Taking a playbook straight from Wall Street, consumers maxed out their store-branded retail cards and decided simply to not pay them in November-December. And even that could not prevent December retail sales from coming it at below expectations: one wonders just what it is that will drive the retail dynamo that ever more clueless pundits on CNBC claim will boost 2010. Here are the facts: "Fitch notes that in December more than one in every eight dollars of receivables was written off as uncollectable during the November collection period on an annualized basis." Well, at least the government (if not private retailers) got something out of this and managed to revise November sales slightly higher. Good luck repeating this.

One knows when a "rating agency" tells you things are bad and getting worse, it behooves one to listen:

"We do not foresee any meaningful improvement in the retail card credit quality in the coming months," said Managing Director Michael Dean. "U.S. consumers remain under stress on a number of fronts, most notably on the employment front, and retail card chargeoffs will continue to reflect those pressures."

Despite the elevated chargeoff and delinquency measures, Fitch expects retail card ABS ratings to remain stable throughout 2010. Excess spread remains robust, which coupled with loss coverage multiples and other structural protections will shield investors from potential downgrades or early amortization scenarios.

In December, Fitch's Retail Credit Card Chargeoff Index snapped a two-month decline, rising 122 basis points (bps) to 12.56% from the previous month.

Throughout 2009, chargeoffs surpassed the previous record (12.25% in January 2005) five times, establishing a new all-time high of 12.81% in August. Throughout the year, retail chargeoffs averaged 11.88% (more than 42% above the historical average of 8.34%).

Perhaps consumer have finally figured out the great scheme: if nobody will lend to you, what use are good FICO numbers? Which is why spend, spend, spend, and max out anything and everything you can. As for the consequences: well, just write a letter to Obama, explaining how your $50,000 in credit card debt makes you too big to fail. If you are lucky, you just may get bailed out. Holding a few trillion in Interest Rate swaps with Goldman as a counterparty sure would help.

High unemployment and ongoing household deleveraging will continue to limit demand for consumer credit in 2010. Consumer confidence as measured by the Conference Board remains historically low despite rising in the most recent period and unemployment is expected to remain elevated averaging 10.2% in 2010. 'Households will remain cautious with their spending and further curtail their use of retail cards in 2010,' said Dean.

This does not bode well for prospects of a robust rebound in retail sales or credit usage in 2010 as the employment situation and economic environment overall continues to weigh on consumers' spending decisions. The latest Fed figures show revolving credit usage decreased at an annual rate of 18.5% in November - the largest dollar-value drop since 1968 and the 14th consecutive decline since October 2008. As long as the employment and income growth remain weak, demand for consumer credit - especially retail credit - will be limited.

Well, with credit increasingly limited, thank god consumers at least have jobs, savings and steady incomes to fall back on. Otherwise one may be forced to take all those predictions of strong retail performance in 2010 with just a grain of salt.