Consumer borrowing fell for the eighth straight month in September. This record-setting streak is due largely to tightening by lenders, unemployment and the conservative preference to pay down debt rather than spend. This widespread fit of fiscal responsibility, economists fret, could prevent a recovery from taking root, since consumer spending is responsible for 70% of the U.S. economy. This conventional thinking, of course, overlooks the fact that an eventual increase in spending that isn't fueled by consumer spending will yield a recovery that's more likely to last.

According to the Federal Reserve, borrowing fell at an annual rate of $14.8 billion in September -- it's biggest drop since July and much larger than the $10 billion predicted by economists. The behavior is exactly what you'd find in people worried about losing their jobs or focused on rebuilding safety funds and investment portfolios. Those who want to borrow are finding banks won't be complicit this time, as they clamp down on lending practices.

What happens when a bank has to accept the collateral posted for loans? Well, in Russia, it's like the punchline to a bad Yakov Smirnoff joke. "In Russia, when a bank takes collateral, it has to set up a pigpen!"

Well, this is exactly what happened to Alexander Lebedev's OAO National Reserve Bank. It wound up with 40,450 of them. As Russian banks are coping with the financial crisis, they are finding themselves with a variety of hard goods that they never expected to receive.

Everything is fine, right? I mean May was a great month, following a solid April - so we are out of the woods, right? Not so fast my friend, there are some hints that we could hit a second credit crisis. According to this article, some early warning signs of another global financial crisis include surging government bond yields, a slumping dollar, and the end of the bear market rally in the U.S.

The most worrisome possible signal is the heavy selling of U.S. dollar-denominated assets, which could "trigger a full-blown currency crisis and usher in surging inflation." This assertion means that we should be a bit concerned that the Treasury note yields' surged to six-month highs near 3.75% this week. This move indicates that investors may be concerned about the U.S. government borrowing requirements this year.

Wells Fargo (NYSE: WFC) is set to report earnings on April 22, but the bank stated this morning that it expects to report first-quarter income of nearly $3 billion. WFC's preliminary first-quarter earnings are 55 cents per share, compared to 60 cents per share a year ago. These figures are after "preferred dividends," which include $372 million in dividends paid to the government - these charges are taken into account.

The early reports of earnings of 55 cents per share are far better than the consensus estimate for 31 cents per share. WFC added that total revenue for the quarter should be $20 billion.

Ah, yes. Tuesday, baseball season, and new NCAA champs. Sigh. Online classified ad growth skyrocketed by 84% in February, according to Hitwise (tip to MarketingCharts.com). The bad news? Craig's List and other free classified sites dominated the growth, further sealing the doom of newspapers. Steve Ruble of Micropersuasion interviewed Jeff Jarvis of "What Would Google Do?" fame (and Buzzsaw, of course) and asked what the future of online advertising was. The reply? Bleak to non-existent.

In the film version of Tennessee Williams' 'Cat On A Hot Tin Roof' (1958), Maggie 'The Cat' (Elizabeth Taylor), knows her husband Brick (Paul Newman) is hiding something, but she can't figure out what it is.

Later, we learn that Brick is hiding the truth about his father, millionaire Big Daddy (Burl Ives), and he slowly gathers the courage to end the mendacity that has permeated their lives.

At some point the nation will, likewise, end the mendacity about American International Group (NYSE: AIG) and announce the full, probable cost of the orderly stabilization of AIG. For economic conservatives, market absolutists, most Republicans, and others who oppose government intervention, the above would be bad news, but at this juncture, it appears to be unavoidable.

After the closing bell sounded yesterday afternoon, MBIA (NYSE: MBI) stepped into the spotlight to report fourth-quarter earnings. The struggling banking firm saw its fourth-quarter loss shrink to $1.2 billion, or $5.30 per share from last year's fourth-quarter loss of $18.55 per share.

This quarter's loss came courtesy of a $1.7-billion and a $532-million loss on insured derivatives. Both of these losses were logged pre-tax. The company's CEO Jay Brown blamed the rough 18-month period on the "worst credit crisis since the Great Depression." Last year was a rough year for MBIA, as the weak housing market lead to many homebuyers and homeowners defaulting on or lagging in their mortgage payments leading to a major problem for MBIA, which insures mortgage bonds. The problem for the banking firm is that the mortgage turmoil is expected to continue.

The world's largest maker of farm equipment is due to report earnings on February 18 and the outlook is generally bleak. All of the major drivers behind Deere's (NYSE: DE) formidable business appear to be headed into a tailspin. Global agricultural commodity prices have come down significantly from peaks in 2007 and 2008, leaving farmers with less money to spend.

