Debt Revulsion

US Savings rate rises to 14-year high in January

US Bureau of Economic Analysis "Personal Income and Outlays" report for Jan 09 is out.
Link here.
Highlight
Personal saving as a percentage of disposable personal income was 5.0 percent in January, compared with 3.9 percent in December.

The personal savings rate at 5% is the highest since March 1995. The political pressure is "to get the banks lending again".

Did anyone check that the consumer actually wants to borrow? With Tax hikes in the future who wants more devbt? Debt reviled.

US bailout is equivalent to 74 Marshall plans

So the bailout to rescue the US from lending too much to buy houses is now 74 times the cost of the package to rebuild Europe after World War 2. Note that this is not in "old money" as the Marshell plan figures have been adjusted for inflation.

Tech sector wage cuts

After my brief self-doubt in a furniture store - I'm coming out fighting again after a couple of days immersed the news.
Inflating our way out of the mountains of debt is surely the most tempting course for politicians.As wages rise rapidly - the debt burden for the individual is eased. Back in the real world there are waves of pay cuts
After reporting a 13 percent drop in first-quarter profit, the world’s largest personal-computer maker said it will reduce Hurd’s base salary by 20 percent, executives’ pay by 10 percent to 15 percent, and most employees’ salaries by 5 percent.
Will these folks be rushing to borrow more?

Anecdotal

I generally avoid anecdotal evidence. I do like a balanced view.
Anyway - as a nod to my Inflationista pal Kev I will admit that this
weekend I went to Ikea Glasgow - and it was busier than I have ever seen
it. The indoor snow ski slope had queues at the entrance. This does
not square with my worldview.
Credit crunch over? One last blast on the credit cards? House prices up in Jan and MEW brigade fired fired up again?
Comments welcome.

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Sent from my mobile device

An infantilised electorate

Fresh out of the Treasury Select Committee on Wednesday Jeff Randal strips the issue of debt to the fundmanetals in the Telegraph today
We're in denial: afraid to face up to the real causes of recession
Finally someone trying to shift the spotlight around to those that share the blame. It is not only
bankers and subprime in the US to blame..
For if too much debt is at the heart of the crisis, what about the over-borrowers? What do they have to say?I'm not talking about unfortunate souls who have slipped behind as a result of redundancy or family crisis. I'm more interested in Smart Alecs who signed for a dozen credit cards and then spent over the limits. Or homebuyers who enjoyed a burst of creativity when it came to disclosing incomes on mortgage forms. Or heavily geared buy-to-let merchants who worked out that instead of paying for a house, they could get a house to pay for them.

I'm not sure there will be momentum in this sentiment - but it will be interesting to watch.

Consumers pay down debt in December

Retailers were on the warpath in December - pulling the sales earlier than ever before and aggressively discounting.
The borrowing binge didn't appear.
People actually paid down their credit card debt. New loans are down a third year-on-year.Consumers repayed £0.4bn of unsecured borrowing through credit cards, overdrafts and loans, figures from the British Bankers' Association (BBA) showed today.
It is clear that encouraging consumers to take on additional debt is not an effective transmission mechanism for increasing spending.

Don't these people know they are meant to be spending the extra cash?

From... 
Lloyds TSB has reported more than 27,000 requests from customers to overpay their mortgage since November's sharp interest rate cut.
Interest rate cuts on mortgages are encouraging people to pay down their mortgages more quickly. The culture of saving, and paying down debt, is becoming entrenched. People know there are hard times ahead, that taxes will rise in the long term, and are preparing for it.

Best quote on today's bailout...

this from Bruce Packard at Evolution Securities
EVO take: Following various announcements we could see a bounce this morning, in all the banks ex RBS, because the rest of the sector is not being forced to recapitalise, and therefore there is no further dilution to equity shareholders. Fundamentally though we would steer clear and concentrate on sectors which can be analysed rationally. Gordon Brown quoted as saying “We know the essential problem is the resumption of lending.” Underlines just how much “political risk” there is investing in the bank sector. We expect the UK Govt to try to solve the obesity crisis next week, by nationalising the supermarkets, so that they can then resume the supply of cheap doughnuts to fat people.