Holiday shoppers must not have gotten the memo about "The Big Recession" - Page 2 - Mercedes-Benz Forum

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post #11 of 26 (permalink) Old 12-01-2008, 12:15 PM
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The INITIAL Black Friday numbers were good but we won't know what the actuals are for a bit and we really won't know what the impact is until we know how much of the traffic was profitable and how much was on loss leaders. We also need to see what the amount of CREDIT that was added to the consumer credit cycle and if it will be addressed quickly or will it become part of more debt [we have learned by now that we can't spend our way out of debt, haven't we?]. So we should know by January if this was/will be a good shopping season.

Last year's numbers were uneven and were the harbinger of the start of the RECESSION that experts say started about then.
This year I don't see me spending any extra cash. I am going to wait and see what happens after the 1st Qtr of next year. I suspect the lower gas prices have people willing to spend during these times, but honestly nothing has changed for any of the sectors to make me feel like spending.






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post #12 of 26 (permalink) Old 12-01-2008, 12:30 PM
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The indicator that I used to see where things were was when I went into Best Buy Friday evening to help a friend buy a new computer. They still had some of their morning sales leaders on the floor and those should have been gone by noon.

I went back on Sunday on the off chance that there was a couple of items left and ended up buying three WD 500GB External Backup drives for $89 each. They had been in the Friday sale but still had three dozen left.

The other thing to look at is how well the credit card companies perform today. They have instantaneous count of their sales volume and "number of hits". If they are doing well, that tends to make me believe that the weekend sales were really good and not just sneakers in aisles.

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post #13 of 26 (permalink) Old 12-01-2008, 12:34 PM
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^^People are maxed out and it's hard to get extended credit
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post #14 of 26 (permalink) Old 12-01-2008, 01:00 PM
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^^People are maxed out and it's hard to get extended credit
Well this should certainly help.

Credit-card industry may cut $2 trillion lines: analyst
Monday December 1, 12:38 pm ET

(Reuters) - The U.S. credit-card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.


The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.

"In other words, we expect available consumer liquidity in the form of credit-card lines to decline by 45 percent."

Bank of America Corp (NYSE:BAC - News), Citigroup Inc (NYSE:C - News) and JPMorgan Chase & Co (NYSE:JPM - News) represent over half of the estimated U.S. card outstandings as of September 30, and each company has discussed reducing card exposure or slowing growth, Whitney said.

Closing millions of accounts, cutting credit lines and raising interest rates are just some of the moves credit card issuers are using to try to inoculate themselves from a tsunami of expected consumer defaults.

A consolidated U.S. lending market that is pulling back on credit is also posing a risk to the overall consumer liquidity, Whitney said.

Mortgages and credit cards are now dominated by five players who are all pulling back liquidity, making reductions in consumer liquidity seem unavoidable, she said.

"We are now beginning to see evidence of broad-based declines in overall consumer liquidity."

"Already, we have witnessed the entire mortgage market hit a wall, and we believe it will, for the first time ever, show actual shrinkage over the next few months," she wrote.

The credit card market will be 18 months behind the mortgage market and will begin to shrink by mid-2010, Whitney said.

Whitney also expects home prices to continue falling another 20 percent hurt by lower liquidity. They are down 23 percent from their peak, she said.

"In a country that offers hundreds of cereal and soda pop choices, the banking industry has become one that offers very few choices," Whitney wrote in a note dated November 30.

She also said credit lines to consumers through home equity and credit cards had been cut back from the second-quarter levels.

"Pulling credit when job losses are increasing by over 50 percent year-over-year in most key states is a dangerous and unprecedented combination, in our view," the analyst said.

Most of the solutions to the situation involve government intervention, and all of them require more dilutive capital to existing lenders, she said.

"Accordingly, we continue to be cautious on our outlook on US banks."

Credit-card industry may cut $2 trillion lines: analyst: Financial News - Yahoo! Finance

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post #15 of 26 (permalink) Old 12-01-2008, 01:06 PM
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Well this should certainly help.

Credit-card industry may cut $2 trillion lines: analyst
Good, I hope they do. Honestly...






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post #16 of 26 (permalink) Old 12-01-2008, 01:32 PM
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Good, I hope they do. Honestly...
Yes. It will be a long term gain for everyone. Short term, folks will have problems with that "belt tightening" but that really needs to happen.

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post #17 of 26 (permalink) Old 12-01-2008, 02:05 PM
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^^^

You know though, this is a near-perfect corollary for the over-the-top "stimulative" deficit spending & bailouts now underway. It's all borrowed money. Are we really to applaud this sign of fiscal probity whilst our government does just the opposite--also to our applause?
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post #18 of 26 (permalink) Old 12-01-2008, 02:15 PM
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Yes. It will be a long term gain for everyone. Short term, folks will have problems with that "belt tightening" but that really needs to happen.
The logic for many many years for people was to spend plastic but they didn't make enough green. I watch people all the time, fancy toys and such but they took out second mortgages just to purchase said toys. I watched as a business man, took out a second mortgage on his home, only to open up a second restaurant, it boost his credit so he financed a brand new BMW 0 miles for his daughter so she can build her credit . I am not sure who his financial adviser was, but I would not have done that. Now that happened 6 years ago, I don't know how he is doing now but suspect not so good. His cash flow was only 1 million a year, and his property tax and such where very high. The hospitality business here in the region isn't what it used to be. I do wish him the best, he is a hard working man who worked 12 hours a day or more to live the American Dream.

In many ways it will be 100 times harder for me to get a home when I am ready or a decent credit card when I am ready but the overall effect of the credit card companies realizing its a privilege to have a credit card and not a necessity as to finish college, buy a car, or purchase clothing, will help America in the long run. Those who honestly need a credit card for the right reasons will be granted one. I learned from 2 mistakes in my life, they where small in comparison to average debt but big enough for me to have learned from.






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post #19 of 26 (permalink) Old 12-01-2008, 02:18 PM
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You know though, this is a near-perfect corollary for the over-the-top "stimulative" deficit spending & bailouts now underway. It's all borrowed money. Are we really to applaud this sign of fiscal probity whilst our government does just the opposite--also to our applause?
I would only hope an effective and aggressive move like the cut back on credit lines will equate into a balance of bailout monies and consumer debt. I am no accountant and not so good at math, but the way I see it, is it will loosen the choke hold the economy is in right now, while freeing up room for those who can really use the credit such as small business owners who generate jobs. Sorry for those who shopped at Nieman Marcos and then had to file for BR when they lost their jobs, it sucks to see it this way but it is how I see it.






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post #20 of 26 (permalink) Old 12-01-2008, 02:20 PM
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In many ways it will be 100 times harder for me to get a home when I am ready
Don't be too sure... they might be giving them away for pocket change at the rate we're going.

Otherwise, your points are, as usual, quite sound
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