Biggest consumer borrowing decline in 65 years

[bart]

Re: Biggest consumer borrowing decline in 65 years

There's nothing new under the sun here.

Funhouse Mirrors #1: Personal Savings Rate

Just to clarify here, are you seriously saying that savings isn't up recently?

[FRED]

Re: Biggest consumer borrowing decline in 65 years

Just to clarify here, are you seriously saying that savings isn't up recently?

Read my comments again. They say that just like in Japan in 1990, they are up temporarily.

[LargoWinch]

Re: Biggest consumer borrowing decline in 65 years

But so far into 2009, prices in Canada seem to be FALLING at the grocery store. And fresh fruit and berries from Chile is now here, boxed and ready to go, in the middle of winter. Fresh lettuces of all different colours from the U.S. in the middle of winter, priced to sell, and ready to go. Salsa from Mexico and South Texas is now available, fresh, exotic, hot, and tasty...... Unheard of before in Canada! (This is a country where 10 years ago, a bottle of HP sauce or ketchup with vineger was considered plenty exotic.)

So if hyper-inflation is coming, and I suspect it is, where is it?

New car prices apparently falling. Starbuck's cutting prices on coffee. House prices dropping or drifting in Vancouver and Victoria..... Where is the hyper-inflation? :confused:

Starving I disagree once again.

Look, there are more than houses, cars and starbucks coffee: you have to look at the entire basket of expenses for a familly unit or average consumer unit.

Here are a few Canadian examples (diapers, milk, tuition, drugs, hydro etc. are excluded cause I am now tired tonight and do not want to hunt down for article):

Postal system (this is fresh as of today):
http://www.cbc.ca/money/story/2009/0...nada-post.html

Beer (yup, this one hurts):
http://www.citynews.ca/news/news_30320.aspx

Parking tickets:
http://www.citynews.ca/news/news_20593.aspx

etc. etc.

[bart]

Re: Biggest consumer borrowing decline in 65 years

Read my comments again. They say that just like in Japan in 1990, they are up temporarily.

And how is that different from what the two charts show?

[FRED]

Re: Biggest consumer borrowing decline in 65 years

And how is that different from what the two charts show?

I'm confused by your comment. You charts show rising savings rate but make no forecast. My comment puts the rise in the savings rate in the long term context of cycles asset price inflations discussed here for 10 years. Asset price inflations reduce incentives to save. Immediately after asset price inflations, households attempt to save (pay down debt) but soon find that falling incomes thwart the effort. Make sense?

[GRG55]

Re: Biggest consumer borrowing decline in 65 years

But so far into 2009, prices in Canada seem to be FALLING at the grocery store. And fresh fruit and berries from Chile is now here, boxed and ready to go, in the middle of winter. Fresh lettuces of all different colours from the U.S. in the middle of winter, priced to sell, and ready to go. Salsa from Mexico and South Texas is now available, fresh, exotic, hot, and tasty...... Unheard of before in Canada! (This is a country where 10 years ago, a bottle of HP sauce or ketchup with vineger was considered plenty exotic.)

So if hyper-inflation is coming, and I suspect it is, where is it?

New car prices apparently falling. Starbuck's cutting prices on coffee. House prices dropping or drifting in Vancouver and Victoria..... Where is the hyper-inflation? :confused:

Well it's nice to see that someone thinks their cost of living is actually going down. Enjoy that feeling while it lasts.

Where I live, across the other side of the mountains, the cost of fresh fruits and vegetables has gone up substantially in the past 6 months. I am guessing this is due to the end of local seasonal produce and the dramatic drop in the exchange value of the Loonie for the fresh produce we have to import in winter. You guys must have abandoned the Loonie for a more valuable currency...B.C. Bucks???

Want to mail a letter in Canada? Tomorrow it'll cost you 4 percent more than it did last week:

Canada Post raising mailing rates
Last Updated: Sunday, January 11, 2009

Canadians who still love sending traditional "snail mail" will have to pay more as of Monday.

The cost of mailing a first-class letter, card or postcard within Canada will increase to 54 cents from 52, Canada Post says.

Letters to the United States will also go up a couple of pennies and cost 98 cents, while letters to all other foreign countries will increase by a nickel to $1.65...

When I ask people I know around these parts, the only thing they tell me is cheaper is a tank of gasoline. And that's not going to last either...:p

From yesterday's Vancouver Sun:

Pump prices jump 16% in a single day


By Robert Barron,
January 10, 2009

NANAIMO - Gas prices jumped 14 cents per litre in Nanaimo this week. The price of a litre of gas soared by a whopping 14 cents on Thursday night. Most stations saw the price rise 16%, from 74.9 cents a litre to 88.9 cents. But industry analysts don't believe it will continue to rise as it did last summer, when fuel hit $1.52 per litre on the island...

