Comments on: OUR CREDIT SCORES STINK

By: Angry MBA

Angry MBA — Tue, 13 Jul 2010 17:08:37 +0000

This story pretty much contradicts this commonly held belief that consumers are eagerly reducing their debt. If that was as commonplace as is believed, then their credit scores would be going up, not down.

This story does support the point that a lot of the deleveraging is occurring through default, bankruptcy, charge offs and workouts. That trend should continue and it’s actually good for the long run health of the economy. Not all of this debt is going to be paid, nor does it need to be.

By: Onlooker

Onlooker — Tue, 13 Jul 2010 01:22:18 +0000

“I had no idea that businesses often need loans just to operate much less expand. That is just insane.”

I agree. I remember back in ’08 when I discovered how much of small business required credit just to make payroll, etc. They were/are living right on the edge. No wonder the credit crunch caused such an implosion.

It’s the just-in-time business model applied to the cash flow as well as inventory. It squeezes out a tiny bit more profit, sometimes, I suppose, though I’m skeptical of that for the most part. But it makes you terribly vulnerable to any hiccup in that flow. It’s crazy.

By: jt26

jt26 — Mon, 12 Jul 2010 22:27:38 +0000

Ease of credit is relative. I can remember a time when you had to get a car loan only from a bank .. let alone 0% for 4 years to anyone with a pulse. Auto sales were brutal in the 80′s recession (I think dropping >50%). People forget what a “normal” recession is like; yet everything earlier than 1990 is lumped into 1930. The world is not going to end. But, I’m a bit optimistic on the free ipods. I have this nagging feeling that no matter what the auto industry or CE manufacturers say, net profit margins are going stick in very low single digit and if that means swallowing loss on subprime customers I think they will do it. Watch in 2015 when the GM CEO says “we’ll continue to maintain our discipline in focusing on profit and not revenues, but this expansion and debt raise will be a game changer as we take back market share from our competitors …” blah blah blah.

By: F. Beard

F. Beard — Mon, 12 Jul 2010 22:25:02 +0000

I always thought of credit as a luxury. I had no idea that businesses often need loans just to operate much less expand. That is just insane. The counterfeiting cartel has an absurd choke hold on the economy.

By: Chuckling

Chuckling — Mon, 12 Jul 2010 18:27:28 +0000

FHA last sucker giving mortgages to this group because no securitization suckers left to fleece in private mlt. Thankfully the govt has qualms using the taxpayer as ultimate sucker and source of funds to keep the charade going.

I wonder how many of these people turned to debt once their work was sent to China or India.

By: Rom Badilla

Rom Badilla — Mon, 12 Jul 2010 17:19:22 +0000

Funny how things turn out. Many people were bashing the subprime market when the economy crashed. Now, many of those people ARE subprime.