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Credit Cards: The Next Debacle
WSJ
Meredith Whitney
Few doubt the importance of consumer spending to the U.S. economy and its multiplier effect on the global economy, but what is underappreciated is the role of credit-card availability in that spending. Currently, there is roughly $5 trillion in credit-card lines outstanding in the U.S., and a little more than $800 billion is currently drawn upon. While those numbers look small relative to total mortgage debt of over $10.5 trillion, credit-card debt is revolving and accordingly being paid off and drawn down over and over, creating a critical role in commerce in America.
Just six months ago, I estimated that…
Global Investing Roundups
Ford and Toyota Sales Crash; Triple Airline Merger in Talks; GE Ponders Job Cuts; Sears Closing Stores; Oil Prices Hit 3-year Low; Discover Says More Credit-card Write-offs Likely
- U.S. sales in November fell 31% for Ford Motor Co. (F) and 34% for Toyota Motor Corp. (ADR:TM) Every line of Ford vehicle posted falling sales, and the company responded by slashing first-quarter North American output for 38% to 430,000 vehicles, Bloomberg reported.
- Crippled by global slowdown, British Airways plc (OTC:BAIRY) said it is in merger talks with Australian airliner Qantas Airways and Spain’s Iberia, Reuters reported. Should the three mesh together, it would create…
That Ticking Noise You Hear in Your Wallet is a Credit-Card Time Bomb
For those holding out hope that the American economy can miraculously avoid a long and deep recession, consumer credit is often viewed as the wonder drug that can cure all manner of economic ills. As such, last week’s report showing that consumer credit grew by $15 billion was widely heralded as proof of America’s economic strength and resilience.
The reality is very different, however: We’re already suffering from the after-effects of too much debt, meaning that our salvation cannot be found in more of the same.
Death by a Thousand Charge Slips
Credit card debt, which now stands at whopping $957 billion nationally…
15May2008 | Money Morning | Comments Off | ContinuedThe Nation’s Debt: Collectors are in for rough times
There is no denying when it comes to soaring fuel prices, this nation has a major problem on its hands. Thanks to credit cards, the problem may be exponentially larger than most folks think.
Look at it this way. For the vast majority of us, a stop at the pumps is pretty simple. We swipe our credit card and squeeze. We are $40 poorer, but we never shell out any cash. That pain comes in a few weeks when the credit card statement arrives.
It may not appear to be a major problem for those of us that pay our…
24Apr2008 | Guest Contributor | Comments Off | ContinuedCredit Card Stocks: The Credit Card Fair Fee Act may kill the interchange fee… and credit card company revenues
The nation is in a credit-induced mess. Thanks to incredible amounts of financial leveraging, a small-scale headache for the mortgage industry has ballooned into an economic catastrophe that threatens every global market.
Some of the nation’s largest, most secure banks are screaming for government help. But it is too late. The ripples created by over-leveraging, bad debt, and rising inflation are going to increase the problem exponentially, no matter what Bernanke or any other federal intervention can do.
In fact, for one large segment of the nation’s credit industry, Washington is tirelessly trying to pass legislation that would be a significant burden…
19Mar2008 | Guest Contributor | Comments Off | Continued
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