Consumer credit at 3PM

So the next economic number that may put a wrench in the market is the Consumer Credit number released at 3pm Wednesday. Survey numbers say -8.5 Billion with prior month -15.7 Billion...Will this move us for the close, short answer is YES---market pros will use "any" excuse to trade the news....

Also big news today is Alcoa earnings-always big but for some reason everyone is jumping all over their earnings as a was to tell ALL future earnings for the quarter. Kind of dumb but true.

Below is a quick note from my firm on Consumer Credit:

Total consumer credit balances are shrinking at an aggressive pace. According to the Federal
Reserve, a majority of banks are still tightening their lending standards for consumer loans
and credit cards. Meanwhile, consumer spending is slipping again after an unexpected increase
earlier in the year.
Revolving credit balances are falling at a steadily increasing rate. Consumer spending has slipped in
recent months, although it is still holding up much better than it was in late 2008. Consumers also have
more cash to work with thanks to several months of greater savings, increased transfer payments from
the government, and payroll tax credits. These factors have lessened the need for credit cards, while
consumers also try to dig themselves out of debt.
Non-revolving credit balances are also shrinking, but the recent rate of decline has been slower and
steadier than it has for revolving credit. New vehicle sales remain extremely weak but seem to have
found a floor at an annualized sales rate of about 9 million units. Demand for new non-revolving lines of
credit is very weak, while current borrowers are steadily paying off their existing balances. Consumer
delinquency rates for auto loans remain much lower than they are for other types of credit.
Total consumer credit balances are expected to gradually decline over the months ahead. In particular,
revolving credit balances will fall steadily as consumers hold more cash and look to reduce their debt.
Consumers are not expected to significantly increase spending or their demand for credit until the labor
market begins to firm up in 2010 or beyond. On the upside, reducing credit utilization during this severe
recession will help consumers avoid a longer-term decline in credit quality.

posted by Peter Greene

An easy way to understand the AIG Debacle..

Two couples were playing poker one evening. Jim accidentally
dropped some cards on the floor. When he bent down under the
table to pick them up, he noticed Bob's wife, Sue wasn't wearing
any underwear under her dress! Shocked by this, Jim upon trying
to sit back up again, hit his head on the table and emerged
red-faced.
Later, Jim went to the kitchen to get some refreshments.
Bob's wife followed and asked, 'Did you see anything that you
like under there?' Surprised by her boldness, Jim admitted that,
well indeed he did. She said, 'Well, you can have it but it
will cost you £500.' After taking a minute or two to assess the
financial and moral costs of this offer, Jim confirms that he is
interested.
Sue told him that since her husband Bob worked Friday afternoons
and Jim didn't, Jim should be at her house around 2 p.m. Friday
afternoon.
When Friday rolled around, Jim showed up at Bob's house at 2
p.m. sharp and after paying Sue the agreed sum of £500 - they
went to the bedroom and closed their transaction, as agreed. Jim
quickly dressed and left.

As usual, Bob came home from work at 6 p.m. And upon arriving,
asked his wife: 'Did Jim come by the house this afternoon?' With
a lump in her throat Sue answered 'Why yes, he did stop by for a
few minutes this afternoon.' Her heart nearly skipped a beat
when her husband curtly asked, 'And did he give you £500?' Sue,
using her best poker face, replied, 'Well, yes, in fact he did
give me £500.' Bob, with a relieved, satisfied look on his face,
surprised his wife by saying, 'He came by the office this
morning and borrowed £500 from me. He promised he'd stop by our
house this afternoon on his way home and pay the money back..
' As applied to the current financial crisis, the characters in
the above story are represented as follows:
Jim
= Goldman Sachs
Bob
= AIG
Sue
= US taxpayer



posted by Peter Greene

GM under White House Control

So this weekend the Obama administration took over GM now Government Motors. They will say that they are just giving a few suggestions in order for the company to receive government loan (or bailout I don't know what word they are using today) for what the 2nd or 3rd time in as many months. These types of loans and rules that go with them are normal--IF they come from PRIVATE investors. Now the US Government is the number 1 investor in our companies.

This is a total socialist takeover of private companies, nothing less. I am not some nut screaming against government assistance, for example the FDIC insurance or SEC oversight of companies, or thinking that no rules are needed to keep the playing field level and fair. Heck, that is what I'm asking for -a level playing field. We have lost that now, we have new rules- some companies are "Too Big To Fail" or are too important as a manufacturing through back--this is not a level field of play. It is not capitalism that we have in the United States of America. This nation is the greatest because we all have the same opportunity, not a guarantee...to play favourites is total socialism-if you are on the list of the powerful government you are saved no matter what, if you are not on that list you die...

If GM or Chrysler or the banks can't find investors to back their plans then they need to re-organize, merge or perish...OMG, yes some companies go out of business or evolve. When this happens other small businesses with better ideas, products or way of marketing come along and fill in the gaps left. The problem is everyone things things happen in 24 hour news cycles. Get over it and let the capitalist system that built this country live.

How many people have bitched for years that the big auto companies kept the ideas of electric or some other alternative fuels cars from the public-now we want to save them?

There are a bunch of Buggy Whip makers heading to Washington this morning to get their bail out next!


posted by Peter Greene

GM may not survive

According to the company's auditors GM has "Going Concern" Risk...

Is anyone surprised...I have been saying that GM and Chrysler need ch11 bankruptcy to REORGANIZE. Even a merger to a leaner, meaner firm would be the best think..

Funny this news hits as Ford says they are actually retiring debt and making important corporate decisions to remain as a viable company.




posted by Peter Greene

Saab Moves to Separate Itself From G.M.

Saab, the Swedish automaker owned by General Motors, filed for bankruptcy protection Friday and asked the Swedish government for help in making it an independent car company again.

Maybe they will finally make good cars again!!



posted by Peter Greene