Credit-Impairment Will Shrink Future Sales and Lending, Crippling Retail Industry

Credit-Impairment Will Shrink Future Sales and Lending, Crippling Retail Industry.

(Not to mention the reluctance to spend caused by increasing food and energy costs)

US Courts show: 850,912 Bankruptcy filings in 2007 (up 20% in 2008)
RealtyTrac reports show: 700,000 Foreclosure filings in 2007 (up 28% in 2008)

Questions:

Assuming foreclosure actions plus bankruptcy filings represent 5 to 10 unsecured creditors plus the mortgage lender, how will the loss of creditworthiness (“credit viability”) of these borrowers, the “credit-impaired,” affect these creditors’ future business? (add-in 2001 through 2006, plus 2008 for an accurate measure)

Even further; how will the huge number of recently credit-impaired borrowers affect retailers’ and potential creditors’ ability to anticipate any sales growth compared to that of the period from 2000 through 2006?

Will a “business recession” precede a “consumer recession?”

With so many credit-impaired consumers, will credit ratings, credit reporting, and credit standards remain meaningful, or useful?

What about collection practices and regulations?

All tolled, the approaching decade looks bleak for sales, lending, banking, and a large and increasing portion of the population in general! Everyone, including those who pay their debts as promised, knows someone who is behind or on the verge of falling behind on debt-service. Many know people who are severely behind and on the verge of much worse—bankruptcy or foreclosure. Mortgage and credit card defaults are expected to continue to grow or at least remain at a rate higher than in the recent past. Thus, the creditworthiness dilemna will not improve; and its effect on business will continue, perhaps compounded by the increasing portion of “credit-impaired” among the general population.