Wednesday, July 15, 2009

Credit card green shoots

Shares of American Express and Capital One, both major credit card providers, today rose 11 and 12%, respectively, after they reported reductions in credit card delinquency rates.

NEW YORK (AP) — Two major credit card providers reported more improvements in delinquency rates in June on Wednesday, an encouraging sign that borrowers are not in as bad shape as many had feared.

American Express Co. said in a regulatory filing that accounts at least 30 days past due shrunk to 4.4 percent of total loans during the month ended June 30, after falling to 4.7 percent in May and 4.9 percent in April.

Capital One Financial Corp., a major credit card issuer based in McLean, Va., said its delinquency rate among U.S. cards improved for a fourth straight month, falling to 4.77 percent from 4.9 percent in May.

This is consistent with the improvements I have been seeing for the past several months.

10 comments:

alstry said...

Scott,

Federal, State, and Local Government collectively employ over 20,000,000 people. Defense Contractors, Health Care Companies, Hospitals, WalMart, Grocery Chains, Drug Companies, Drug Stores, and and many other "private sector" companies receive a substantial amount of their revenues from direct government payments and indirect payments such as medicare, medicaid, welfare, food stamps, unemployment etc......

Collectively these payments make up about 25% of GDP just from Federal Payments and closer to 50% once you add in State and Local payments. In turn, citizens use the income derived from government payments to take out credit cards to buy goods and services further stimulating our economy.

Since our private economy is evaporating, evidenced by over 20% revenue drops from Dell, Intel, CSX, Imports, Exports, American Airlines etc.......Government payments are becoming a much more important influence in maintaining credit card compliance.

As a result, you should thank President Obama for continuing to spend money he doesn't have so our citizens can remain compliant on their credit cards.

Government had its greatest expansion in history under President Bush....so I guess we should thank him too.

The only issue now is how are we going to continue to finance government now that servicing debt is consuming a greater and greater percentage of a shrinking GDP.

You may find this chart interesting:

http://market-ticker.denninger.net/uploads/debtt0gdp1q09_7981_image001.gif

Notice how much debt as a percentage of GDP expanded under President Bush.

alstry said...

A Little Weed Killer on the Green Shoots?

WASHINGTON (AP) -- The Obama administration drew a line in the sand on financial bailouts Wednesday by denying emergency aid to CIT Group Inc., a struggling commercial lender on the brink of bankruptcy.

Let's think this through. CIT provides critical financing to about 300,000 retailers and 1 million small businesses in total.

Guessing an average employee count of 10 per business, that could be about 10 million credit card holders that might have trouble making payments.

You see Scott, I created Alstrynomics because traditional economics was not prepared for dealing with a world wide credit contraction and systematic insolvency. It has never happened before on such a large scale.

Most of the economic data you rely on is old news.....understanding the subtle implications of current events on future economic consequences is what separates Alstrynomics.

Once it is reduced to a chart, it is generally too late to apply it for profitable purposes. It is why Alstrynomics is often early in its projections....it takes a while for the charts and market to catch up.

alstry said...

WHOOPS!!!!!!!!!!!!!!!

A committee of University of California regents approved a plan today that will force most of UC's 180,000 employees to take unpaid leave and pay cuts as part of a plan to address cuts in state funding.

I estimate that at least 10,000,000 to 15,000,000 Government, College, and University workers will be forced to suffer material wage cuts in the near future.....what do you think that will do credit card delinquencies going forward?

You see Scott....all of this has been very predictable. And if we continue proceeding forward with the Zombulation policies initiated under the Bush administration....this recession you say is over will really be the beginning of The Greatest Depression in history.

For what it's worth....it was likely an inevitable fact the day Obama took office due to the unsustainable debt and entitlement burden created during the Bush era.

Chad said...

A Little Weed Killer on Alstrynomics?

From the AP: Denial of CIT bailout unlikely to rattle markets

From Reuters: US stock and bond futures little changed after CIT statement

alstry said...

Chad,

Please.....comparing Alstrynomics' accurate analytical approach to the AP?

At least Scott has serious credibility.

"If I were at the Fed or Treasury, I would think about: Will we spook the markets if we let this one go?" said Bill Isaac, former chairman of the FDIC. "It's not a time for philosophy. It's a time to be practical."

Brian said...

Scott -

Alstry is simply posting his own blog posts within your blog.

He's a blogging parasite.

Is there any way you can block his posts? I think I am speaking for most of your readers when I say that I'd be highly in favor.

alstry said...

I will cut waaaaay back, and sorry Scott if I offended you.

You clearly are a cut above, and I thought you would be an intellectual challenge and fun to debate the opposite sides of the same coin.

I have very little doubt that you will soon learn your perspective is way off.

If I have served to make you think, than I achieved my goal.

Public Library said...

"July 16 (Bloomberg) -- Federal Deposit Insurance Corp. Chairman Sheila Bair told lawmakers that 500more banks are at risk of failure “unless something dramatic” happens"

Our financial system is as helthy as ever. The CIT example is a great case of despite which accounting rules you want to apply, hope will not make your bank losses go away.

I reckon 500 is probably an understatement.

Scott, you are still combatting the doomsday scenario which no longer exists. This is going to be a long slog down to the bottom.

And since when did a 10% move in a stock mean anything? Wowzers.

rg32 said...

There is no debate going on. It is simply an invasion.

Thank you Brian for making the point so much better than I did a few days ago.

Scott Grannis said...

I can delete comments, but I don't think I can block a commenter permanently. Before deciding to delete his comments, I would respectfully ask alstry to not re-post things here that he posts on other sites, and to focus instead on debating what I have and others have posted regarding the theme of the post. I would be happy to debate in a reasoned fashion, but I like others am getting very tired of alstry's rants.