What's A Little Heart Damage Among Friends?

"(T)hese data should not see the light of day to anyone outside of GSK."

Cole: "If only we had de-regulated the pharmaceutical market and got rid of the heavy hand of the FDA, the free market would have discovered this well in advance and SmithKline would be punished by consumers."

See Ya

Damned consumers have quit buying stuff. Bastards. LATimes (01.18.08):

"Taking stock of a rough holiday season, retailers are shuttering stores and trimming expansion plans as they stare down edgy consumers.

Industry analysts said Thursday that there was little mystery behind the plans announced by several chains this month."

Dismal holiday season leads retailers to shutter stores

"'We're in poor economic times, and when you're in poor economic times, retailers close stores and reduce the number they plan to open, said Eric Beder of Brean Murray, Carret & Co. 'That will accelerate into the second half of 2008.'"

Zale's is closing 60 stores in the immediate future, and "several dozen more" this year.

Liz Claiborne "is pulling the plug on its 54-store Sigrid Olsen chain".

Ethan Allen is closing 12 stores and two service centers.

Talbots is closing "78 Talbots Kids and Talbots Men's stores".

Pacific Sunwear is closing "the last 154 stores in its struggling demo chain".

And yes, even Macy's (!!) is closing nine stores.

What's In Your Wallet?

Got nothing in ours. AP (01.10.08):

"Capital One Financial Corp. said early Thursday that its 2007 earnings will fall short of the company's previous expectations because of increased loan delinquencies and additional legal reserves in the fourth quarter."

Capital One Cuts 2007 Earnings Forecast

They're "taking a $1.9 billion provision for loan losses in the fourth quarter, including about $1.3 billion in charge-offs."

They also said they're "adding about $650 million to its charge-off allowance because of recent delinquencies in its consumer lending businesses and 'continued deterioration' of approximately $700 million of home equity lines of credit originated by its GreenPoint Mortgage unit, which shut down in August."

Two months ago, they predicted "$4.9 billion to $5.5 billion" of charge-offs in November. Now they've upped that to "about $5.9 billion in 2008 amid expectations that the U.S. economy will be weaker."

And that's not all! "The company said it initiated a $60 million legal reserve for possible damages in pending litigation involving the Visa credit card network, of which Capital One is a member. Capital One previously said it was taking a fourth-quarter pre-tax charge of about $80 million for liabilities in connection with the antitrust settlement that Visa reached in November in American Express Co."

Can't be all bad then. At least the lawyers are making money.

Tapped

Us consumers are getting more behinder. AP (01.03.07), via ThinkProgress:

"Late payments on a cluster of consumer loans, including those for autos, home improvement and certain home equity loans, climbed in the summer to their highest point since the country's last recession in 2001.

The American Bankers Association reported Thursday that the delinquency rate on a composite of consumer loans increased to 2.44 percent in the July-to-September quarter."

Late Payments on Consumer Loans Rise

"That was up sharply from 2.27 percent in the previous quarter and was the highest late-payment rate since the second quarter of 2001, when the economy was suffering through a recession."

Delinquencies on auto loans arranged through dealerships "jumped in the third quarter to 2.86 percent, a 16-year high." Yeah, we think we know why, too.

What The Hell?

How can people be so naive? LATimes (12.30.07):

"When Jennifer and Bobby Post traded in their 2001 Chevy Suburban last year for a shiny new Ford F-350 turbo diesel with an extended cab, it seemed like a great deal. Even though they still owed $9,500 on their SUV after the trade-in value, they didn't have to put a penny down.

The dealership, near the Posts' home in Victorville, made it easy; it just added the old debt to the price of the new truck and gave the couple a seven-year, $44,276 loan.

New cars that are fully loaded — with debt

"The Posts were a little worried about taking on such a long obligation, but they couldn't pass up a monthly payment under $700. Now they're having regrets."

"'I didn't realize how much debt was in it,' said Jennifer Post, who has since moved with her family to Iowa. Now, she'd like to get rid of the truck but can't, because there's so much debt that she'd literally have to pay someone to take it off her hands."

"Cindy Gerhardt has rolled over so much debt on successive vehicle purchases -- five in three years -- that she now owes almost $43,000 on two trucks worth no more than $29,000 and, she says, perhaps as little as $22,000."

Cindy's car payments "exceed her monthly mortgage".

"'It's our own fault that we traded in vehicles so many times, but we never thought it would get to this,' said Gerhardt".

We hesitate to ask what she thought was going to happen.

Tapped Out

Yeah, that surge in consumer spending in November? This is where it's coming from. AP (12.24.07):

"Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come.

An Associated Press analysis of financial data from the country's largest card issuers also found that the greatest rise was among accounts more than 90 days in arrears."

Unpaid Credit Cards Bedevil Americans

It's getting bad. "The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP."

"That represented more than 4 percent of the total outstanding principal balances owed to the trusts on credit cards that were issued by banks such as Bank of America and Capital One and for retailers like Home Depot and Wal-Mart."

Going For Broke

Might as well have a helluva Christmas. AP (12.21.07), via FirstDraft:

"Consumers put aside worries about slumping home sales and soaring gasoline prices and headed to the malls in November, pushing spending up by the largest amount in 3 1/2 years."

Consumer Spending Surges in November

Where did the money come from? Not income. That was down. Again. "After-tax incomes were up 0.3 percent in November, but after adjusting for inflation, incomes actually fell by 0.3 percent — on top of a 0.2 percent drop in October."

Ahhh! Here's how they did it. They financed it!! "With spending rising at a faster rate than savings, the nation's savings rate dipped into negative territory in November at 0.5 percent, the first negative savings rate in 15 months. That meant that households spent all of their incomes and either dipped into savings or borrowed to finance high spending last month."