More People with Bad Credit

I am concerned that there is no consumer spending to bring us out of the recession. This is primarily because there are no good manufacturing jobs which has resulted in people trying to borrow to make up the difference between their lifestyle and their income. This article shows the result.

I just read an article which stated that consumers BEHIND in their credit cards payments hit an 8 year low last month.

This is how it works…People OVER EAT at the credit buffet, and then spend time paying for it.

BUT…It’s becoming clear that people are cleaning up their own balance sheets…THAT will drive the future econmy

Yes, there are more people with bad credit. Yes, the number of people BEHIND on their credit cards is lower. How can both of these be true - BECAUSE THE REASON FEWER PEOPLE ARE BEHIND ON THEIR CREDIT CARDS IS THAT THE BANKS WROTE OFF THE BAD DEBT!!! I will try to find the article that explains it. Also, I wholeheartedly agree with Bluemoon that the socialists have forced the good manufacturing jobs overseas. Now, our favorite socialist president is forcing the drilling rigs out of the Gulf of Mexico, along with the tens of thousands of good jobs they represent.

It’s only going to get worse.


I couldn’t agree more!!!

But that’s what happens to people who sit on the sidelines during the biggest blow out sale in real estate history!!! Their LIVES get worse as they sit and WATCH OPPORTUNITY pass them, becoming more and more BITTER as they realize their MISCALCULATION!!!

                  What you say is true and makes complete sense only if debt was never monetized. Unfortunately, it has been.

Try explaining the monetizing of debt to the average American consumer and let me know how you make out…

This economy runs on SENTIMENT, how the Average Americans feels about THEIR PERSONAL balance sheet…The MECHANICS of how debt is created, purchased, sold, and financed might as well be LATIN to most people.

When the American consumer feels as though THEIR balance sheet is HEALTHY…They will do EXACTLY what they ALWAYS do right after a recession…

GO OUT AND BUY A NEW CAR and load up on 5 more years of DEBT!!!

That’s why they call them DEBT SLAVES!!!

And THAT is never gonna change…WATCH!

Jfpen is exactly right. It doesn’t matter whether the people understand the monetization of their debt - what matters is that the government has done it and all levels of government have a HUGE debt that can not be sustained or repaid. Worse yet, we have over 150 TRILLION in unfunded liabilities that can NEVER be paid. The bottom line is that the country is broke and will collapse.

As for people buying new cars because their debt is gone - WRONG! Their credit has been destroyed and credit is very tight. They aren’t going to be buying anything. Add to that the fact that good jobs are being destroyed and taxes are about to EXPLODE - and at least a few of us can figure out what that means. Here’s a hint - it isn’t the mother of all booms!!!

And AGAIN…Just like the NUCLEAR OPTION for the GULF OIL LEAK he’s predicting…

Just because MIKE says it will happen…Doesn’t mean it DOES!!!

If FACT…Mike is becoming a rather ACCURATE CONTRARIAN INDICATOR!!!

DOING the EXACT OPPOSITE of what he DOES has proven VERY PROFITABLE for me!!!

Like me BUYING REAL ESTATE when he says he ISN’T!!

Keep up the great work Mike…PLEA$E!!

I hear you loud and clear and agree with you for the most part. Consumer confidence does promote spending and the will to create debt. Consumers paying off credit cards will contribute to that sentiment. I have no doubt that consumers with confidence will want to borrow. The question is will the consumer be allowed to borrow like they did in the past?
Correct me if I’m mistaken, but here is how I understand debt’s role in the economy.
When a credit card is paid off, a debit balance on the consumer side is erased and likewise an asset is taken off of the books at the bank. Because that debt was an asset of the bank held in “reserve”, its reduction reduces the “reserves” and therefore the banks ability to borrow from the FED based on whatever the “fractional reserve” policy is at the time. This effects the amount of money the bank has to lend.

For example: If the fractional reserve policy of is 9:1, paying off that $10,000 credit card prevents the lending of an additional $90,000.

Yes, the FED can change reserve requirements and the discount rate and do “open market transactions” to promote borrowing. But isn’t that how we got in this mess to begin with?

My point is that merely paying down ones credit cards will not stimulate the economy. The banks need assets on the books. And, to a bank assets are either debt or savings deposits. The reduction in debt will lead to a reduction in credit unless there is a corresponding increase in savings or another debt.

Anyway, I’m going to start looking for another house while the sale is still on!!!


There you did it Jfpen - confusing the issue by bringing up facts. Shame, shame. Furthermore, the dirty little fact is that the big reason that credit card debt declined is that it was written off as bad debt.

As at matter of FACT…JP is partially right…Paying down ones credit cards will NOT stimulate the economy…That comes LATER when the memory of that DEBT begins to FADE…

Americans…If nothing else, have shown us TIME and TIME again that they have INCREDIBLY SHORT MEMORIES. This time will be NO DIFFERENT.

Will they be ALLOWED to borrow like before???

Let’s all hope NOT!!

But returning to a more stable use of credit from the next to NOTHING currently being used WILL stimulate the economy…Once it starts, it FEEDS on itself.

The only thing different about THIS TIME???

It occured to a GENERATION that has GROWN UP on DEBT…These people have been TRAINED (incorrectly) that in order to have a good life they MUST saddle themselves with MASSIVE COLLEGE LOAN debt before they ever earn a PENNY.

Do you REALLY think MIKE has this one nailed???


That’s what he said…NOT BUYING ANYTHING!!! Good luck if you based YOUR investment decisions on THAT scenario playing out.

The very same people BREAST FED DEBT from BIRTH are suddenly going to STOP USING IT???