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Internet Makes Bad Credit Unsecured Personal Loan Easily Accessible

There is no gainsaying the fact that availing a loan is no more a tough task. With the loan market growing bigger and bigger and new lending institutions emerging constantly like mushrooms, getting a loan of one’s choice has become quite easy. Yet, it can’t be denied that there are certain loan products, which are not easy to come by. One such loan is bad credit unsecured personal loan . There are genuine reasons behind the scanty availability of this specially designed loan.

First of all, it is an unsecured loan . It has no backing of any collateral. This implies that the lender has no material guarantee to recover his money. Failure of the borrower means loss of lender’s money. Though he can take the borrower to the court, he will have to work hard to retrieve his money. Legal action may be taken against the borrower, but this will not help the lender recover his money fast. Because of this, lenders hesitate to offer this loan unless they are satisfied with certain criteria.

The second reason why bad credit unsecured personal loan is not easily obtainable is that applicants usually belongs to the vulnerable group. He has a bad credit record means that he has already failed in his debt commitment. It presages that he may fail in future. This may work as premonition and make the lender shy away from giving approval to his loan application. However, if this loan product exists then certainly there is a way to avail it.

The easiest way to avail bad credit

Source: All About Financial Matters

Welsh October letter

The twenty-five year period between 1982 and 2007 may be the best period in economic terms in our nation’s history. There were only two shallow recessions, each lasting just 8 months. This extended period of economic growth and stability provided a wonderful investment climate that lifted the DJIA from under 1,000 in 1982 to over 14,000 in 2007. In order to gain a better perspective and appreciation of this period of prosperity, one should stand back and view a long term chart of the DJIA from 1946, just after the end of World War II. What quickly becomes apparent is the extended rally in the DJIA from near 150 in 1949 to 1,000 in 1966 that was also accompanied by strong economic growth, stability, and very little social unrest. Sandwiched between these two wonderful windows of growth and stability is the period of 1966 and 1982. These 16 years were marked by instability that not only engulfed the economy, but also resulted in enormous social stress. As assassinations gave way to race riots, war demonstrations, runaway inflation, and mile long gas lines, it felt as if the foundations underpinning our society were shifting.

From a historical perspective, visualize a pendulum that oscillates between stability and instability, with each period reaching an extreme after 15 to 20 years. The period of stability that ended in 1966 was heralded with the political phrase “ ’ in 1999, and bid technology stocks to absurd valuations. In response to the bursting of the tech bubble, the Federal Reserve aggressively lowered interest rates to keep the economy from deflating. Ironically, the extended period of economic stability between 1982 and 2000 encouraged market participants to take on highly leveraged risks, even as the pendulum was already swinging away from stability toward instability.

As I discussed in last month’s letter, there are numerous cyclical and secular headwinds that could easily take another 5 to 7 years to work through. (The September letter is available at welshmoneymangement.com, click on Publications and this month’s letter.) The fundamental challenges facing our financial system and all levels of government are structural in nature, and the result of excesses that have built up since 1982. There are no easy solutions.  During the 1966-1982 period of instability, the DJIA made its price low in December 1974. (Chart below.) Even though the period of instability had another 7 years to run, the DJIA never fell below 730. My hope (and prayer) is that the March 2009 low marks the price low in the stock market, even as the economy struggles and social unrest increases in coming years. If the March 9 low is broken, it would suggest that all the efforts and money spent to prevent a deeper economic contraction had failed.

History suggests that these extended periods of instability (1929-1949, 1966-1982), do not reward investors who buy and hold, or the institutions that disdain cash. As a kid growing up in the Midwest, during July and August, I always wore a t-shirt and shorts and wore a crew cut. In January and February, my hair was longer and I never went outside in shorts and a t-shirt. (Well maybe once on a dare.) If my parents had known, they would have rhetorically asked me if I was stupid. So here’s a worthwhile question.

