Friday, September 07, 2012

Another side of the credit crunch

Gillian Tett assesses the fall in credit card debt and use of plastic. It should not be a great surprise given the increase in the savings rate.
"Yes, you read that right. Although Americans are (in)famous for their addiction to credit card debt, that love affair is cooling, or being forcibly cooled. By the middle of this year, the number of credit card accounts in circulation had tumbled to 383m, 23 per cent below its 2008 peak, and fresh applications for credit were declining too. Put another way, while cards are still being flogged to consumers (and even sometimes marketed, via direct mail, to pets), not all Americans are saying “yes”."
Another way to look at this is from the supply side.  As part of the 'credit crunch' and cut back in advances to risky credits.

Monday, September 03, 2012

Skin in the game - indeed

Finance is in need of a technological revolution - "Less than two months before the Facebook fiasco, another IPO suffered an even more shocking fate. BATS Global Markets, which operates the third-largest stock exchange in the US, went public on its own exchange. If ever an organisation had sufficient “skin in the game” to get it right, it was BATS and if ever there was a time when getting it right really mattered, it was on the day of BATS’s own IPO. So when BATS debuted at an opening price of $15.25, no one expected it to plunge to less than a tenth of a penny in a second and a half due to a software error affecting stocks whose ticker symbols began with the letter A or B. The ensuing confusion was so great that BATS suspended trading in its own stock and ultimately cancelled its IPO."