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Small overview.........folks popped the credit cards in November, holiday spending. What happens to spending, when the cc bill arrives and the pay down begins?
Probably good news if a investor. If I recall, folks been cutting back on credit during the downturn. Shot of the ol' snake that bit ya not necessarily bad. Much of the jump in credit appears auto related. And MI on life support can use the help. Average age VOR over 10 years. Yikes, nothin like meeting a 15 year ol wreck with misalligned headlights coming your way on a dark rainy night.
It represents a more positive attitude on the part of consumers willing to assume more debt. Early on, there would have been an element of 'putting off the day of reckoning' sort of charging. Sort of like our gov't is wont to do. At the present time, most of this is long past. Now we don't seem to still be losing jobs and may be starting to slowly add some. In addition, many people per force, if you will, have of contrived various ways to economically cope. The Blue Meanies hate this because much of this economic activity if black market and off grid.
Be that as it may, this expansion of credit is extremely positive as a counter to the liquidity trap we're in. The wiki entry is very good.
Lot's of money but none to be had. 'You want me to write you a 30 year fixed at 4%?!?!? Are you crazy!!!.'
And it's still explained with d/s curves when you have artificial price controls leading, most naturally, to supply restrictions. And this translates into a near zero velocity of money - which among other things greatly dampens price inflation.
You noted: "Be that as it may, this expansion of credit is extremely positive as a counter to the liquidity trap we're in."
I won't disagree with your comment; but I remain concerned with this spending from November; and whether the repay on the cc's will slow spending again. Being as there are numerous generations of consumptive habits in place; those forced to not spend much for any number of reasons are not unlike getting folks off a booze or drug habit. The spend and have itch is still there, whether affordable or not. And yes, the underground economy has grown even more in the past few years. No tax revenue, but some money to spend.
As to the deleveraging of consumers; this can become a very vicious and destructive cycle; as the consumer is waiting again for prices to come down even more before they will purchase. This is what they have been seeing and finding, at least during holiday shopping periods.
Comments
It represents a more positive attitude on the part of consumers willing to assume more debt. Early on, there would have been an element of 'putting off the day of reckoning' sort of charging. Sort of like our gov't is wont to do. At the present time, most of this is long past. Now we don't seem to still be losing jobs and may be starting to slowly add some. In addition, many people per force, if you will, have of contrived various ways to economically cope. The Blue Meanies hate this because much of this economic activity if black market and off grid.
Be that as it may, this expansion of credit is extremely positive as a counter to the liquidity trap we're in. The wiki entry is very good.
http://en.wikipedia.org/wiki/Liquidity_trap
Lot's of money but none to be had. 'You want me to write you a 30 year fixed at 4%?!?!? Are you crazy!!!.'
And it's still explained with d/s curves when you have artificial price controls leading, most naturally, to supply restrictions. And this translates into a near zero velocity of money - which among other things greatly dampens price inflation.
Can you say The Lost Decade?
peace,
rono
You noted: "Be that as it may, this expansion of credit is extremely positive as a counter to the liquidity trap we're in."
I won't disagree with your comment; but I remain concerned with this spending from November; and whether the repay on the cc's will slow spending again. Being as there are numerous generations of consumptive habits in place; those forced to not spend much for any number of reasons are not unlike getting folks off a booze or drug habit. The spend and have itch is still there, whether affordable or not. And yes, the underground economy has grown even more in the past few years. No tax revenue, but some money to spend.
As to the deleveraging of consumers; this can become a very vicious and destructive cycle; as the consumer is waiting again for prices to come down even more before they will purchase. This is what they have been seeing and finding, at least during holiday shopping periods.
My inflation adjusted 2 cents worth.
Take care of you and yours,
Catch