Credit outstanding is still growing at a breakneck pace>
Certain types of credit are still growing solidly, what I would characterize as speculative borrowing to buy securities, and financial assets (flagpole rallies) Right now I sense this is being generated offshore by carrytrades. The key to this trade is a stable USD as the speculators are short Yen and Euro(problematic?) and giveaway interest rates in Europe and Japan. Mish's earlier post describes one of these.
Message 21855356
However, IMO consumer credit is beginning to contract, evidenced in the HELOCs (*), consumer lending (**)data. RE lending has sort of hung in there, but the last two weeks MBAA reports are ominious. Lately the economy has held together because some people have been able to do windfall cashouts of their housing, and that means more debt expansion. That shows up in non M1 component of M2, but it only helps a select group of people (trifurcation, discussed here).
wallstreetexaminer.com
Joe Six does not have the ready cash to get by without lots of fresh borrowings, evidence M1 data (***). It's like their heads are underwater. Will they get another "bond rally" (that include agencies?) to revive them? I almost get that feeling, but will will see, Joe Six and Bully wannabes really need it, kind of a moment of truth.
(*) HELOCs
07/20/2005 439.0
07/27/2005 439.1
08/03/2005 439.3
08/10/2005 439.0
08/17/2005 439.1
08/24/2005 439.0
08/31/2005 439.1
09/07/2005 438.8
09/14/2005 437.4
09/21/2005 438.1
09/28/2005 438.9
10/05/2005 435.0
10/12/2005 435.0
10/19/2005 436.7
(**) consumer:
07/27/2005 717.3
08/03/2005 714.2
08/10/2005 716.0
08/17/2005 716.9
08/24/2005 719.7
08/31/2005 716.6
09/07/2005 719.0
09/14/2005 721.9
09/21/2005 720.9
09/28/2005 719.8
10/05/2005 708.1
10/12/2005 705.0
10/19/2005 705.3
(***) M1: high at beginning of month as cash builds up to pay mortages, resulting in the low later in the month. As Freddie Mac reported, Humpty had to engage in aggressive equity extraction just to keep M1 from collapsing.
today.reuters.com
2005-05-30 1398.2
2005-06-06 1366.3
2005-06-13 1350.4
2005-06-20 1379.6
2005-06-27 1385.6
2005-07-04 1380.0
2005-07-11 1342.5
2005-07-18 1342.0
2005-07-25 1368.0
2005-08-01 1357.5
2005-08-08 1349.0
2005-08-15 1357.0
2005-08-22 1383.3
2005-08-29 1388.8
2005-09-05 1364.7
2005-09-12 1340.0
2005-09-19 1358.3
2005-09-26 1373.7
2005-10-03 1396.8
2005-10-10 1356.7
2005-10-17 1347.6 |
