Mike Shedlock has put together a good Post on Consumer Credit contraction. Banks are lending less, down some 12% year over year. Consumer Credit itself has shrunk in June by about 5.5% at the year over year rate. I, like Mish, would like to thank Dave Rosenberg for the series of graphs, which should be studied by the Reader. A major element in Consumer Credit contraction consists of the way being led by the Banking community, who has been spooked about massive increases in bad paper. This hyper nervousness on their part has probably did more to generate the Savings cycle among Consumers than any other factor. It is like unto a Poker Game, where Consumers do not pay much attention to the News media, but keep an Eye on their local Banker; when they begin to see him Sweat, they decide it is time to build up some ready Cash. FDR declared a Bank Holiday at the bottom of the Depression; if Obama did the same, We would be back at that bottom of a Depression–Consumers thinking it was time to go to spending Cash. Federal policies across the board should be worried about alarming the Consumers, who will determine whether We go Up or Down through the Christmas Season. We go Down, and We will be Down there another Two years.
Tim Worstall has found a Cuban Toilet Paper shortage, and manages to effectively translate the shortage into a good argument for Hayekian destruction of central planning. A lot of people will think the Story somewhat amusing and Stupid. I would like to remind that the Military throughout history has had major problems with this very issue, with Troops suffering lack of Toilet Paper on almost every continent, and most islands, in the history of this nation–all centrally planned. There have almost been generated military mutinies because of shortages of liquor, Cigarettes, and Coca Cola for our Troops–grown in the Consumer necessities of consumption. Military officers can tell you that the dangers of ‘fragging incidents’ go up if there is a loss of Beer for the Troops. One does not need to turn to foreigners to highlight the limitations of central planning.
I have never been a devotee of graphs in economic analysis, yet find that Any who want to advance their knowledge of economics must attain a capacity to studying these things. The major element of my bias is probably my having never taken the time to learn PowerPoint. Still, I must give the Students access to this Post, which tells Us by graph that the United States ranks low in the utilization of Small Business employment. One has to ask Why, and they can generally determine there exists a Bias among the financial community, which refuses to acknowledge Small Businessmen as actual Businesses. The Bankers treat these individuals as simply self-employed, and refuse to give them the time and attention which they shower on other enterprise. American banks have ceased being a venue for detailed business advice, and spend more time trying to sell dubious financial instruments than in providing business advise. lgl