Things are hard all over the place. The market rallies, then declines, then rallies, then declines. It's positively Sisyphean. The banks keep on saying the worst is over. The homebuilders keep saying the worst is over. Pundits and permabears live in fear of the dreaded "r" word(recession). So who can you trust, when no one will tell the truth?
The debt collectors. These guys are on the front lines. They've heard every excuse in the book and they know what's going on with the American consumer. Read this quote Asset Acceptance Capital Corp.'s CEO:
Looking ahead to the remainder of 2008, we are encouraged by the opportunities presented in the current economic climate particularly with regard to both the supply and pricing of charge-offs.
He is encouraged. Remember, this guy's business is to buy debt on the cheap and then collect on it. He sees a lot more bad debt in the future.
Asta Funding, another publicly-traded debt collector had a terrible Q2. They all did actually. Anyway, it said they were going to be careful about purchases and focus on retiring debt. These guys are vultures and if the carrion doesn't look all that great to them,that should give all of us pause.
This tells me a lot about the consumer. While lower gas prices are helping, people still aren't paying their debts. They're using that money to eat.
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