Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Ride the Tiger with CD -- Ignore unavailable to you. Want to Upgrade?

To: Cogito Ergo Sum who wrote (168717)	7/8/2009 5:48:54 PM
From: heinz44	2 Recommendations Read Replies (3) \| Respond to of 312532

Get ready for the next wave of derivatives to implode commercial realestate

To: Cogito Ergo Sum who wrote (168717)	7/8/2009 10:37:51 PM
From: russet	Read Replies (1) \| Respond to of 312532

What they don't talk about is the billions in writeoffs by the lending institutions which is probably accounting for a majority of the declines in credit outstanding. Consumer is 70% of the economy,...less consumption, less sales, less profits, less employment, less trade, less market cap for stocks. Bolded parts stand out for me. US Consumer Credit Falls In May A Fourth Straight Month Last update: 7/8/2009 3:01:38 PM By Jeff Bater Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--Americans, forced to frugality by the highest jobless rate in a quarter century, reduced borrowing during May for a fourth straight month. Consumer credit outstanding decreased at a seasonally adjusted annual rate of 1.5%, Federal Reserve data showed Wednesday. The fourth-straight decline came as U.S. companies keep showing workers the door. The unemployment rate in June rose to 9.5%, the highest in 25 years. But at $3.2 billion, the decline in credit, to $2.520 trillion, was well short of expectations on Wall Street, which projected a $7.1 billion drop. Consumer credit in April decreased $16.5 billion, adjusted from a previously estimated $15.7 billion drop. Credit made a double-digit drop in March and in February, too. U.S. banks have made it harder for people to get loans. A Fed survey of bank executives released in May showed larger fractions of domestic banks reported tighter standards for both credit-card loans and other consumer loans earlier in 2009. The Fed's quarterly Senior Loan Officer Opinion Survey on Bank Lending Practices found banks expect credit quality to deteriorate over the year as economic weakness lingers. Data this week showed U.S. consumers are falling behind on their loans. The American Bankers Association said Tuesday its composite delinquency ratio rose to 3.23% of all accounts on a seasonally adjusted basis in the first quarter, up from 3.22% in the final three months of 2008. The ratio is based on loans that are at least 30 days past due across eight closed-end loan categories. The Fed data Wednesday on consumer credit signaled people are leaving their credit cards in their wallets. Revolving credit, which includes credit-card use, retreated in May by $2.9 billion to $928.0 billion, or 3.7%. Revolving credit fell $8.7 billion in April. Nonrevolving credit, including automobile and mobile-home loans, dropped in May by 0.3%, or $367 million, to $1.592 trillion. Nonrevolving credit in April decreased 5.9%, or $7.8 billion. The consumer-credit data exclude home mortgages and other real estate-secured loans. These tend to be highly volatile from month to month and are frequently revised. But the report still has interesting details on how Americans finance their lifestyles. Consumer spending makes up 70% of gross domestic product, a broad measure of economic activity in the U.S. Spending rose weakly in the first quarter, after two straight declines. A reluctance to borrow and spend can doom the economy to subpar performance for some time to come. Deleveraging among U.S. households is seen continuing even after the economy begins recovering. Many people feel insecure about their finances - and retirements. Some households are in the red; for those who aren't, their wealth has shrunk. The Fed's quarterly "Flow of Funds" report June 11 said total net worth of households fell 2.6% in the first quarter. Property values and stock market prices have fallen a lot, although equities began a rally in March. The saving rate is at its highest in 15 years, the latest data showed. A Commerce Department report June 26 said Americans' income soared in May, driven by the Obama administration's stimulus package. Spending rose modestly; the saving rate was 6.9%. -By Jeff Bater, Dow Jones Newswires; 202 862 9249; jeff.bater@dowjones.com (END) Dow Jones Newswires July 08, 2009 15:01 ET (19:01 GMT)