Gaze With Me Into The Credit Crystal Ball

[flacorps]

First TARP recipient bank has failed:

 

http://www.onwallstreet.com/news/ucbh-fail...-2664520-1.html

 

Remember, they didn't give TARP money to banks they thought weren't salvageable.

[cashnocredit]

I'm thinking the future of credit cards based on credit reports alone is grim. Banks are going to start looking at the old three C's, Character, Capacity, and Collateral once again. Credit reports and FICO really only measures Character with an indirect measure of Capacity. The recent housing and CC binge was enabled by the widespread use of FICO as a substitute for all three. While it is quite a good indicator for what it measures, the holes left have become more apparent (widespread use of only FICO for securitization) and they will have to be plugged.

 

History doesn't repeat but it does rhyme. Makes the "red monster boxes" look a lot more attractive.....

Edited November 10, 2009 by cashnocredit

[LBCS]

First TARP recipient bank has failed:

 

http://www.onwallstreet.com/news/ucbh-fail...-2664520-1.html

 

Remember, they didn't give TARP money to banks they thought weren't salvageable.

 

Did you expect the gubmint to be perfect? But most of the recepients are alive and kicking so what's your point?

Edited November 10, 2009 by LBCS

[flacorps]

AMBAC's looking like it will go Chapter 11 early next year....

 

http://www.marketwatch.com/story/ambac-war...ptcy-2009-11-10

[flacorps]

Moody's is finally downgrading about $450 billion of shaky paper issued by Citi, Goldman Sachs and Morgan Stanley.

[flacorps]

The Telegraph's Ambrose Evans Pritcherd says that France's Societe General is telling its clients to prepare for a second global financial collapse:

 

http://www.telegraph.co.uk/finance/economi...l-collapse.html

[flacorps]

An update on the housing crisis in five charts:

http://www.zerohedge.com/article/next-leg-...e-simple-charts

[flacorps]

Marc Faber sees war, just as I do:

http://moneynews.com/StreetTalk/marc-faber...omo_code=9706-1

[flacorps]

Lower consumer confidence => more retail failures => more commercial real estate defaults (up to $3T) => more bank failures => more unemployment => go back to first item, and prepare for another big leg down in the recession ... nevermind PIIGS and the Gulf, they're just sideshows.

[hegemony]

Total revolving credit added since the 2007 credit crisis: 231600

Total revolving credit thefted since the 2007 credit crisis: 0

[flacorps]

A lot has been done to stave off the second major global financial crisis in the time since this thread started. All of it is about to come to naught. Europe is set to blow, and its 32 largest banks together don't add up to Apple's market capitalization. Meanwhile stateside Bank of America is going to cut 30,000 jobs. Does that sound to anyone as though the economy has a bright future? Any future?

 

This is 1932 folks, the year when the market crash of '29 really spread out and soured the economy of the rest of the country. Europe went in the crapper too at the same time. Get ready for a long, painful slog with everyone fighting each other over shrinking pie slices instead of making the pie bigger.

[foeplay]

Shut up

[somekindofhappiness]

A lot has been done to stave off the second major global financial crisis in the time since this thread started. All of it is about to come to naught. Europe is set to blow, and its 32 largest banks together don't add up to Apple's market capitalization. Meanwhile stateside Bank of America is going to cut 30,000 jobs. Does that sound to anyone as though the economy has a bright future? Any future?

 

This is 1932 folks, the year when the market crash of '29 really spread out and soured the economy of the rest of the country. Europe went in the crapper too at the same time. Get ready for a long, painful slog with everyone fighting each other over shrinking pie slices instead of making the pie bigger.

 

Not to be confrontational or anything, but you don't have a crystal ball. The future belongs to none of us, and even our greatest efforts to bend it to our collective will shall ultimately redound only to the purpose unfolded at the emerging of the Universe.

[T77125]

A lot has been done to stave off the second major global financial crisis in the time since this thread started. All of it is about to come to naught. Europe is set to blow, and its 32 largest banks together don't add up to Apple's market capitalization. Meanwhile stateside Bank of America is going to cut 30,000 jobs. Does that sound to anyone as though the economy has a bright future? Any future?

 

This is 1932 folks, the year when the market crash of '29 really spread out and soured the economy of the rest of the country. Europe went in the crapper too at the same time. Get ready for a long, painful slog with everyone fighting each other over shrinking pie slices instead of making the pie bigger.

 

I lean towards agreeing with this post.However everyone has seen this Greece thing happening years ago. I think the US markets are prepared for the EU fall out. I honestly think BOA is done, they are a mess. They can shed as many jobs as they want, it won't matter.

[kilrock]

A lot has been done to stave off the second major global financial crisis in the time since this thread started. All of it is about to come to naught. Europe is set to blow, and its 32 largest banks together don't add up to Apple's market capitalization. Meanwhile stateside Bank of America is going to cut 30,000 jobs. Does that sound to anyone as though the economy has a bright future? Any future?

