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.

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.

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.

Of course, complicating matters may be a growing public perception that the government is rewarding consumers at the expense of savers. Not to mention quantitative easing, which is gradually starting to seep into the public consciousness, albeit mostly in the form of “government prints money.” In the UK, you can argue, that the government has clearly signalled that tax breaks now will come at the expense of tax increases later — so why spend?

The public expect to have to pay in the future for the government's spending now - so they are going to save money to get ready for the more difficult times ahead. Exactly the opposite of what the government is trying to persuade us to do.

http://clusterstock.alleyinsider.com/2009/1/jamie-dimon-loan-demand-dropping-dramatically 

The "recessionista" is looking for the quality, durability and style of designer clothes, but with a "chicenomic" price tag in keeping with more straitened times.

Nice words for deflationary pressures.