Saturday, October 06, 2007

Loading Up On Debt

And this would be good how?

WASHINGTON — Consumers have boosted their borrowing at the fastest pace in three months, turning increasingly to their credit cards to replace home equity loans as a source of ready cash.

The Federal Reserve reported that consumer credit rose at an annual rate of 5.9% in August, the biggest increase since a 7.9% jump in May.

The increase was led by an 8.1% leap in revolving credit, the category that includes credit card loans. Consumers have been using their credit cards more to finance purchases now that home equity lines of credit are becoming harder to obtain.

Non-revolving credit, which includes auto loans, also rose at a faster pace in August, increasing at an annual rate of 4.7%, compared with gains of 3.1% in July, and 4% in June.

In total, consumer credit rose by $12.2 billion to a record $2.469 trillion. The increase was bigger than the $9.5 billion gain analysts had been expecting.

So now consumers have gone from borrowing money on the inflated values of their homes to loading up on credit card debt - all so that they continue to live over their means.

Sure, this spending with borrowed money makes Wall Street happy and we know it makes Preznut Bush happy too (after all, he said shopping is a "patriotic duty"), but it cannot be sustained forever.

I think we need to start a Jeremiah circle. I starting to get weary of seeing the writing on the wall (Nebuchadnezzar, but a mixed metaphor is the least of it).
I'm watching people here, locally and nationally, buying some present comfort in the hope of some future miracle.
Of course we have been talking about this and similar issues for some time. It's like watching a train out of control, but not having anyway of averting the impending disaster.
Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?