Card issuers are struggling to defuse a consumer-debt bomb that could blow an estimated $41 billion hole in their businesses this year – and even more in 2009 (by bussiness week)
The troubles sound familiar:
Borrowers falling behind on their payments. Defaults rising. Huge swaths of loans souring. Investors getting burned.
But forget the now-familiar tales of mortgages gone bad. The next horror for beaten-down financial company is the $950 billion worth of outstanding credit card debt – much of it toxic.
That’s bad news for players such as JPMorgan Chase and Bank of America that have largely sidestepped – and even benefited from – the mortgage mess but have major credit card operations. They’re hardly alone. The consumer-debt bomb is already beginning to spray shrapnel throughout the financial markets, further weakening the U.S. economy.
“The next meltdown will be in credit cards,” says Gregory Larkin, a senior analyst at research firm Innovest Strategic Value Advisors.
Adds William Black, the senior vice president of Moody’s Investors Service’s structured finance team: “We still haven’t hit the post-recessionary peaks (in credit card losses), so things will get worse before they get better.”
Any statement that speaks about the specifics would always be flawed when judged again generalities; obverse side of this also holds ground because exceptions always prove the point.
With that said, rest of the lines in your post, in fact, proves my point. I didn’t speak about or by any mean predicting the imminent collapse of “capitalism” as a system, though the failure is inevitable yet not impending, there are more than many reasons for my belief that if the system doesn’t reinvigorate, eliminating the thriving factor of immense greed and acquisition , it is likely to fail world wide.
I agree that unchecked growth is unsustainable and that is why a boom is followed by a bust, yet paving a way for another boom, however a bust at US may result a boom at some place else.
Recent plunge of the banking sector is a cascading effect of unregulated sub prime mortgage practices, and we will be naive to believe that ripples will not spill over to credit card side of speculated money market. You may know that there are trillions of speculated dollars in credit card market, and you may also know that companies like VISA and MASTER CARD are not the supplier of the cash behind these speculated transactions, there are banks on behalf of which a businesses are offering commodities to the consumers, what if tomorrow it is reviled that 50% of this speculated money is unrecoverable, banks will quickly stop paying on behalf of busted consumers bringing down the whole enchilada of consumer based economy to its very foot print.
US economy is 100% consumer economy, capitalism will keep thriving as long as people have either real or even speculated buying power, however the systems runs on shoulders of financial institutions, most of which are feeling the heat and some failed to survive, FED is trying hard to bailout the big names leaving behind a big question, who will bail out the FED?
I do not go to any finance realted websites just because they give me depression.
Ab GS per bhee yeh sub parhnay ko mil raha hay.
Ya Allah main manjhee kithay dhawah , kayray pasay jawan .
US economy is 100% consumer economy, capitalism will keep thriving as long as people have either real or even speculated buying power, however the systems runs on shoulders of financial institutions, most of which are feeling the heat and some failed to survive, FED is trying hard to bailout the big names leaving behind a big question, who will bail out the FED?
bush chacha to taway per haath rakh ker bhi baat karey to itebaar nahi kerna chahiye
Waisay buffet sahab ki baat kaa itebaar kiya jaa sakta hai constantly kah rahey hain stock khareedo “Be fearful when others are greedy, and be greedy when others are fearful.” invest karo
^^ Can we be speculative about the past, things have already happened. Assertion like "every thing will be fine" is more like a lullaby offered to a mother who lost her only child.