Looking at the jobs and retail landscapes, it would make sense to assume that consumers are slow in paying credit card bills. In some cases, they are not paying at all.

The actual trends are getting much worse, and banks with consumer credit exposure may be in for a rougher time than expected. According to Reuters, one credit rating agency is getting more business. The news service reports, "And more lenders are requesting an Equifax product called 'bankruptcy scores' that expresses the probability that an individual will be bankrupt over the next one to two years."

We all know the harsh reality of the tough economy we are in. We are dealing with a recession that no one can foresee ending at this point. This morning we got another hint at how bad things are with the release of 2008 construction figures, which showed construction spending in 2008 fell by a new record amount.

The Commerce Department released December construction figures today, which showed spending in December fell for the third month in a row, with a reported 1.4% decline during the month. This was a bit worse than the revised 1.2% decline that analysts had been expecting to see for the month. Previously, the November figure was showing a drop in spending of only 0.6%.

Yes, you may hear that the corporate bond market is breathing again and the exotic "TED spread" -- the difference between T-Bill and LIBOR rates -- is shrinking, but no one is lending money to anyone and confidence is non-existent.

Recently the entire country of Spain (meaning Spanish national debt) was put on credit watch due to deteriorating economic conditions.

Remember, the Wall Street Crash of 1929 and the Great Depression (I am not forecasting either one, by the way) started at a medium-sized bank in Austria, not on Wall Street or in London.

Credit markets are not only frozen because we don't know what is on the banks' balance sheets; they are also frozen because banks are repairing their own balance sheets by hoarding capital.

Be sure to read all 7 reasons the stock market isn't going up any time soon.

Michael Shulman is a contributor to OptionsZone.com.

The banks are a wreck and now the pieces are beginning to fly apart, with Citigroup (NYSE: C) struggling the most and beginning to dismember itself.

Meredith Whitney, the uber-analyst who has been right about everything in banking for more than two years, said there were $2.4 trillion in asset downgrades at the end of last year by the credit agencies. This will really whack the banks' critical Tier 1 capital.

And even if you forget earnings problems, the banks will continue to have no money to lend, which will strangle businesses and the economy.

Be sure to read all 7 reasons the stock market isn't going up any time soon.

Michael Shulman is a contributor to OptionsZone.com.

Almost everyone who can get a quote in the newspaper or five minutes on TV has a solution to the global economic meltdown. These range from more financial regulation to stimulation of housing to government programs to create new jobs.

The head of the IMF put all of that into context with his opinion that spending by nations around the world to help get it out of a deeper and deeper recession has not been nearly enough. According to Reuters, "The IMF has called for fiscal stimulus -- higher government spending and temporary tax cuts -- worth $120 trillion, or 2 percent of global annual economic output, to fill the gap caused by slumping private demand following the credit crunch."

The view is, to a large extent, mirrored by the plan Obama has suggested. Spend money now even if it puts the government into a huge debt hole. But, does it make any sense?

Recent studies indicate that in spite of popular thinking, there is no credit crunch.

Bank credit and bank lending are at all time highs. Companies with good balance sheets are having no problem in obtaining credit. The Libor Rate, which is a measure of lending activity, is down to 2%. Even economists at the Federal Reserve are baffled by widespread comments that the U.S. is having a credit crunch.

According to reports on the credit situation, it was only a few banks that got overextended and got into trouble, which then triggered the huge bailouts we have seen.

Now where do we go from here? There should be some kind of investigation as to the number of banks and which banks caused this mess. These bankers should be identified and asked to step down immediately. We no longer can tolerate such obvious misdeeds.

The Government Accountability Office, Congress' investigative arm and watchdog, said the U.S. Federal Reserve and the U.S. Treasury have the authority to bail-out the Big Three automakers, marketwatch.com reported Thursday.

Gene Dodaro, acting head of the GAO, said the Fed and Treasury could provide loans to the struggling U.S. automakers under an emergency loan designation.

The above ruling conflicts with the view of U.S. Treasury Secretary Henry Paulson, who has said that the $700 billion in TARP funds administered by the Treasury Department can only be used for financial companies.

However, Dodaro said the TARP legislation "is worded broadly enough" to allow Treasury to lend money to General Motors, Ford, and Chrysler, marketwatch.com reported.

Shares of GM (NYSE: GM) fell 33 cents to $4.57 while Ford (NYSE: F) fell 4 cents to $2.81 on Thursday at mid-day.