Your Money's No Good Here: Americans To Lose $2 Trillion In Credit
The U.S. credit-card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.
The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.
"In other words, we expect available consumer liquidity in the form of credit-card lines to decline by 45 percent."
Bank of America Corp (BAC.N), Citigroup Inc (C.N) and JPMorgan Chase & Co (JPM.N) represent over half of the estimated U.S. card outstandings as of September 30, and each company has discussed reducing card exposure or slowing growth, Whitney said.
Closing millions of accounts, cutting credit lines and raising interest rates are just some of the moves credit card issuers are using to try to inoculate themselves from a tsunami of expected consumer defaults.
A consolidated U.S. lending market that is pulling back on credit is also posing a risk to the overall consumer liquidity, Whitney said.
Mortgages and credit cards are now dominated by five players who are all pulling back liquidity, making reductions in consumer liquidity seem unavoidable, she said.
Lordy, lordy, lordy - whatever will the little mice do without their plastic tickets to shop? Stop living beyond their means for a change? God forbid they actually begin putting a little something aside and- GASP!!- pay in cash from time to time. For all you credit junkies who have forgotten what that entails, let me clue you in:
First, you open your wallet or billfold and extract all the cash you find therein. If the amount marked on the price tag of the desired item exceeds the amount of cash you're holding in your hand, then it means that you will be UNABLE (I know - bummer!!) to purchase that particular item until your cash reserves equal or exceed the value on the price tag. Thank you for your time. But remember, you might want to save a little for that mortgage payment. Bwaahaaahaaaa!!! Sorry, just kidding.
The US economy is utterly dependent upon criminal cartels dealing in credit--both expensive and cheap. The cheap credit was ostensibly allocated for the purchase of homes a la Greedspan while the expensive Citigroup/Bank of America lines of credit are intended to enrich the purveyors of cheap, low-quality imports while rendering the shallow, materialistic consumer of such articles destitute and beholden. Read this Paulson quote and tell me what's wrong with it:
Compounding the problem, he said, was that "credit card rates are climbing, making it more expensive for families to finance everyday purchases. This lack of affordable consumer credit undermines consumer spending (and) as a result weakens our economy."
Why the fuck are millions of families financing their "everday purchases" with a Mastercard? Have we really reached the point where we can no longer cope without a 2" x 3" piece of plastic emblazoned with a football helmet or puppy dog? Furthermore, I would hazard a guess that Americans were (generally) not buying toothpaste and apples with their credit cards but rather iPhones and Kate Spade bags.
As for the bigger purchases like durable goods and electronics . . . Well, it's most unfortunate that Home Depot, Best Buy and Apple won't be meeting their 4th quarter profit estimates, but until America's degenerate hordes of shopaholics grow up and find something more substantial, that is, something that gives their lives meaning other than toting around shopping bags chock full of Chinese crap, then cutting their credit cards in half is the best thing for them really. The party is truly over, fun boys and party girls. I do find it amusingly ironic that the American consumer is seeing his credit limit being cut just as Moody's prepares to cut the US's own credit rating from AAA to OMFGYKR (Oh my fucking god, you're kidding, right?).
