Tim Iacono
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Maybe someday they'll look back at this period in history and think that we all should have seen what was coming - to think that asset prices would rise indefinitely, forever masking the amount of credit and debt that was being created, seemed like an awfully stupid way to run an economy.
Bloomberg reports that late payments just hit a high not seen since 1992:
Consumers fell behind on car, credit-card and home-equity loans at the highest level in 15 years, another sign the U.S. economy is slowing, according to the American Bankers Association's quarterly survey.
Payments at least 30 days past due increased across all eight categories of loans tracked during the fourth quarter, the Washington-based group said today in a statement. Late loans in the quarter climbed 21 basis points to 2.65 percent of all accounts in a consumer-loan index created by the group.
"It's an indication of the degree of stress consumers are facing right now," said Nigel Gault, director of U.S. research at Lexington, Massachusetts-based Global Insight Inc. "People overextended themselves, they took out loans they thought weren't a problem as long as house prices kept rising."
Last year, former Fed Chairman Alan Greenspan noted that many of the developing economic problems would be alleviated if home prices went up by ten percent.
From today's levels, that would be more than a twenty percent increase, but, from the sound of what's coming out of Washington, don't be surprised if they bring The Maestro out of retirement to try to engineer such a feat.
As Angelo Mozilo once noted, you have to get to the root of the problem and that is that home prices are falling (see Angelo Mozilo is a moron).
Meanwhile, writing in The New Yorker, James Surowiecki laments the bankruptcy reform that was passed a couple years ago:
In recent months, a lot of people have been handed financial get-out-of-jail-free cards. C.E.O.s who presided over billions in losses have walked away with tens of millions in compensation. The Federal Reserve has showered cheap money on banks and brokerages. Even Bear Stearns caught a break when, last week, J. P. Morgan agreed to quintuple the price it will pay to take over the firm. But there’s one group for whom forgiveness has not been forthcoming: ordinary consumers struggling with piles of credit-card debt. For them, escaping the burden of their bad decisions and their bad luck has become much harder.
That’s because of a law that Congress passed in 2005 which has made it more difficult for people to write off their debts. Filing for bankruptcy has become much more expensive. More important, while lower-income people can still declare Chapter 7, which takes away your assets but then discharges your debts, most middle- and higher-income people now have to declare Chapter 13. That means they have to pay their creditors monthly for five years before they’re free.
The little guy, it seems, sometimes has a different set of consequences at the end of the credit and debt party. That's why it's not a good idea to be the little guy.
Not coincidentally (perhaps), just the other day, PBS re-ran their excellent Frontline documentary on The Secret History of the Credit Card. You can watch the whole thing online now and, maybe after living through the mortgage mess for almost a year now, this will make a little more sense to a few more people.
more than one occasion in these pages you've read that the "Reagan Revolution" was thought to have more to do with the expansion of credit than anything else.Now this is something new - a link to Web of Debt was left in the comments section the other day and, though, nothing is known about this book, it certainly is in keeping with the general theme around here and has one heck of an image on the cover.
Shouldn't someone be sending me a copy of this in the mail?
Does anyone know how the documentary Credit Card Nation did? You'd think that someday, people would take an interest in this stuff.
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This article has 5 comments:
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Serge Birbrair
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45 Comments
My Website
Apr 06 05:48 AMarsvictim.com
When big guys sneeze, mid size guys getting cold
arsCLASSaction.com
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Deacon
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6 Comments
My Website
Apr 06 09:49 AMMy Letter to Editors at DailyReckoning.Com:
Pay attention, folks!
This is a conspiracy-driven dismantlement of the West's
financial underpinnings, for a certain purpose: TO EQUALIZE
GLOBAL ECONOMIES, for future installation of one-world
government.
I've provided all the details in my essay, "Planned
Destruction of America" (linked below), which is my report
on Lt. Col. Archibald Roberts' 1968 booklet: "The Anatomy
of a Revolution".
Study my essay, then write as if we're all being led down
a path to hell on Earth by secretive, elite movers and
shakers on the Left and Right (path to hell aka Third-Way
Global Economic Socialism. Read and learn and teach:
The EU and the coming North America Union are products of
the 1940s GATT formulations, and very few analysts are
aware of it ((GATT, NAFTA, and CAFTA are socialistic
attempts at equalizing global economies, in order to in-
stall one-world government under THIRD-WAY Global Economic
Socialism)).
My missive to Ron Paul’s staff, regarding my view that
this financial crisis is not by happenstance nor
mismanagement—but BY DESIGN!:
The Honorable Ron Paul is ignorant of an ongoing conspiracy
to topple, financially, the West, in order to equalize
the world’s economies; for building one-world government
under GLOBAL ECONOMIC SOCIALISM. // The conspiracy began
in the 1940s with the GATT formulations. // Ask why
Greenspan had violated his chairmanship duties by advising
prospective home buyers to take out an ARM. // Ask why
Greenspan had sent out fed regulators to warn banks that
they’d be charged with RACISM if they didn’t loosen home
loans for minority, HIGH RISK home buyers. // Ask why
Greenspan recently, TRAITOROUSLY, had advised OPEC oil
producers to de-link from the U.S. dollar. // Greenspan -
the FEDERAL RESERVE - has embarked on a purposeful set of
monetary policies designed to destroy the West’s financial
underpinnings. // Read about the WHO, the HOW, and the WHY
of it in my below article (first one):
Planned Destruction of America
planneddestructionofam.../
Corporate America: What Went Wrong?
corporateamericawhatwe.../
This one helps to confirm efforts to PURPOSELY trash
America’s financial underpinnings:
www.321gold.com/editor...
P.S.
Oil is payoff for the West's efforts at providing PROXY
COMBATANTS for Israel--for protecting Israel from expanding,
encircling Islamic Arabism; a Jewish nation-state having
supporters throughout the West willing to destroy the entirety
of Western civilization for Israel's sake.
That's the gut-wrenching truth of why Western democracies
are sacrificing blood and treasury in the Middle East; especially
the U.S., which has enough off-shore and on-land oil reserves
to last 300 years at her present rate of consumption, and
which reserves were PURPOSELY capped and/or not drilled
because Israel's supporters poured millions of dollars into
ENVIRONMENTAL MOVEMENT groups' coffers, to work at
keeping America from oil/energy independence and tied to
Israel's interests in the Middle East. That's the truth you'll
NEVER see nor hear reported in Western mainstream news
media, because Israel's supporters control what's fit to be
said or printed about why the West wars with Islamic
Arabism.
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mkreisel
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308 Comments
Apr 06 11:48 AMOnce all of our reserves are fired, then we become truly dependent upon others.
Right now, we are exchanging worthless green paper for truly useful commodities. That's a wonderful deal.
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hollowman
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24 Comments
Apr 06 09:17 PM-
trfoil
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1 Comment
Apr 07 09:28 PM