Over the last two years, the Federal Reserve has responded with unprecedented programs to initially prevent a complete collapse of the financial system and subsequently to restore some measure of functionality to the credit markets. The Treasury Department launched a large bailout of banks deemed too big to fail, and Congress passed a huge stimulus package. Despite these extraordinary efforts, overall credit is still contracting, residential and commercial real estate prices are still deflating, and consumer incomes are shrinking. On the plus side, the stock market rally has recovered half of the bear market losses, and corporate bond prices have also rebounded significantly. The economy has stabilized and is rebounding, but at a price. Government income transfers amounted to 17% of total personal income in the first half of 2009. Federal fiscal stimulus dollars helped plug the gaping hole in state budget deficits, which enabled them to avoid deeper cuts in services. But the safety net provided by the federal government will produce trillion dollar deficits for years to come. At some point, the Federal Reserve will shrink monetary stimulus and end their market support programs. The Federal government will need to raise taxes and lower spending to rein in the Federal budget deficit in coming years. The removal of these economic life support measures must be timed and balanced against the numerous secular and cyclical headwinds that will suppress economic growth and tax revenue in coming years. This sounds like a prescription for years of instability. Unless you believe the Federal Reserve and Congress are capable of perfect execution.

The uncomfortable reality is that none of us, including the Federal Reserve and Congress, knows how all of this will play out. What we do know is that we are in a period of instability and higher unpredictability. During periods of instability, the surprises are generally negative. This will require that investors adopt a more flexible investment game plan than quarterly rebalancing a diversified portfolio of assets.

The next potential challenge within the current period of instability will develop in the next six to nine months, as the U.S. economy will: A ) smoothly transition into a self sustaining economic expansion, B ) experience a modest dip, with GDP growth sagging to around 1% to 1.5% before reaccelerating, C ) experience a more pronounced dip lasting up to two quarters with one quarter of GDP near 0% before rebounding, D ) perform a flawless one and one-half gainer after the V-shape recovery stalls and go to hell in a hand basket. The correct answer to this question is important since the financial markets will obviously respond accordingly. Experts suggest that when confronted with a multiple choice question, and a distinct lack of certainty, go with C . If for no other reason, correct does begin with C . However, since forecasting and investing involves a high degree of probability, I would assign the following odds: A 5%, B 30%, C 45%, D 20%.

According to the , the economy grew 3.4% in the third quarter, and will expand 2.4% in the fourth quarter. Next year, they expect GDP to average 3% growth. Their forecast assumes there will be a smooth orderly transition into a self sustaining recovery in 2010, with only the slightest dip in the fourth quarter. They have chosen A .

In order for this forecast to come true, credit availability from the  securitization markets and banking system will have to measurably improve, businesses large and small will need to increase business investment and hiring, consumers will need real income growth so they can save spend more, and global growth must strengthen so exports can increase further. For a self sustaining recovery to take hold in the first half of 2010, each of these significant factors would have to already be improving. They aren’t.

Thirty years ago the banking system provided 75% of the credit funding the economy. Within the advent of the securitization of Fannie Mae mortgages in the early 1980’s, the credit funding process evolved substantially. By 2007, the share of bank funded credit had shrunk to 35%, while the securitization markets for mortgages, auto loans, credit cards, receivables, and student loans provided 40%. In December 2007, I wrote that the Federal Reserve would not be able to contain the coming credit crisis, since the Fed’s leverage on the credit creation process through the banking system had become so marginalized. The securitization markets were created by financial innovation, but built on the trust provided by the rating agencies that the securities bought by investors were worthy of the triple A rating they carried. That trust has evaporated and along with it the private market based credit funding our economy depended upon to finance economic growth. In 2006, the amount of home mortgages not securitized by government agencies was almost $750 billion and was $700 billion in 2007. In the first half of 2009, just $8 billion has been securitized by non government agencies. Commercial real estate securitization has vaporized from $200 billion in 2007 to $0 so far in 2009. The securitization of auto loans, credit card debt, receivables, and student loans has also contracted significantly.

To fill this void, the Federal Reserve launched its Term Asset-backed Securities Loan Facility program (TALF). Through mid-September, the Fed has purchased $905 billion of government guaranteed mortgages to keep mortgage rates low. The Fed has said it will continue buying until it reaches $1.25 trillion. It is estimated that the Fed’s purchases represent 80% to 85% of the market. In other words, . Will the mortgage market continue to function, without Federal Reserve life support? Maybe. I’d feel better if the Fed’s market share was closer to 25% or less, as the $1.25 trillion ceiling approached. It is likely that the securitization markets will operate with diminished capacity for an extended period, as they are weaned from the Fed’s substantial support.

