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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (45325)	11/11/2005 10:52:44 PM
From: mishedlo	Read Replies (2) \| Respond to of 110194

Why is that a mystery? Negative savings rates, cash out refis, loose lending standards. HELOCs have now flattened and refis are way down although from very lofty levels to more normal levels. As we have discussed the party is over once housing stumbles hard. To me it is no mystery, but rather it is amazing that it could go on as long as it has. Perhaps that is what you mean. Mish

To: John Vosilla who wrote (45325)	11/12/2005 6:08:15 PM
From: GraceZ	Read Replies (2) \| Respond to of 110194

The biggest mystery to me is how consumer credit has continued to expand at such a rapid pace since the middle of last year as the fed tightened Consumer debt outstanding expanded 3.7% in the last year from 9/2004 to 9/2005. This is around what the GDP expanded and at a lower rate than the latest inflation data. If we are to believe the latest data on inflation, consumer credit contracted on an adjusted basis. Contrast this with the 12%-15% rate of growth in consumer credit we had in the mid nineties with sub par GDP growth and comparable inflation rates. Of course back then we coming off several years of contraction in consumer credit in the early nineties. Are you lumping mortgage money in with consumer credit? For that there is little mystery why that expanded. Mortgage rates barely budged up while home appreciation rates were still high in most of the country during that time frame. Until a month ago I could still match or beat where I refied a few years ago at the bottom of the Fed's cycle. I think it is fair to say, a lot of consumer credit has been replaced with mortgage borrowing because it is so cheap and easy to borrow money secured with RE. Check my figures on consumer debt yourself. 2004 09 2084586.90 2004 10 2105998.35 2004 11 2108734.27 2004 12 2135929.60 2005 01 2128959.84 2005 02 2117040.90 2005 03 2111301.47 2005 04 2114709.75 2005 05 2115578.98 2005 06 2128246.44 2005 07 2136677.60 2005 08 2154983.87 2005 09 2161420.43