Total credit and loan volume in the US is now contracting at a record pace and by record levels, more than at any time since the beginning of the credit crisis, and possibly even more than ever before in US history (source stlouisfed.org):
Total credit and loan volume:
Total credit and loan – annual growth:
This is a rapid and seemingly bottomless contraction at this point. Considering that market behavior and attitudes are currently are currently suggesting the exact opposite, something is bound to blow up right in our faces somewhere and at some point sooner or later.
isn’t this a good thing? we were hella overextended, which you were against.
nothing about this crisis is good. i wish we would have never created it. but within the confines of the crisis, yes it is good to see a contraction and cleanup of debt.
but the problem right now is that people are acting like it’s all solved and trying to go back to previous spending patterns. meanwhile credit conditions are deteriorating. THAT is what I view as dangerous.
when perceptions are out of tune with reality, the inevitable correction will hurt even more.
the bad thing, if you will, is the fact that this contraction is happening only now. we could have let it happen 2 years ago. we could have let all the other necessary corrections and bankruptcies occur then. we would be in our second year of a true rebound, growth, and job creation now.
but where are we? we are merely on the eve of another dip in economic activity. we will be testing new lows sooner or later. it is this that i criticize, and have been criticizing since the crisis has started, heck i even warned about it way before the crisis started …