Mark Anthony

Painful Unemployment Report

On Nov 06 11:36 AM Karl Denninger wrote:
> It is not a lagging indicator for loan defaults - and never has been.
>
> For consumers to consume they must have income. Can't get around
> this - defaults and thus economic slowdown take a few months to start
> to ripple through the economy once employment starts to slack, but
> when it turns up the removal of the downward pressure on loan (credit)
> performance correlates almost exactly with the resumption of positive
> economic activity.
>
> We have NOT turned the corner.

Absolutely FALSE. A consumer is a consumer and is called a consumer because he/she consumes something. You don't need to have income to consume. All the billionaires who have net loss, versus net income in the past years, have they stopped consuming because they have no income?

A consumer only needs to be breathing, to be a consumer. That includes every one from new born babies to people who have retired, and people who are on unemployment benefits. Only when a consumer stops breathing, will he/she stop being a consumer.

The dramatic drop in consumer credit, is actually a good thing. Don't kid yourself, Karl, you think all the people who lost their jobs, and that credit card companies bump up interest to 30%, those people without job and without income are desperately depleting their non-existant savings to pay down their debts, and mean while these people are not eating anything or consuming anything?

No, these people simply stopped paying the credit card company, forcing banks to write down losses. Any dollar that a consumer does not spend paying the banksters, is a dollar the consumer can spend buying things he/she and family needs.

So in a sense that is good. Instead of bailing out banks, the people are bailing themselves out using their own methods.