in the entire bailout regime? What error do you see in holding that focus? How do you know that the day counting might not be either exact or close enough to be considered exact?
Please keep in mind I am not giving you trading advice. I am calling investors to remain firm in their conviction.
Regards,
Jim
Whodunit? Sneak attack on U.S. dollar
By: Eamon Javers
October 8, 2009 12:43 PM EST
It’s the biggest mystery in global finance right now: Who conducted a sneak attack on the U.S. dollar this week?
It began with a thinly sourced but highly explosive report Monday in a British newspaper: Arab oil sheiks are conspiring with the Russians and Chinese to quit using the dollar to set the value of oil trades — a direct threat to the global supremacy of the greenback.
Is it true? Everyone from the head of the Saudi central bank to U.S. officials scrambled to undercut the story, but no matter.
With the U.S. economy on the ropes and America by far the world’s biggest debtor, investors aren’t feeling as secure about the dollar as they used to. And the notion of second-tier economies ganging up on Uncle Sam didn’t sound so far-fetched.
Jim,
Good morning. Once again, thanks for all you do for us out here.
I thought it would be interesting to overlay the USD index onto the hourly spot gold price.
The file linked below is the result. Anyone can do this at http://goldprice.org/live-gold-price.html.
Have a good day.
CIGA Jack
Click chart to enlarge
Dear Jack,
It certainly makes the relationship clear.
31 days to go.
Regards,
Jim
Dear Jim,
The problem worldwide is that regulators are moving slowly while business and technology are moving at warp speed. The job being done by the CFTC, SEC and their counterparts abroad is pitiful.
Respectfully yours,
Monty Guild
Dear Monty,
I am asked almost daily by readers about the best strategy for scalping and day trading. The bottom line best strategy is DON’T.
Anyone out there that thinks they can beat flash trading systems or secret dark pools is out of their silly minds.
The super rich tech guys have destroyed markets for all intents and purposes, rendering them suicidal for the average person’s day trading or scalping intentions.
Where do you think the average $2,000,000 profit per operator comes from? If you think expert speculation you are dead wrong.
The Strategy is DON"T because you are the turkey in that game.
Regards,
Jim
‘Dark pools’ Outpacing Regulators, Exchanges Say
Wednesday, October 07, 2009
NEW YORK (Reuters)—"Dark pools," or venues where stock trades are hidden from public view, have proliferated around the globe without a "careful regulatory plan," the head of the world’s main exchanges group said on Wednesday [Oct. 7].
William Brodsky, chairman of the World Federation of Exchanges (WFE), said these alternative trading venues—where stocks change hands anonymously at prices not disclosed publicly—have no regulatory obligation and lack transparency.
"What our concern is on the dark pools is that these have evolved without a careful regulatory plan," he told a press teleconference at the end of the WFE annual meeting in Vancouver. "We’ve allowed the technology and evolution of these markets to run way ahead of the regulators’ ability to integrate what’s going on in the dark pools," said Mr. Brodsky, who is also chief executive of the Chicago Board Options Exchange, the largest U.S. options venue.
Dark pools allow traders, especially of large blocks of stock, to hide their intentions and avoid moving share prices. They have gained traction over the last decade as the average size of trades dramatically decreased on the transparent exchanges.
Dear Jim,
Let me see if I understand all of this?
If you cross the North Korean border illegally,
you get 12 years hard labor.
If you cross the Iranian border illegally,
you are detained indefinitely.
If you cross the US border illegally,
you get a driver’s license, a social security card, welfare, food stamps and free health care.
CIGA Lion
Dear CIGA Lion,
You have it down perfectly. This courtesy is also extended to Iranians and North Koreans as long as they are of the Southern recruited variety.
Regards,
Jim
Dear Jim,
The chief technician for a very major retail and institutional brokerage house was at our offices the other day. Among the important things she had to say was that gold had a very good chart and she expected $1200 and then $1600.
The most significant piece of information she had was that the average customer of her giant firm had only 2% gold shares or ETFs in their portfolio and she expected that at the top it would be a much higher percent of their holdings.
Respectfully yours,
Monty Guild
Jim,
Another sign we are going to get Stimulus Package #2, not named Stimulus Package #2. Maybe the Terminator can work out a deal for the homeless!
Respectfully,
CIGA Bernie
Hotel defaults, foreclosures rise in California
In the state, defaults and foreclosures are up fivefold since Jan. 1.
The list of troubled properties includes the St. Regis Monarch Beach in Dana Point, the downtown Los Angeles Marriott, the Sheraton Universal and the W hotel in San Diego.
The owners of the renowned Quail Lodge Resort and Golf Club in Carmel, for example, plan to close the hotel Nov. 16.
"I have never seen so many lenders contemplating mothballing properties," said Jim Butler, a hotel lawyer and chairman of the global hospitality group for Jeffer, Mangels, Butler & Marmaro. "It can and it will get worse for the hotel industry."
The problem is not unique to California, but the effect is being felt especially hard here because of tourism’s importance to the state.
