Posted on 12/24/2008 8:12:57 AM PST by BGHater
U.S. consumers are falling deeper into debt, an official at one of the largest U.S. credit bureaus told Reuters on Tuesday, as the U.S. recession deepens and job losses mount.
Dann Adams, president of U.S. Information Systems for Equifax Inc, said the already high rate of personal bankruptcies could increase. "We've seen a continued ramp up of delinquencies across the board," he said.
That would pile more bad debt on banks already struggling to cope with heavy mortgage-related losses.
Consumers are missing payments on mortgages, credit cards, and auto loans, Adams said, adding that Americans may be growing more reluctant to take on new debt and more willing to save.
Economists have long warned that U.S. households were taking on unsustainable levels of debt, pushing the savings rate near zero. But although increasing savings and reducing debt can contribute to consumers' financial health, if Americans further tighten their purse strings now it could worsen the recession.
VICIOUS CIRCLE
What happens in this type of economy is that consumers and businesses get caught up in a vicious circle, where they fall behind on payments, banks clamp down on credit, and the economy deteriorates further.
Unemployment reached 6.7 percent in November, its highest since 1993. Economists think it will peak above 8 percent.
A government report on Tuesday said the U.S. economy as measured by gross domestic product contracted at a 0.5 percent annual rate in the third quarter. The U.S. Commerce Department, in its final revision, said the decline in the third quarter versus the previous three months was the steepest since the third quarter of 2001, after the September 11 attacks on the United States.
(Excerpt) Read more at reuters.com ...
If the government can do it than why oh why cand I? haha
we will end up being nothing but tax slaves.
Consumer; if you can’t afford it, don’t buy it.
And they simply won’t pay, and then blame the evil credit card company for scamming them. The government will demand a moratorium on suits against defaulting credit card debtors. Its the American Way anymore.
What’s going to start to affect the economy even more is when the instacredit dries up, or people start defaulting even more and can’t stay afloat. That’s the only thing keeping it all out of the tanker IMO.
when EZ credit goes away, how is this generation going to deal? I have some very young men in my department who buy dinners, gas and groceries on credit and are used to a life of never having to say no to themselves. I don’t know how people will hack it if they don’t have access to purchasing power to get what they want, when they want. Waiting til payday, and budgeting is a foreign concept.
Banks cannot “loan” anything but cash money. They are cheating the public by offering “credit” and then by using the amount of the credit line in their list of “assets.”
How convenient. I get a credit card with a $20,000 limit and that $20,000 shows up as an ASSET? There’s no cash behind that! The bank doesn’t have that amount of money sitting in a vault. It only has . . . thin air. And what do I have? Cash money? Nope, I never saw the $20,000 either.
So, where do banks make money? MOSTLY on all the charges related to loaning out credit . . . or “air” . . . millions and millions of dollars. Because they charge you based on . . . their contol of . . . credit. Air.
So what do you do? Get your own bail out. Check my blog (third post) and comment if interested (your comment will remain private, I monitor my comments).
Why should the banks get a Congressional Bail Out and then NOT bail out their customers who gave them the “asset” that they used as leverage to get the bail out? Doesn’t make sense when I read it the second time, either.
Maybe they saw that everyone else was getting a ‘bailout’ so they decided to give themselves one too.
Credit score here is pretty good, it is always good to get it higher I suppose.
Dave Ramsey ping!
Every article I read like this makes me thankful that I discovered DR a couple of years ago. Since I am following the babysteps, I have decided to not participate in this downturn.
If you would like to be added to the “Live like no one else, so that you can LIVE like no one else” list, feel free to Freepmail me.
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