I am not surprised. Is anyone here surprised? "The Federal Reserve reported Tuesday that consumers ratcheted back their credit by a larger-than-anticipated $21.6 billion from June, the most on records dating to 1943. Economists expected credit to drop by $4 billion." http://www.cnbc.com/id/32738637 We are the consumer of global output (70% of our economy in fact is based on Americans consuming and borrowing money to buy foreign goods and services) I am not surprised. Right now Americans are busy servicing debt and not borrowing. They fear unemployment, large numbers are underemployed. These Harvard grads seem to get it wrong, they were surprised that the property market was a bubble and now they are still surprised. The problem with Analysts is they need to get out of the office and look around and make real life analysis not look at computer models. Look at LTCM for example.
Not surprised they get it wrong. Hard to know whats going on with the average joe when you dont even know one. All these harvard guys all have multimillionaire parents, multimillionaire friends, all eat at the same places, shop at the same stores, and they never go down to main street and see the empty stores, or even closed stores that went out of business.
Unbelievable: Tue Sep 8, 2009 3:02pm EDT WASHINGTON, Sept 8 (Reuters) - Total U.S. consumer credit fell by a record $21.6 billion in July, Federal Reserve data showed on Tuesday, while June's decline was bigger than previously thought. July consumer credit outstanding fell at a 10.4 percent annual rate to $2.47 trillion, suggesting that households were shying away from credit amid rising unemployment.
Banks are so screwed. Just think if everyone pulled there deposits. Banks better wake up as to who really is in charge. The consumer is in charge.
What makes you think that there's enough consumers out there with significant bank deposits these days to make a bit of difference? Besides, the Fed would pony up anything any bank needed. It'd be a non-event...
How do you think this will make Q3 look. I mean you can only make up profits by cutting costs but that is only effective for so long. These numbers reflect the cost cutting effects which trickle down to the consumer (who will not buy your goods and services with borrowed money) The artificial bull market only worked as long as credit was loose and the hot potato was being tossed around fast enough so no one gets burned. Now with tight credit and consumers unable to make up the difference they will cut. Only way out of this is by bringing jobs back to the US and paying wages that make it possible for consumers to buy goods and services without borrowing money. Very deflationary sign and omnious predictor of whats gonna come Q3. And of course the media pundits are not going to report or discuss consumer credit to the masses lining up for the slaughter.
Companies will be given permission to lie about earnings. What ever it takes to make people think everything is ok.