U.S. consumer borrowing $11.1 billion, a Federal Reserve report showed Thursday, much more than expected.
March consumer credit fell at an annual rate of 5.2% to a total of $2.55 trillion.
This is the biggest percentage drop since Dec 1990.
Q: I've read that you think the penchant of the last two presidential administrations for bailing out failing U.S. companies is a big mistake and will contribute to prolonging this recession. You argue that it's best to let these companies all go bankrupt. How bad can the economy get?
A: Yes, politicians are making mistakes. In Japan, the problem has lasted for 19 years. I hope that it doesn't last 19 years in the U.S. The approach that works is to let them (U.S. banks and automakers) collapse and clean out the system. The idea that phony accounting is the solution (through changes in mark-to-market rules) is ludicrous. And the idea that a debt problem and an excessive spending problem can be cured with more debt and more spending is ludicrous.
It's laughable on its face, but politicians think they've got to do something. Unfortunately, they are doing the wrong things and they are going to make it worse.
Consumer credit dropped much faster than expected in February. Americans took on far less credit card debt.
Credit card debt fell at an annual rate of $7.8 billion (9.7%).
This is the sharpest drop in dollar terms ever, he steepest percentage fall since 1978.
Overall Consumer debt decreased at an annual rate of 3.5%
Government wants to increase credit - consumers saying no to debt.
Any move to further restrict mortgage lending would add insult to injury," said Trevor Kent, a former president of the National Association of Estate Agents.It would be suicidal and cause property prices to come down yet further. Lenders are already reluctant to lend, and this would give them an excuse to put up another hurdle, stopping buyers getting access to finance."Self serving nonsense.
