Tuesday, July 07, 2009
The news from the trenches continues to get worse:
Soaring unemployment has pushed credit card and home-equity delinquencies to record levels as US consumers struggle with the loss of income, household wealth and sputtering investments, the American Bankers Association said on Tuesday.
Delinquencies on all consumer loans rose to 3.23 per cent of all accounts in the first three months of the year, bringing them to the highest level since 1974. ABA defines a delinquency as an account that is more than 30 days past due.
“The number one driver of delinquencies is job loss,” James Chessen, ABA’s chief economist said. “When people lose their jobs, they can’t pay their bills.
Such consumers are leaning more heavily on their credit cards and the equity in their homes. In the first quarter bank card delinquencies have jumped to 4.75 per cent of all accounts from 4.52 per cent in the previous quarter.
Delays are also leading to swollen balances. On delinquent credit card accounts, overdue balances now account for a record 6.6 per cent of all outstanding bank card debt, leading credit card companies to try to recoup losses by raising interest rates and minimum payments.
The hunkering down continueth. People with money are paying down debt and saving it for a rainy day, and people without are going further into hoc. Even in the aftermath there are going to be haves and have-nots, and that will affect our national politics.
I think the unemployment rate dictates everything of consequence in our country, since expectations of prosperity are so very critical to us. If our countrymen feel their jobs are in danger, or worse, they are already unemployed and desperate, then our economy will decline and the negative feedback loop will start to affect our other institutions. Politics is not excepted certainly, and this President (and his useful idiot fellow travelers in the Democrat party), a man who has followed his own lodestar with callous disregard for the effect his government worker centric policies have had on Americans generally will be made to pay the price.
Here's one article predicting a 2010 unemployment rate of 14%, a rate I agree we will see unless the government changes policy course. The Obama presidency will go down in history as one long national nightmare.
The question is whether a 14% unemployment rate really concerns the democratic establishment?
During the last great recession I will remind everyone that FDR managed to get himself re-elected 4 times. Perhaps keeing us in the hole and screwing business to the wall is part of a grand democratic strategy.
The unemployment rate may not concern the Democrat leadership in and of itself, but it'll concern all voters. That will concern the establishment.
Democrats are floating the idea of yet another stimulus, our third one. Bush and Pelosi spent $168 billion and Obama, Pelosi and Reid kicked in another $787 billion. Biden was sent up on a trial balloon for a third stimulus over the weekend, and the voters are saying, "no!" to the new, new, new deal.