AMERICAN CREDIT CARD DEBTS - ANOTHER CRISIS IN MAKING
Very good reminder Amit. Take a look at a cautionary note sent out in a well-respected newsletter y’day about the credit card debt issue here in the US
Yesterday afternoon consumer credit numbers were released. Consumer credit outstanding expanded by a slightly lower than expected $7.5 billion in July, from a downwardly revised $11.9 billion in June. June was originally $13.2 billion. Is this good, bad or indifferent?
- First, we look at the main driver of the expansion: revolving credit, or credit cards. - Revolving credit rose by $5 billion, double the growth in non-revolving credit, and is running at 6.6% year-over-year pace. - What’s the big deal: - Well, consider that, according to Mintel International Group, direct mail credit card offers to *subprime* customers in the United States jumped 41% in the first half of this year, compared with the first half of 2006. - Meanwhile, direct mail offers targeted at customers with the best credit *fell* more than 13%. - Incredibly, this was occurring *even as* subprime mortgage defaults were skyrocketing. - But that’s not all, even as the pace of subprime mortgage defaults has continued to expand, thus removing an important level of credit access (the home) from available options, credit card outstanding balances have grown at an 8% rate in just the past three months. - In other words, it is likely that consumers are turning to credit cards to fund consumption and access credit.
So if we rread between the lines what we see is this the credit card companies just like the sub-prime lenders have started to look into the sub-prime market for further expansion because the market for credit cards (for people with good credit) has become so saturated. Anybody who has lived in the US knows how it used to be so difficult to get credit in the first couple of three years because of lack of credit history and score. Apparently its not the case anymore. And read the last two lines…its very apparent that the sub-prime woes is very stealthily spreading to the broader market thru the credit card companies. I am a seller of all financial companies here in the US. The rate cut will give them a little boost but I think a wide-ranging credit crunch is coming. The fall-out of that will be IMHO, the FIIs start withdrawing money from the Indian bourses. So short to medium term I am bearish of the Indian and US stock markets
Debashish
On 9/12/07, Pratik wrote: > > > It may affect the credit card companies & their performance if they > are listed > > Regards > > Pratik > > On Sep 12, 12:21 pm, AMITOR LOGISTICS wrote: > > Note: forwarded message attached. > > > > ——————————— > > Shape Yahoo! in your own image. Join our Network Research Panel today! > > > > > > > > [ Attached Message ]From:AMITOR LOGISTICS > To:investmentsupergrowth@googlegroups.comDate:Tue, 11 Sep 2007 22:57:48 > -0700 (PDT)Local:Wed, Sep 12 2007 10:57 amSubject:AMERICAN CREDIT CARD DEBTS > - ANOTHER CRISIS IN MAKING > > > > dear members, > > > > have got info from my friend in usa that america is facing another > threat from credit card debts (outstandings) which could turn out in > billions of dollars, > > > > will it be another crisis in making, will it lead to heavy sell offs in > emerging markets, i dont think so, > > > > members please share some info > > > > regards > > amit anam > > > > ——————————— > > Need a vacation? Get great deals to amazing places on Yahoo! Travel. > > > > >
