The Flexible Friend.....Some Credit Card Data

Thank god the credit crisis and the recession that never started are already over.....But i assume it´s hard even for a bull trying to explain the already sky high delinquency rate.... Nice to see that the Fed ( just a few weeks ago ) and other central banks are willing to take the securitized credit card debt as collateral. Lets hope the haircut will be big enough and the way too often toxic waste won´t be rolled over indefintely.......... This post ECB Concerned Over Swap-O-Rama Exit Strategy from Mish is showing that there are already schemes in place to "design" securities to limit the haircut & to make them available as collateral . One more reason to be bullish on gold.... Especially when you take a look at this graph Federal Reserve Balance Sheet

Gottseidank ist die Kreditkrise und die nicht eingetroffenen Rezession bereits vorbei....... Dann aber sollten die bereits jetzt astronomischen Rückstandsraten bei den Kreditkarten selbst für die Daueroptimisten aber für noch mehr Beunruhigung sorgen. Immerhin ist es gut zu wissen das zur Not die Fed ( erst seit einigen Wochen ) und andere Zentralbanken auch die verbrieften Kreditkartenforderungen als Sicherheit akzeptieren. Bleibt nur zu hoffen das die angenommenen Risikoabschläge ausreichend sein werden und das diese oft fragwürdigen Papiere nicht auf alle Ewigkeit prolongiert werden ..... Wie dieses Posting ECB Concerned Over Swap-O-Rama Exit Strategy von Mish zeigt hat es nicht lange gedauert bis die Marktteilnehmer Strategien entwickelt haben um dieses System zu Ihren Gunsten zu nutzen. Wenn man das mit einem Blick auf die grafische Darstellung der FED Bilanz kombiniert hat man leicht einen gewichtigen Grund mehr langfristig eine bullishe Meinung zum Gold zu haben....UPDATE: Das paßt wie die Faust auf Auge.....Zentralbanken können auch bankrottgehen FAZ & Sind Verbraucherkredite der nächste Krisenherd? FT Deutschland
Credit-Card Firms May Look Alluring, But Threats Loom WSJ
The quickest way to pay top dollar for something you don't need is to make an impulse buy on your credit card. Investors eyeing shares in credit-card companies as a quick way to profit from an economic recovery should also resist the temptation to buy right now.

A growing feeling that stand-alone credit-card lenders will weather the economic slowdown has started to lift shares in firms like American Express Co., Discover Financial Services and Capital One Financial Corp.

But recent credit-card data indicate that none of the big card companies -- including the large card units at banks like Bank of America Corp., Citigroup Inc. and J.P. Morgan Chase & Co. -- are in the clear. Rising defaults could weigh on earnings for longer than expected.

Since the credit crisis began, investors have expected rising charge-offs -- the term given for losses caused by defaults -- at credit-card companies. Two big negatives were identified: Job losses and, for many borrowers, a sharply reduced ability to use home-equity loans to pay off more expensive card balances.

Credit did deteriorate. Moody's Investors Service reports that, for the card lenders it tracks, the annualized charge-off rate -- which measures defaults as a percentage of loans outstanding -- rose to 6.05% in March from 4.64% a year earlier. The charge-off rate peaked at just over 7% during the 1991 and 2001 recessions, according to Moody's.

Credit-card bulls -- believing that a recession may be avoided -- think charge-offs won't go to recession highs. If so, firms like Capital One could look forward to sharply higher earnings as lower defaults would allow lenders to ease off on the expense of building their loan-loss reserves.

But two key data points indicate defaults climbing higher, not falling fast.

First, card borrowers are starting to pay back less of their outstanding balances each month. Analysts at Oppenheimer & Co. say that a sustained decline in the amount borrowers repay each month, compared with a year-earlier, can be a leading indicator that borrowers will start to fall behind on payments.

