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Realistbear

U S Consumer Borrowing Shows Mega-increase 300%

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http://www.forbes.com/technology/feeds/ap/.../ap2932325.html

Associated Press

Consumer Borrowing Rises Sharply in June

By MARTIN CRUTSINGER , 08.07.2006, 03:10 PM

Americans increased their borrowing in June at a much faster pace than expected, with the rise led by higher credit card debt.
The Federal Reserve reported Monday that consumer borrowing rose at an annual rate of 5.7 percent in June, up sharply from a 3.3 percent increase in May.
The June advance reflected a rise in
consumer debt of $10.27 billion at an annual rate, much larger than the $3.7 billion increase economists had been expecting.

300% more than the Street was expecting :o

Not much chance of a Fed pause now then? Spending may reflect a corporate depression. Same kind of behaviour in the UK. Debt, unemployment, twin deficits etc. and we spend MORE! Comfort spending?

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rb, you missed the end bit ;)

The increase in borrowing in June pushed total consumer credit to a record

annual rate of $2.19 trillion. The Fed's measure of consumer credit does not

include mortgages or other loans that are secured by real estate.

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http://www.forbes.com/technology/feeds/ap/.../ap2932325.html

Associated Press

Consumer Borrowing Rises Sharply in June

By MARTIN CRUTSINGER , 08.07.2006, 03:10 PM

Americans increased their borrowing in June at a much faster pace than expected, with the rise led by higher credit card debt.
The Federal Reserve reported Monday that consumer borrowing rose at an annual rate of 5.7 percent in June, up sharply from a 3.3 percent increase in May.
The June advance reflected a rise in
consumer debt of $10.27 billion at an annual rate, much larger than the $3.7 billion increase economists had been expecting.

300% more than the Street was expecting :o

Not much chance of a Fed pause now then? Spending may reflect a corporate depression. Same kind of behaviour in the UK. Debt, unemployment, twin deficits etc. and we spend MORE! Comfort spending?

Fully agree RB. I think the Fed will keep hiking - and they're going into recession Q1 2007 whatever they do.

Unlike the last US 'recession' when consumers actually spent more, this will be a consumer recession because the housing market is in free-fall. And they won't be able to reflate the economy like 'bubbles' Al did either. Bernanke really is in the sh*t - and he knows it.

Just what I like, a 'real' recession where the great unwashed spend less because credit's tight :lol:

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Ooo, it's like looking into the future for the UK

I didn't think people would stop borrowing/spending - they are too used to living the high life over the past few years and they've got used to high inflation....

Edited by dnd

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Ooo, it's like looking into the future for the UK

I didn't think people would stop borrowing/spending - they are too used to living the high life over the past few years and they've got used to high inflation....

So...what happens to an economy where consumers refuse to heed the warnings and continue to spend and borrow even though monetary policy is tightening money supply and increasing the cost of maintaining debt?

AFP

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So...what happens to an economy where consumers refuse to heed the warnings and continue to spend and borrow even though monetary policy is tightening money supply and increasing the cost of maintaining debt?

AFP

They won't be able to. If they reach a point where they can't afford to pay back their existing debts then lenders will stop giving them money.

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They won't be able to. If they reach a point where they can't afford to pay back their existing debts then lenders will stop giving them money.

That doesn't make sense and is not what we are seeing in reality.

If that were the case we would not be having such a huge rise in people with debt problems and bankruptcy. Anyone else?

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They won't be able to. If they reach a point where they can't afford to pay back their existing debts then lenders will stop giving them money.

The lenders change their 'products' to make it easier to borrow larger and larger sums - called a 'market economy' - it adapts....

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That doesn't make sense and is not what we are seeing in reality.

Sure it does, you asked what will happen, pointing out what is happening means it just hasnt happend yet.

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Sure it does, you asked what will happen, pointing out what is happening means it just hasnt happend yet.

I have to disagree. That statement was like saying we have a perfect market and we have far from that. We have people that do not have an ability to repay yet they are still managing to get lending, so why bother making such false statements. Sounds like the kind of thing found in a simple economics model.

So what happens if this continues?

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That doesn't make sense and is not what we are seeing in reality.

If that were the case we would not be having such a huge rise in people with debt problems and bankruptcy. Anyone else?

Its a huge rise in a very small number. Plus the law on bankruptcy was changed after much of this money was lent, which is why the lenders are now having to increase provisions for bad debt. Even with the best risk profiling and credit policies in the world some people will still find themselves unable to repay what they're lent, either through fecklessness or bad luck. But that's all priced into the cost of lending, so that across the whole debt portfolio the lenders still make money.

I have to disagree. That statement was like saying we have a perfect market and we have far from that. We have people that do not have an ability to repay yet they are still managing to get lending, so why bother making such false statements. Sounds like the kind of thing found in a simple economics model.

So what happens if this continues?

I was assuming that everybody on here was intelligent enough to know that we don't live in a perfect world and that means even in a well-functioning market you'll get some bankruptcies... :ph34r:

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Its a huge rise in a very small number. Plus the law on bankruptcy was changed after much of this money was lent, which is why the lenders are now having to increase provisions for bad debt. Even with the best risk profiling and credit policies in the world some people will still find themselves unable to repay what they're lent, either through fecklessness or bad luck. But that's all priced into the cost of lending, so that across the whole debt portfolio the lenders still make money.

I was assuming that everybody on here was intelligent enough to know that we don't live in a perfect world and that means even in a well-functioning market you'll get some bankruptcies... :ph34r:

Please don't insult my intelligence after your posting such a dumb response to my request for people thoughts.

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Please don't insult my intelligence after your posting such a dumb response to my request for people thoughts.

Insult your intelligence? You seem to be doing a good job of that all by yourself... :ph34r:

Which specific part of my response was 'dumb'? Care to explain where and how I am so misguided?

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Insult your intelligence? You seem to be doing a good job of that all by yourself... :ph34r:

Which specific part of my response was 'dumb'? Care to explain where and how I am so misguided?

I don't know why you have to turn things personal.

Your statement that banks will stop lending to people who can't afford it is clearly not what happens.

I'm sorry we couldn't discuss this issue.

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I don't know why you have to turn things personal.

Your statement that banks will stop lending to people who can't afford it is clearly not what happens.

I'm sorry we couldn't discuss this issue.

I'm not making it personal. I gave you a reasoned response and you called it dumb.

It is exactly what happens. In case you hadn't noticed there is a pinned topic at the top of the main forum page all about signs of tightening credit. Read it then come back and call me dumb. How much evidence do you require?

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I think that credit tightening will occur as the ability of debt applicants to service debt falls. Studies show that a similar 'myopia' gripped Japanese banks in the late eighties, before they returned to more 'traditional' lending practices .

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I think that credit tightening will occur as the ability of debt applicants to service debt falls. Studies show that a similar 'myopia' gripped Japanese banks in the late eighties, before they returned to more 'traditional' lending practices .

According to AFP holding that opinion makes you dumb... :blink:

I think we're already seeing many signs of credit tightening and the banks have obviously woken up to the problem. Expect a raft of "I was advised to get an IVA and now I can't get a credit card..." sob stories soon.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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