Business NEWS
Meredith Whitney Scares Us All again says credit cards are the next credit crunch.
By Amarendra Bhushan for CEOWORLD Magazine Updated:March 10, 2009
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Does it need any kind of expert to predict the downfall of economies that doesn’t depend on hard work any longer, but depend on lazy numbers only, while only the Chinese are dedicating to hard work and exporting from nails to super heavy weight products?
Prominent banking analyst Meredith Whitney of Meredith Whitney Advisory Group warned that “credit cards are the next credit crunch,” as contracting credit lines will lower consumer spending and hurt the U.S. economy.
Meredith Whitney, a vank uber-analyst wrote in The Wall Street Journal that the economy will have more problems as banks take credit cards away from people to prevent bad debt write-offs. She says “Just six months ago, I estimated that at least $2 trillion of available credit-card lines would be expunged from the system by the end of 2010. However, today, that estimate now looks optimistic, as available lines were reduced by nearly $500 billion in the fourth quarter of 2008 alone.
Role of credit-card availability in that spending!
- There is roughly $5 trillion in credit-card lines outstanding in the U.S., and a little more than $800 billion is currently drawn upon.
She said though credit was extended “too freely over the past 15 years” and rationalization of lending is unavoidable, what needs to be avoided was “taking credit away from people who have the ability to pay their bills.”
Whitney said available lines were reduced by nearly $500 billion in the fourth quarter of 2008 alone, and she estimates over $2 trillion of credit-card lines will be cut within 2009, and $2.7 trillion by the end of 2010.
“Inevitably, credit lines will continue to be reduced across the system, but the velocity at which it is already occurring and will continue to occur will result in unintended consequences for consumer confidence, spending and the overall economy,” Whitney said.
Currently, there is roughly $5 trillion in credit-card lines outstanding in the U.S., and a little more than $800 billion is currently drawn upon, she said.
“Lenders, regulators and politicians need to show thoughtful leadership now on this issue in order to derail what I believe will be at least a 57 percent contraction in credit-card lines,” she said.
Who is Meredith Whitney?
Meredith Whitney is a veteran of Wall Street research for more then 15 years. Meredith Whitney (born 1970) was a managing director of Oppenheimer & Co. (which acquired certain former assets of CIBC World Markets, a division of the Canadian Imperial Bank of Commerce in January 2008). She now manages her own firm, Meredith Whitney LLC, and works in New York, where she analyzes the stocks of financial institutions. She is a prominent banking analyst and she appears regularly on Cavuto on Business, a Fox News program, Bloomberg and CNBC shows. She graduated with honors from Brown and was a member of the first co-ed graduating class of The Lawrenceville School. She resigned from Oppenheimer & Co. on February 19, 2009 to establish her own firm.
What we have seen in the financial meltdown, I bet Meredith hasn’t seen it yet..She is still dealing with numbers and not the lazy culture.
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