Oppenheimer calculates that, for the companies it covers, borrowers paid back 19% of their balance on average in April, down from 19.7% in the year-earlier period. American Express's borrowers paid down 23.8% of their balances in April, down from 25% a year ago, according to Oppenheimer. Conversely, Capital One borrowers paid down 18.5% of their balances last month, up from 17.6% a year earlier.

Also worrisome are data from Moody's suggesting that borrowers are finding it harder to become current on credit-card loans once they fall behind. The ratings firm notes that the amount of loans on which borrowers have skipped three or more payments has started to rise more quickly than loans that have missed one or two. Once borrowers are three payments behind, fewer of them ever catch up.

Federal Reserve data say revolving credit outstanding -- which tracks credit-card balances -- increased 6.7% in the first quarter, compared with the year-earlier period. Borrowers are taking on more debt to support spending through the slowdown.
It's a gamble for card companies to lend more to people who are turning to relatively expensive debt because they're cash strapped.

And it's a bad bet for investors to load up on the card companies taking that gamble.

Trendspotting - Credit / Daily Show

Demetri Martin dispenses tips on credit card usage - and accumulating massive debt

Ohne Humor ist der Umgang in den USA mit Kreditkarten nur schwerlich zu ertragen :-)

Maxed Out

Have a nice weekend

Allen ein schönes Wochenende

Bank Data Reveals Stretched System / Minyanville

I´m pretty sure that the endgame will hit the "experts" with surprise and will shock the markets in the future at least for one week until the Fed steps in....... ;-)

Nach meinen Erfahrungen dürfte das Ende vom Lied mal wieder alle "Experten" überraschen und die Märkte in ferner Zukunft für maximal eine Woche in einen Schockzustand versetzen bis die Fed zur Rettung eilt....... ;-)

" Well, I´d better go now. I´m almost at the wall..."

Thanks to The New Yorker

Minyan Peter / Bank Data Reveals Stretched System
On Friday, several pieces of key bank data were reported by the Federal Reserve:

First, for August, non-mortgage consumer debt rose at an annual rate of 5.9%, up from 4.7% in July. The bulk of the increase came from revolving debt, principally credit cards, which rose at 8.1% versus 7.5% in July.

To frame the revolving credit figure, here is some historical data:

Year	Annual Growth Rate
2003	2.3%
2004	3.8%
2005	3.1%
2006	6.3%
June 2007	7.1%
July 2007	7.5%
August 2007	8.1%

That credit card debt growth is accelerating at a time when retail sales growth is slowing suggests that more consumers are turning to their cards to finance their basic monthly cash flow. As I have said previously, it appears that the credit card banks have become the consumer lender of last resort. How long this can continue, particularly with the slowdown in personal income growth, (from 0.9% monthly income growth in January to 0.3% in August) remains to be seen.

Second, the weekly report on system-wide bank balance sheets showed a surprising $100 bln increase in bank assets for the week following the Fed Funds rate cut. I, and others, had expected to see a decline in bank balance sheet assets, figuring that the rate cut would have paved the way for banks to move some more liquid loans or securities off their balance sheets and into the secondary market. That this did not happen suggests that either corporate borrowers are hoarding liquidity by drawing down credit lines or the secondary markets have not fully responded to the rate decline. At the same time, system-wide net assets (a proxy for capital) showed a $15 bln decline for the week.

For the record, since May, when it peaked, net assets (again, a proxy for capital) for large U.S. banks has dropped by $55 bln - or 7% (from $740 bln to $685 bln), while over the same period, total assets for large banks has grown by $228 bln - or 4% (from $5.607 trln to $5.835 trln). Furthermore, substantially all of this growth was funded through non-deposit debt sources.

To return large bank capital ratios to their peak May levels would require either an $85 bln increase to capital or a $640 bln reduction in assets.

While the “all clear” whistle may have blown for the stock market, the growth in system-wide bank balance sheets, particularly credit card balances, coupled with a meaningful decline in large bank capital levels indicates to me that our banking system is being stretched.