Lending by banks will remain constrained as lending standards remain high and banks, large and small, absorb additional losses on every type of credit. According to the , the delinquency rate on bank credit cards, home equity loans, and home equity lines of credit hit record highs as of June 30, driven by rising unemployment and falling incomes. Unemployment rose and incomes weakened further in the third quarter, so delinquency rates have not peaked. Bank balance sheets will be further burdened by losses from commercial real estate, as regulators push banks to set aside more in loss reserves for their commercial real estate exposure. The reduction in available credit will have a greater impact on medium and small businesses, which do not have access to the credit markets. Small business lending is down $113 billion since the end of 2008, according to the Federal Reserve.

Between 2000 and 2008, the major credit card companies increased the number of credit cards issued to small businesses from 5 million to 29 million. More than 80% of small business owners rely on their credit cards to provide short term financing for their business. According to the recently reported that 79% of the businesses surveyed say lending standards have tightened drastically, along with lowered credit lines. Small businesses employ 50% of the work force and contribute 38% of annual GDP. Small businesses account for 75% of the new jobs created, so the contraction of credit to small businesses will impair job growth in coming quarters.

Between 1982 and 2007, credit and debt grew faster than GDP. Credit availability from the securitization markets and banking system is not only growing more slowly than in the 1982 to 2007 period, it is still . At some point non government debt will begin to grow again, but it is likely to remain weak in the first half of 2010. We won’t see the rates of credit expansion that existed in the 1982 to 2007 period for a very long time. Nor the GDP growth it helped finance.

In September, capacity utilization rose to 70.5%, well below the thirty-year average of 81.0%. The huge overhang of excess capacity will delay when companies will need to buy new equipment, which will mute any increase in business investment in the first half of 2010.

In the second half of 2007, I noted that the Household Employment Survey, which provides the data to calculate the unemployment rate, often leads changes in the reports, 54% of unemployed workers are permanently laid off, the highest in 30 years of records. Roughly 33% of workers have been out of work for over 26 weeks, the highest since World War II.

The average workweek of 33 hours is a record low. Weekly earnings over the last year have risen a scant .7%. Weekly pay for 80% of the work force has fallen for nine consecutive months, according to the In the 44 years of records, the next longest string was 2 months in the 1981-1982 recession. There are now 6.3 people competing for each job opening, far higher than the 2.8 peak in July 2003, after the 2001 recession.

If all these statistics sound bleak, it’s because they are. Last week, Democrats in the Senate reached an accord to extend jobless benefits for another 14 weeks, so nearly 2 million unemployed workers won’t exhaust their benefits by year end.

Consumer spending represents 70% of GDP, and without job growth and income growth, consumers aren’t going to have the disposable income needed to absorb the slack as government stimulus spending runs down in the first half of 2010.

According to the . This suggests that bank lending in the U.S., but more so in Europe, will be impaired through the end of 2010. This will restrain economic growth in Europe. Japan will remain weak in 2010.

China’s GDP is less than 10% of world GDP, and it derives 35% of its GDP from exports. Between 2003 and 2008, the U.S., Europe, and Japan absorbed 65% of China’s exports, according to . Over the last year, Chinese exports have fallen 13%. Given the weak outlook for growth in the U.S., Europe, and Japan, the total volume of Chinese exports to these countries will only grow modestly. In the first half of 2009, Chinese banks increased lending by $1.1 trillion, and the government added a $570 billion stimulus plan. Although a large portion of the Chinese stimulus went into infrastructure projects, there is no doubt real estate speculation has increased and additional export capacity added. Given the weak growth that is likely worldwide in 2010, excess capacity is going to be an ongoing problem in China. And I believe some of the frenetic lending in 2009 will lead to losses for Chinese banks in coming years. After all, bankers will be bankers.

The U.S. economy is not likely to make a smooth transition into a self sustaining economic expansion in the first half of 2010, since each of the factors necessary are not in place. This suggests that the coming dip will be deeper than expected, which will raise fears of a double dip recession. My guess is the appearance of the V-shaped recovery shifting into a sustainable recovery will be maintained into the first quarter of 2010. If the coming dip materializes as I expect, every asset that has rallied in anticipation of a sustainable recovery – stocks, oil, gold – will be vulnerable to a sizable sell off, especially if the answer is C . And if the answer is D , we may have a 2008 déjà vu moment all over again.

Since we won’t know for a number of months whether a self sustaining recovery is at hand, or a double dip, combining technical analysis with fundamental analysis could prove valuable. Until there are significant indications that the rally from the March low is over, based on technical analysis, I will not turn negative on the market.”