Beautiful! Bank Lending Falls in January 2010
Investors can’t afford not to keep a watchful eye on lending levels which have a direct impact on inflation with how much in reserves has been added to the banking system. Luckily for us, and the economy, consumers still aren’t willing to take on negative-carry debt to fund consumption spending. Can we get a big hell yeah?
Lending Survey
The Treasury department found that bank lending at 9 bailed out banks dipped in January to a level 35% below December borrowing. The Treasury’s explanation is that it is due to huge increases in 4Q 2009, but I’m thinking it has to do with borrowers feeling worried after Holiday spending. Holiday spending showed no gains, but virtually no loss, despite more than 10% unemployed. My guess is that after checking their year-end bank statements, consumers flat out feel broke.
Homes and Cars
The slowdown might also be due to a slump in real estate transactions and car sales, especially with recent problems in Toyota’s supply chain. With the American public afraid to take on debt, buy a home that may plummet in value, or a car that may send them going 100mph down the freeway, it should be of little question why lending is so scarce.
Interest Rates, maybe?
My third and final theory is that consumers were refinancing in the late 2009 months fearing that higher rates were ahead. Those looking to make big ticket purchases and refinance did so in 2009 and are easing off the credit as the Federal Reserve is considering an increase in interest rates. Never has the consuming public been so concerned about rates, and I can’t say that’s a bad thing.
I hear you. I think the American public is waking up a little, but fear that with the TARP money running out part of it may be due to the banks not being incentivized to act. They are probably waiting on more handouts. Hopefully the taxpayers and our government will realize rewarding the cause of the situation is not the answer.
HELL YEAH!
America must be waking up, otherwise things wouldn’t be as “good” as they are now. I totally expected things to be worse then they are now. Thankfully, the banks are pulling back on the lending, and inflation is staying in check, at least for now.