Tuesday, June 24, 2008

Financial Tsunami Drowns Consumer Confidence

Consumer confidence hit a 16-year low today. Read the Bloomberg report here. With good reason, it seems. Consumers aren't as dumb as business often thinks. They know a disastrous economic downturn when they see one. After all, if your mortgage has not been foreclosed, it is likely that the value of your home has gone down over 15 percent in the last two years. Just peachy. And of course, there's the mountain of credit card debt; the auto loans; the equity lines of credit - the list of liabilities just goes on-and-on. The Author has posted before about the roots of this recession, here and here. Readers have learned consumers are not to blame for the sub-prime crisis, rather it is predatory business practices based in corporate greed and excess. Previous posts have also looked at how the crisis will affect cities and schools (hint: very badly).

Just how bad is it? Is the U.S. becomming a third-world nation? Well, Bennet Sedacca, president of money manager Atlantic Advisors LLC in Winter Park, Florida wrote the following in a report (source) issued yesterday:

"Whether it is anecdotal or statistical evidence, I see inflation everywhere, and this is where the financial tsunami cometh. `A battered, over-indebted consumer, if forced to retrench, could create even more problems for the banking system as loan delinquencies would begin to rise even further. All sorts of delinquencies are rising. This is now a systemic issue.''

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