Thursday, May 1, 2008

Another side of consumer credit: cards.

Read these two synopsis of articles coming out today; the first is news to me, the second is not really as it has been the trend the past couple of weeks as rationalization comes back when pricing "money-good" cashlows:

May 1 (Bloomberg) -- Overdue debts at the six largest U.S.
credit-card lenders held steady in March, remaining at the
highest level since November 2004, data compiled by Bloomberg
Payments late by at least 30 days averaged 4.11 percent of
loans in March, the same as in February, according to reports
filed by American Express Co., Bank of America Corp., Capital
One Financial Corp., JPMorgan Chase & Co., Citigroup Inc. and
Discover Financial Services.
``I'd be surprised if we're at the peak for late
payments,'' Nigel Gault, research director at Lexington,
Massachusetts-based Global Insight Inc., said in an interview.
``Pressures on the consumer are increasing, with employment
declining, home prices continuing to fall, and prices outpacing

By Sarah Mulholland
May 1 (Bloomberg) -- U.S. securities backed by credit card
and auto loans are lagging behind other debt
, a sign the Federal
Reserve hasn't done enough to quell concern that consumers may
fail to make monthly payments on time.
Credit-card bonds lost 0.14 percent in April and auto-loan
debt fell 0.4 percent, Merrill Lynch & Co. indexes show. By
contrast, high-yield, high-risk corporate bonds returned 4.2
percent, the best month in five years, and top-rated securities
backed by subprime or home-equity loans rose 0.77 percent.

Do you think what I am thinking or shall I say in Spanish? [evilgrin]

Spanish? Okay, "Principal Unos". There YOU have the secret now. Calculating put options and looking for risk-reward metrics now and I may take a decent sized position.


D said...

The revisions to BK laws in 2005 aren't going to do ANYTHING if there is no money to collect and people have no work.

I wonder what the bailout proposals for this will look like...

MTGSPY said...

yes, that is affirmative. :)

D said...

The BK revisions were really just about selling CLO investors on the "safety" of the underlying receivables...

So with every day that passes I think about where I will be emigrating to rather than what I will be investing in. I have thought about Brasil, but I see them eventually being "assimilated" for their natural resources. I don't like Europe as they are too close to the middle east. Got any ideas? Singapore? New Zealand?

WTF kind of century do we have to look forward to now?

MTGSPY said...

Ur first choice is the best and never second guess yourself. Go buy a nice house in great area in Sao Paulo. If you have a wife but don't wanna bring her along that's fine too there's plenty real beau over there. The key is to survive the next 3 years and make money off the waves. Don't get killed and I'll c u there. :)

D said...

We think alike...

No wife! I need to work on Portuguese...I love the women's accent down there! What would seal the deal for me is if Rio wins the 2016 Olympic bid. That would be a significant infrastructure upgrade. When the SHTF I am blowing out of Chicago for Northern Minnesota to see what develops. The people up there are the kind you can lean on and won't tolerate the hood coming to town. From there, Brasil ranks number one for a new home.

If we make it out it's beach, booze and broads in Brasil for sure!