And Around and Around It Goes...

A report released earlier this month by the American Bankers Association (ABA) indicated that third quarter delinquent payments for consumer loans hit the highest level since they began recording them in 1980. http://www.msnbc.msn.com/id/28541097/

Let’s consider this:

1. 1980 was the end of the Carter administration and in the next 2 years the country fell into the worst recession in my working lifetime. Does anyone remember the prime rate at 19% and unemployment at double digits?


2. The third quarter ended August 31st – before the kids went back to school and the word bailout had more to do with Manny going to the Dodgers

Any predictions what the 4th quarter is going to reveal? We won’t know those numbers until late March – early April. Here’s the thought for today – if we throw more bailout money at the banks in order to “open up the credit markets” – will those markets include loans to consumers? If loan delinquencies are on the rise - that means that personal credit histories are deteriorating. Will lenders begin lending to borrowers with deteriorating credit scores? Isn’t that how sub-prime lending began? What does an open credit market mean to consumers?

And around and around it goes – just like the water in ex-Merrill Lynch CEO John Thain’s $35,000 commode ...