Government Passing Private Firms In Consumer Lending

Yeah it is Saturday and unusual for a post. However after clearing our inbox of the weeks intel reports - this one cannot pass without comment.


JED GRAHAM, INVESTOR'S BUSINESS DAILY: As early as this quarter, government is likely to displace the private sector as the biggest source of outstanding home mortgages and consumer credit, Federal Reserve data show. That will complete a dramatic reversal from 2006, when private-sector financing supplied nearly $2 in outstanding home mortgages and consumer credit for every $1 of government-financed loans. Since then, the combination of tighter lending standards, consumer defaults and a dependence on government guarantees has shrunk private loan portfolios by $1.9 trillion and lifted the government portfolio by a like amount, Fed Flow of Funds data show....The other growth area for government lending to consumers has been student loans. As overall consumer credit has fallen from $2.6 trillion at the end of 2008 to $2.4 trillion in Q1 2011, direct student loans from the federal government have increased by nearly $250 billion.


This represents the new normal in the US and will lead to a credit crunch unprecedented in modern times. Our analysis of the market and the conclusion that "Self-Sufficiency" is one of the 3 Realities of Business is reinforced daily.


Take action now while you have flexibility. Both personally and in your business, get on top of cash flow and manage it as tightly as possible. Assume there will be no credit and everything you do must be funded from revenues generated (sales) and run your business and life accordingly.


There will be no advance notice, one day this forecast will be reality - the new normal.