...Bill Gardiner said he couldn't care less why the prices are rising as he filled up his car Friday, he was simply miffed that they did go up.


"They're out to gouge us again," he said.

Deflation, you say...:rolleyes:

[bart]

Re: Biggest consumer borrowing decline in 65 years

I'm confused by your comment. You charts show rising savings rate but make no forecast. My comment puts the rise in the savings rate in the long term context of cycles asset price inflations discussed here for 10 years. Asset price inflations reduce incentives to save. Immediately after asset price inflations, households attempt to save (pay down debt) but soon find that falling incomes thwart the effort. Make sense?

I'm getting a partial message that unless I make a forecast, simply posting charts to hopefully help clarify something in a thread isn't enough, etc.

I think its best that I drop out from this conversation.

[Slimprofits]

Re: Biggest consumer borrowing decline in 65 years

Where I live, across the other side of the mountains, the cost of fresh fruits and vegetables has gone up substantially in the past 6 months.

Deflation, you say...:rolleyes:

My experience in Northern California as well for fresh fruits and vegetables, eggs, orange juice in carton or jugs (beloved two for $6.00 appears to be on the way out), peanut butter, generic solutions for contact lenses, beer and canned vegetables.

Dairy and meat have held steady.

[GRG55]

Re: Biggest consumer borrowing decline in 65 years

I'm getting a partial message that unless I make a forecast, simply posting charts to hopefully help clarify something in a thread isn't enough, etc.

I think its best that I drop out from this conversation.

I'm sure FRED didn't mean anything personal by it bart. Perhaps he's just got unrealistic forecasting expectations of someone who's located in "the future"...

[unlucky]

Re: Biggest consumer borrowing decline in 65 years

Because debt is cash, and their jobs depend on the herd being compliant.




These parasites are hard to eliminate.

Don't worry, once Obama takes hold and starts taxing to the max, the black market economy will not be too far behind. Then you should see some real free market action.

Isn't that a bit cynical? The world as a whole cannot save, what is saved by one group must be spent or invested by someone else. Therefore what makes sense for a household (save money against a rainy day) does not make sense for the world as a whole.

Currently the producer nations (China/Japan/Germany/Saudi) save. while the consumers (US/UK/Spain/etc) spend. This arrangement is unstable but its rapid reversal is a cause for concern. The US economy cannot become a producer overnight, nor can China become a consumer. Therefore, the only way to quickly reduce spending in the US and saving in China, is to reduce overall consumption and production, i.e. a fall in world GDP.

It is unfortunate that the imbalance was allowed to grow for so long that rapid reversal and declining world GDP now seems the only plausible outcome.

[Sapiens]

Re: Biggest consumer borrowing decline in 65 years

Isn't that a bit cynical? The world as a whole cannot save, what is saved by one group must be spent or invested by someone else. Therefore what makes sense for a household (save money against a rainy day) does not make sense for the world as a whole.

Please do not be intellectually lazy and give your above comment some careful thought, regurgitating stupid programming is dangerous to your well being.

[LargoWinch]

Re: Biggest consumer borrowing decline in 65 years

please clarify why you want to disqualify paying down debt as a form of savings. if i get $1k and put it in a bank account versus using it to pay down my home equity line, i don't see a significant difference on my balance sheet.

jk, I agree that there is no difference on the balance sheet, but the term "savings" is highly misleading.

Ideally, should it not be broken down between "debt repayment" and "savings"?

[FRED]

Re: Biggest consumer borrowing decline in 65 years

I'm getting a partial message that unless I make a forecast, simply posting charts to hopefully help clarify something in a thread isn't enough, etc.

I think its best that I drop out from this conversation.

Sorry if I was being overzealous. We've been working on an article about the savings rate that's an update to Funhouse Mirrors #1: Personal Savings Rate. Every mainstream economist on earth is now coming out with pronouncements that the savings rate is going up and how great that is for the future. As much as we'd like to see the savings rate rise and sustain at pre FIRE Economy levels -- around 8% -- and as a result for actual savings accumulate to fund future investment, it is unfortunately unlikely to happen. More likely, household cash flow will be siphoning off to pay down debt and little in the way of savings will accumulate.

[unlucky]

Re: Biggest consumer borrowing decline in 65 years

Hmm, so how can the world as a whole save?

[c1ue]

Re: Biggest consumer borrowing decline in 65 years

Hmm, so how can the world as a whole save?

By consuming less than what you produce, and investing the savings in additional future production.

This is possible for everyone to do.