saw interview on Forbes.com with Meredith Whitney--the analyst who is getting lots of kudos for being ahead of the curve in called the crack in the financial wall last fall (and maybe earlier)...
Meredith Whitney's Consumer Meltdown - Forbes.com
she is pretty negative about the next round of credit crunch on consumer side and the govt plan to deal with toxic assets--says that the credit bill that congress has pending and will probably pass/send to the president is trying to protect consumers from malicious lending practices...one of which is that if you get a teaser rate and then it goes up your payments go to the purchase balance on lower rate interest and your higher rate purchases keep accruing on your balance--now your payment will go to the higher rate first and help you pay down your balance much quicker
but the bill will probably actually act to contract access to credit lines for both good and bad credit risks--because it will prevent credit companies from looking at your credit history with other creditors/companies and acting on it--like if you were making late payments on the cable bill or your utility bills--they might increase your interest or cut back on your limit--now they can only change your rate/top if you are late with them--
so what they WILL do to protect their own balance sheet will just be to cancel the card, cut off possible loss in the future...
she thinks they will be much more likely to cut off cards than let people book the max on their credit line and THEN become delinquent with the card companies...if they start cutting off cards and reducing access to credit--then she sees that as not be good for creating forward momentum for growth...
and she is still so negative about the big banks and how the govt is dealing with getting rid of the bad loans on their books...she says that housing could go down another 20-30% when the reality of no one wanting to buy back for what the banks want to sell since there are so many bad loans out there
an additional 20-30% drop means that even markets like my area which has really not seen a significant overall value reduction have to start taking part of the hits...
it is just very difficult to know what analysis is correct--I think some people are looking at the short term/immediate situation and seeing signs of improvement and not asking what about the stuff that is not so easy to see...those loans are still out there for the most part...and the banks are not being honest about how bad they are or how many they are...
think people are just a little too optimistic---
you know Americans === it is really hard for us to stay interested in anything for more than 3-4 months at a time...immediate impact is usually pretty severe/high level of interest (9-11, Katrina, tsunami) but as time goes on it takes something very significant to make it a full news story for 30 days even...9-11 was a significant story for months but it was a severe tragedy...
Lacy Pedersen case was in public eye for quite a while and OJ was on for way too long...
I think some people that are maybe not directly affected by losing a job or having house in foreclosure and just getting kind of tired about all the gnashing of teeth---there are some businesses and areas of the country that are not hurting that bad and people are still making money...
in some ways it is a very lop-sided type of problem but the ripple effect will effect everyone for generations...
and this is off the topic--sorry
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