This whole "extend and pretend" program reminds me of what Wile E. Coyote used to do when he kept running forward through mid-air even though he long ago had left the edge of the cliff.

All that's left now is looking down, wincing, and plunging to that tiny puff of dust on the canyon floor.

Thank you, Karl. Information-dense, and persuasive; a good balance.

Is it just me, or is both the magnitude and frequency of freakishly bad news increasing?

Quote:

Here's the close-up of the last couple of years, corrected per The Fed's latest release. Note that credit card debt went negative on a rate-of-change basis at the end of 2007 and the actual peak of non-revolving debt was a couple months earlier!

I don't see that. Are you saying that the second derivative turned negative at the end of 2007? If that's true, then the peak occurred when the first derivative crosses zero, or around December 2008.

Correct Ts.

The total peak in outstanding was in fact pushed back several months though - look at the "total outstanding" chart.

The revisions were VERY significant on this release.

And last but not least retool these shopping malls into factories that produce things and ship them to the very countries lending us money. I dont care what the hell we produce whether its green products or rubber dog crap as long as countries like China and Japan are buying them and we can start bringing in trade surpluses.

Bravo! All right there in black and white for everyone to see. Now THAT'S change you can believe in!

Just a nit-pick, Gen...

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I had taken a (small) amount of comfort in the fact that non-revolving credit looked to be well behind its cousin the credit card. Well, not so much any more. Yes, its behind, but its catching up fast and in fact the slope has matched its brother now.

Is it cousin or brother? Or is this family so imbred that the cousin IS the brother?

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As usual, appreciate your tremendous efforts!

KD:

If these clowns don't get with the program right quick (read: backstopping the depositors while we can still borrow), will it be time to stockpile rice, beans and greenbacks?

LD

Oh my. The 981,000 figure got me.

Ldog:

KD wrote..

What these figures tell you up above is that those who can borrow are refusing and those who want to borrow are unable (not credit-worthy.)

There is no other interpretation.

What about the defaults? Is it not true that if $30 billion is written off, and $20 billion is created, then some of those who can are expanding their borrowing?

What matters to economic activity is on-balance flow.

A most excellent summation on our economy. Most telling is the BLS goosed employment data.. those who have given up and dropped off the radar will haunt our GDP for a long time and probably the reason for the dent in the SS T.F. deficit.. Those eligible folks who have given up hope of a job have cashed in their cards and applied for their meager SS check....

Very powerful summation of events.

OK, where's the rally monkey ! Guess this will have to do

(insert profound commentary here as all I can come up with is "We are in soooo much trouble...")

Thanks for the scary charts, Gen. Pictures do speak so much better than words.

Jules:
How about... "When in the course of human events..."

It is now completely CLEAR to me that "their plan" has been to juice the hell out of the markets in order make "the consumer" feel better and have them maintain or even increase their spending. They succeeded in manipulating the market but could not provoke the consumer. While .gov can put a band aid over and match "GDP" w/ their unbridled spending, they cannot match the distribution of those funds in the economy. This leads to further unemployment, curtailment in consumer activity, etc.

Somehow "they" really do seem to think that americans who are dropping off the employment and spending rolls are also just sitting around watching the S&P for their signal to go to the mall. Most americans couldn't care less ... AND AT THIS TIME ARE DEVELOPING A SERIOUS CASE OF RAGE AT THE COLLECTIVE INJUSTICE OF THEIR INDENTURED SERVITUDE.

I have very good credit, and yet I've gotten notices from all my credit card companies that they are raising my interest rates. By a LOT. With the Fed rates at ZERO?

Why would any person with decent credit WANT to borrow at these loan-shark rates? Thanks but no thanks. Think I'll pay cash. F*** YOU, banks.

Very good charting and particularly the analysis.
So, if you model the contraction for another 12 months along the same trend line, you end up with roughly a 10% GDP reversal and a 25% unemployment rate
(unemployment to declining GDP elasticity is generally around 60%, ie if GDP GDP drops 1%, unemployment rate increases by 1.6% and then accelerates as GDP goes negative).

nothing short of catastrophic.

I think this is gonna hurt a lil worse than I had been fearing.

Gen:

Got it. If they don't backstop the deposits, then game over.

FWIW, still playing the game while the casino is open. With one eye on my cards and the other on the door.

Be well.

LD

So much for the "consumer-driven recovery." Gen, once again you succeed in scaring the crap out of me, and for good reason. Astonishingly good Ticker.

Question: Does the drop in consumer credit include reduced credit limits or actual reduction in amounts owed -- IOW consumers are paying off and not borrowing more?

Typo alert:

Quote:

Yes, its behind, but its catching up fast and in fact the slope has matched its brother now.

Should be: Yes, it's behind, but it's catching up fast, and in fact the slope has matched its brother now.

I've been expecting far worse than GD1, just because of the scale, but I have to agree with Fidgit.

I think this may be worse than I was anticipating - mainly due to the never-ending attempts by TPTB to continue to kick the can down the road at all costs. The all costs part will be the killer.

On the raising rates thing: About 9 months ago, I got a notice from Capital One, the only card I have a balance on, that they were changing the terms on my credit card (basically, raising the standard rate from .0899 to .10+). I read the notice carefully, and it said I had the right to refuse the new terms by sending (snail mail or fax) a letter stating my intention not to agree. As a consequence, they would immediately close the account, but keep the rate the same (essentially locking it).

That's what I did. Just as they said, they closed the account. The rate stayed at .0899 as they said. It has been that way for about 6 months now, no shenanigans on the part of Capital One.

Stov, if that is happening, make sure you refuse the new terms, unless you just want to keep the cards for other reasons (in which case, pay the balances in full).

I've been reading the Ticker for about a year and a half, and I have learned an awful lot, so thanks Karl for the amazing information you provide.

I have to wonder though, how could the Fed and the government be unaware of the consequences of their actions? IMO the "Occam's Razor" explanation is that instead this has to be occurring on purpose, either through conspiracy or unprecedented corruption, and therefore its a false hope that our leaders are going to see the light and change course -- regardless of the number of faxes and phone calls they receive. Alternatively, we are already living in an Idiocracy.