Household Credit Market Debt Declined by $59 Billion in Q2 (St. Louis Fed)

The latest data from the St. Louis Fed shows that total household credit market debt outstanding has declined from $13,756 billion in Q1 09 to $13,697 billion in Q2, a decline of $59 billion.

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Industry Data Shows: Massive Contraction Has Continued Throughout Q2 2009

Manufacturing capacity utilization in Q2 2009 has dropped to its lowest level ever since beginning of records, 65.2 percent:

Production of nondurable consumer goods has continued its decline in Q2:

Industrial production of nondurable manufacturing has also continued to decline in Q2:

Same for industrial production of electric and gas utilities:

industrial production of electric and gas utilities

On a related note, please consider the accompanying and ongoing credit contraction:

Click on image to enlarge.

As I explained in that article, if we assume the same rate of decline for all the remaining credit classes, then we arrive at a total of $4 trillion in evaporated credit since October 2008.

Also, please consider the unprecedented level of real price declines:

Looking at the detailed table, one can see that owner’s equivalent rent (OER) went up by 1.7%. If we want to calculate the True CPI, we have to replace OER with the Case Shiller home price index, which most recently dropped by 16.8% over the year. If we do this, we get an overall price decline from 1 Year ago of 6.6%. (Last month’s release yielded a real price decline of 6.4%)

An ongoing slump in industry utilization, ongoing credit contraction, record price declines – wherever we look, the data screams deflation at us.

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Fannie Mae – Q2 Loss of $14.8 Billion – Asks for Another $10.6 Billion From Taxpayers

Fannie Mae reports a Loss of $14.8 Billion Driven by Credit-Related Expenses:

Fannie Mae (FNM/NYSE) reported a loss of $14.8 billion, or ($2.67) per diluted share, in the second quarter of 2009, compared with a loss of $23.2 billion, or ($4.09) per diluted share, in the first quarter of 2009. Second-quarter results were driven primarily by $18.8 billion of credit-related expenses, reflecting the ongoing impact of adverse conditions in the housing market, as well as the economic recession and rising unemployment. Credit-related expenses were partially offset by fair value gains. The company also reported a substantial decrease in impairment losses on investment securities, which was due in part to the adoption of new accounting guidance.

Taking into account unrealized gains on available-for-sale securities during the second quarter and an adjustment to our deferred tax assets due to the new accounting guidance, the loss resulted in a net worth deficit of $10.6 billion as of June 30, 2009. As a result, on August 6, 2009, the Director of the Federal Housing Finance Agency (FHFA), which has been acting as our conservator since September 6, 2008, submitted a request for $10.7 billion from the U.S. Department of the Treasury on our behalf under the terms of the senior preferred stock purchase agreement between Fannie Mae and the Treasury in order to eliminate our net worth deficit. FHFA has requested that Treasury provide the funds on or prior to September 30, 2009.

Fannie Mae is continuing its efforts to support the housing market by working with lenders, loan servicers and the government to help homeowners avoid foreclosure and provide liquidity to the mortgage market. We have focused our foreclosure-prevention efforts on the implementation of the Making Home Affordable Program, which is designed to significantly expand the number of borrowers who can refinance or modify their mortgages.

*mouch mouch* What’s that sound? It’s a giant sloth feeding on lifeblood.

You can read up on how well the foreclosure prevention efforts are going:

The number of U.S. households on the verge of losing their homes soared by nearly 15 percent in the first half of the year as more people lost their jobs and were unable to pay their monthly mortgage bills.

The mushrooming foreclosure crisis affected more than 1.5 million homes in the first six months of the year, according to a report released Thursday by foreclosure listing service RealtyTrac Inc.

The data show that, despite the Obama administration’s plan to encourage the lending industry to prevent foreclosures by handing out $50 billion in subsidies, the nation’s housing woes continue to spread. Experts don’t expect foreclosures to peak until the middle of next year.

Foreclosure filings rose more than 33 percent in June compared with the same month last year and were up nearly 5 percent from May, RealtyTrac said.

… so what do we conclude? Of course, throw more money at it!

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True Gross Domestic Product Q2 2009 – Down 5.8%


True GDP has fallen to 13.42 billion gold ounces in Q2 2009, down 5.8% from Q2 2008.

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