 

This is 1932 folks, the year when the market crash of '29 really spread out and soured the economy of the rest of the country. Europe went in the crapper too at the same time. Get ready for a long, painful slog with everyone fighting each other over shrinking pie slices instead of making the pie bigger.

 

Stay off my lawn!!!

[BDK]

Shut up

 

What would happen if you lived under a rock? Obviously you wouldn't know what's going on in the world. And you certainly wouldn't know that switching to ***** could save you 15% or more on car insurance.

 

http://www.youtube.com/watch?v=rCFMDLakxaY&feature=player_detailpage

 

[VK]

Buckle up folks. Rates and fees are going higher, and limits are going lower, and your credit card issuers may change (usually for the worse).

 

This month (March 2008) is the peak month for subprime mortgage resets. From here on out, the number of resets goes down. However, there is another (much smaller) wave of resets that will occur in 2009 that has to do with the pay-option ARMs, which are nominally prime.

 

These subprime resets will put unprecedented strains on borrowers, as we have already seen. Some simply walk away from the homes they purchased. Others shoulder the load and stagger forward as best they can. Still others call their lenders and wander almost endlessly through voicemaze hell trying to find the department that can help them with a workout. The head of the Fed, Ben Bernanke essentially TOLD mortgage lenders just today that they should write down loans for mortgage borrowers.

 

Those that walk away will try to keep their credit cards current. Those that shoulder the load may not be able to. Those who reach some sort of workout plan remain a question mark. The first two should worry all of us who hold credit cards.

 

The last couple of years have been incredibly loose in terms of credit card lending. Buoyed by their analyses that bankruptcies would go down and the quality of BK paper would go up, along with the wealth effect from the housing bubble, lenders have handed out credit cards like cotton candy at the state fair, and with sizeable credit lines to boot. And when the lender faced trouble in other areas, increasing those lines was a way to book additional performing loans to offset the problems.

 

A crisis in liquidity will force those lenders to pull back credit lines and increase interest rates and fees well beyond what is already becoming uncomforable for say, Amex and Juniper cardholders. Lenders can only lend a set ratio of the value of their assets ... when the asset base shrinks, they must call loans due and payable or face takeover by regulators and liquidation. The FDIC is already rehiring retirees in anticipation of 100+ bank failures.

 

For the past few months, so-called "sovereign funds" from foreign nations have been assisting some of the largest banks around the world (including Citigroup) with liquidity ... on easy terms, and with no demand to participate in management at the institutions receiving money. The Fed has revamped its credit facilities so that banks no longer come hat in hand to the discount window and get branded with a scarlet letter for doing so. But even as that happens, the crisis spreads like an ink stain ... now municipalities are having trouble floating bonds at 20% that a few months ago they could easily float at 4% because the businesses that insure the bonds are seen as shaky.

 

In short, while Ben Bernanke says to write down the loans, the banks don't really have a lot of wiggle room to do that. And when those loans go bad and take the banks with them, the folks with the credit cards are going to take it on the chin too. Back to those subprime mortgage folks' credit cards ... they're all getting ratejacked because their credit histories will be damaged, or they're getting canceled. They won't be able to pay back the debt. Some banks will fail.

 

Healthier banks will assume the performing portfolios of the failed banks, and will treat all their cardholders like second class citizens (higher rates and fees and lower limits will be the order of the day). The failed portfolios ... will go to the FDIC's "JDC"program--an outgrowth of the RTC program that was moved over to FDIC when it proved successful at the RTC back in the late '80s and early '90s.

 

What does "JDC" stand for? Well, I haven't found the source of the acronym, but "Junk Debt Collection" sounds about right. How does it work? The FDIC holds a "beauty contest" among applicants (these will be all the usual suspects like LVNV, Asset, Cavalry, etc.) to see who it thinks can collect the most. Then it sells them the debt for $.01 (one cent on the dollar), with the proviso that the FDIC gets 50% of whatever the JDB collects (the JDB must bear the costs). This is well below what junk debt usually sells for ... but the 50% kickback is unusual.

 

It's going to take perhaps a year for all of this to come completely a cropper. The borrowers take time to fail, the banks they borrowed from take time to fail, and the government takes time to step in and take those banks over, and the sales of the bad portfolios to the JDBs takes time, and the JDBs take time to analyze and get to work on those porfolios.

 

I just wanted everyone who might be missing a few puzzle pieces of the future to have them all in one post.

 

nice post for March 2008!

[cashnocredit]

It's called pretend and extend. Not that I have any better ideas.

[PunisherSD]

A lot has been done to stave off the second major global financial crisis in the time since this thread started. All of it is about to come to naught. Europe is set to blow, and its 32 largest banks together don't add up to Apple's market capitalization. Meanwhile stateside Bank of America is going to cut 30,000 jobs. Does that sound to anyone as though the economy has a bright future? Any future?

