Rolfe Winkler

(Reader note: still working on the bugs….please click “continue reading” to see all the links)

Banks, U.S. spar over TARP repayment (David Enrich) This is the kind of thing that gives me a better feeling about Tim Geithner and Ben Bernanke. They are hammering banks to raise equity capital to get out of TARP. They have leverage and are using it productively, forcing bank shareholders to eat losses via dilution so that balance sheets are more stable. Great! Stick to your guns guys!

Questioning the unemployment rate (Kaminska, Alphaville) Dennis Gartman doesn’t buy the good news in the jobs report.

FASB wants accounting standards “decoupled” from bank capital rules (Norris, NYT) Can you blame ‘em? Seems to me Bob Herz just wants to be left alone. If regulators want to give banks more slack, fine.

Consumer credit contracts again (Federal Reserve) Though the contraction seems to be moderating. Just the latest improvement in the second derivative. I’m a fan of this trend. As consumers get out of debt, they rebuild their savings.

NY Fed President Dudley says monetary policy can limit leverage (CalculatedRisk) CR hightlights some key sections of Bill Dudley’s most recent speech. On the one hand it’s good to see him talk about the Fed’s ability to prevent credit bubbles by limiting leverage. On the other, he repeats that rates will stay low for an extended period. So the Fed is doing what it does best, inflating the next bubble. This time ’round they say they understand why that’s a problem. Yet they seem unwilling to do anything about it.

Obama to announce new jobs program (Zeleny, NYT) Including a cash for caulkers program….

BofA CEO candidate under scrutiny (Nadgir/Comlay/Eder, Reuters) Greg Curl was one of two names discussed at Judge Rakoff’s famous hearing back in August…

Greece faces ratings downgrade over spiraling deficit (Atkins/Oakley/Hope, FT) Alphaville is all over this story.

Don’t try this at home…

Missed connection (Craigslist)

Late for work…

Gluskin Sheff’s David Rosenberg on last week’s consumer credit figures.

U.S. consumer credit outstanding fell $10 billion in June, the fifth decline in a row during which the debt balance has shrunk $60 billion or 5.5% at an annual rate.  Both figures are unprecedented.  As the chart below shows, the YoY trend, at -2.8%, is also running at its steepest contractionary rate in over five decades.  Welcome to the new paradigm of savings, asset liquidation and debt repayment [in] the era of consumer frugality. After 20 years of living beyond their means, American consumers will be spending the next several years living below their means, and no, this will not be the end of the world, but it will put a firm ceiling on overall demand growth for some time to come.

Here’s the chart to which he refers (click to enlarge in new window):

The chart depicts the growth of consumer credit.  Not the total level.  Consumer credit isn’t actually contracting unless the line goes below 0%.  And this excludes mortgage debt.

The data on consumer credit is here.

So is consumer credit too high?  I suspect it most certainly is.  But to make that normative judgment, you have to compare credit to something like disposable income or household net worth.  I’m working on putting that data together.