WASHINGTON (MarketWatch) -U.S. consumers reduced their debt in June for the fifth consecutive month, the Federal Reserve reported Friday. Total seasonally adjusted consumer debt fell $10.29 billion, or at a 4.9% annual rate, in June to $2.502 trillion. Consumer credit fell in eight of the past nine months. Economists surveyed by MarketWatch expected consumer credit to decline by $4.5 billion. This is the longest string of declines in credit since 1991. In the subcategories, credit-card debt fell $5.04 billion, or 3.8%, to $1.59 trillion. This is the record 10th straight monthly drop in credit card debt. Non-revolving credit, such as auto loans, personal loans and student loans fell $5.04 billion or 3.8% to $1.59 trillion. http://www.marketwatch.com/story/june-consumer-credit-down-for-5th-straight-month-2009-08-07 That's REALLY good news !!!
Because people paid down their balance or because companies had to write off defaults and "deals".. ??
Dollars the banks paid less than a quarter for. Read up on fractional reserve lending.. Bank pays 2% on 1000 deposit, loans and collects interest on 10,000 at 10% interest. Banks cost of goods ---$20 Banks profit in first year--$1000. Lots of gross margin there to pay for buildings, tellers, guards, vice presidents, writeoffs, zero interest loans to bank presidents (which the FDIC once told me were "normal and common" when I as a holder of bank stock ask them if this was kosher) etc.
It doesn't matter. When people run out of credit, now that they've run out of cash, and banks won't loan them any money, they'll set up mud pie stands and sell mud pies. Green shoots!