 

This is 1932 folks, the year when the market crash of '29 really spread out and soured the economy of the rest of the country. Europe went in the crapper too at the same time. Get ready for a long, painful slog with everyone fighting each other over shrinking pie slices instead of making the pie bigger.

 

Not to be confrontational or anything, but you don't have a crystal ball. The future belongs to none of us, and even our greatest efforts to bend it to our collective will shall ultimately redound only to the purpose unfolded at the emerging of the Universe.

 

The trends are easy enough to see. It's all happened before, and it will happen again. It's a constant cycle of boom and bust. Lessons learned generations ago are forgotten and then learned again. The current crisis breeds new regulation, but with time we forget the pain of economic turbulence so we change our view and those same regulations go from being useful protections to burdensome roadblocks against progress.

 

We experience pain, we learn a lesson, then with time we forget....and it begins again all over.

[PunisherSD]

A lot has been done to stave off the second major global financial crisis in the time since this thread started. All of it is about to come to naught. Europe is set to blow, and its 32 largest banks together don't add up to Apple's market capitalization. Meanwhile stateside Bank of America is going to cut 30,000 jobs. Does that sound to anyone as though the economy has a bright future? Any future?

 

This is 1932 folks, the year when the market crash of '29 really spread out and soured the economy of the rest of the country. Europe went in the crapper too at the same time. Get ready for a long, painful slog with everyone fighting each other over shrinking pie slices instead of making the pie bigger.

 

Not to be confrontational or anything, but you don't have a crystal ball. The future belongs to none of us, and even our greatest efforts to bend it to our collective will shall ultimately redound only to the purpose unfolded at the emerging of the Universe.

 

The trends are easy enough to see. It's all happened before, and it will happen again. It's a constant cycle of boom and bust. Lessons learned generations ago are forgotten and then learned again. The current crisis breeds new regulation, but with time we forget the pain of economic turbulence so we change our view and those same regulations go from being useful protections to burdensome roadblocks against progress.

 

We experience pain, we learn a lesson, then with time we forget....and it begins again all over.

[hegemony]

Total revolving credit added since the 2007 credit crisis: 231600 310500

Total revolving credit thefted since the 2007 credit crisis: 0

[flacorps]

The trends are easy enough to see. It's all happened before, and it will happen again. It's a constant cycle of boom and bust. Lessons learned generations ago are forgotten and then learned again. The current crisis breeds new regulation, but with time we forget the pain of economic turbulence so we change our view and those same regulations go from being useful protections to burdensome roadblocks against progress.

 

We experience pain, we learn a lesson, then with time we forget....and it begins again all over.

 

Good to see a Battlestar Galactica fan posting. We need to put Glass-Steagall in as a Constitutional amendment this time. Let 'em try to repeal that!

[hegemony]

Total revolving credit added since the 2007 credit crisis: 231600 310500421100

Total revolving credit thefted since the 2007 credit crisis: 0

[cashnocredit]

Total revolving credit added since the 2007 credit crisis: 231600 310500421100

Total revolving credit thefted since the 2007 credit crisis: 0

 

Mr. Anomolous.

 

But things have stabilized. Or at least it's the new normal. It's an illusion of mass participation.

 

 

As the graph I posted on another thread shows, Amex's "pay later" portfolio first year defaults is WAY down from any like period in over 10 years. Yet, AFAIK, they just take stated income and don't check anything that isn't on a CR. In my case I'm retired and my credit reports don't show current or past employer. At least they did ask about my liquid assets (rough range) and income and all the other CC issuers I have just asked income. OTOH, since it's stated but not verified assets and stated income so I was half expecting to be FRed by now to get it over with but no joy.

Edited June 3, 2012 by cashnocredit

[snowpuppy]

Things have stabilized? OMG.

 

Robert Shiller (of the Case Schiller index) stated this week he expects housing prices to tank an additional 20% in the next year.

 

It's not only a Grexit they're banking on, now Spain and even the Swiss are going to unravel from the Euro. There won't be any Greek bailout nor Eurobonds nor anyone else to write them a check. They have already defaulted. The Greeks and Spain are already engaged in a 'soft bank run'. There are rumors that the banks are only letting customers withdraw $50 Euros at a time, or about $75 USD.

 

The Chinese economy is tanking because the US and European households have no more discretionary dollars remaining to spend on cheap crap imported into their countries. People are harping about China lowering it's lending rates. The average middle class Chinese household SAVES 35-45% of their income.

 

Mohammed ElErian of Pimco, probably the most respected CEO of any investment house said in an interview recently that it's not IF one of the major banks here fails, but when. It's no coincidence that JPMChase was boasting about using $100B+ in liquid assets yesterday on CNBC. To cover ONLY $2B in losses?

 

We have a triple witching hour of sorts coming the end of this year. Read about the Fiscal Cliff 2012. In the meantime, I see stuff at work that truly has me concerned.

 

I'm busy being a Prepper