Wednesday April 7, 2009 810 CST
Mortgage and credit card delinquencies
are getting worse not better. While the news invariably lags the markets, eventually the news does need to improve to support the idea of buying stocks. This article suggests that despite all the intervention, aimed at the banks not the borrowers, this is not working.
Professor Elam Observation – Has anyone in the administration, Bush or Obama, yet admitted that loaning money without requiring down payments on houses was a bad idea? No they have not which is why they are still trying to 'fix' the problem. The problem will only be fixed by letting prices go to market rates.
All the money and banking classes need to be re-written, one line in this reports makes that clear.
Banks closed 8 million credit card accounts in February, reducing the number of open cards to 400 million from a July 2008 peak of 483 million, according to Equifax data.
It is clear that the FED does not create or expand the money supply by itself, banks can do this anytime by simply creating money by issuing credit cards. Banks are now shrinking this expansion by eliminating cards. Meanwhile the FED is wildly expanding money supply by buying government bonds. Clearly the two are working at cross purposes.
We are witness to a bear market rally. The failure of intervention will be clear by late summer or fall. This morning the North American President of Toyota estimated auto sales would not be back to 15 M annual for five more years.
Professor Elam 
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