Credit Card Debit

Originally posted 2008/10/02 at my old site.

Everyone knows that the economy is having some challenges, and I've thought a lot about it and even written a bit, but I haven't had time to make what I think concise and clear. Here's one thing which I don't see being talked about, which I think will have a very major additional negative impact.

I think there will soon be a crisis in credit card debit leading to a crisis in personal bankruptcy. None of the "solutions" being approved by the US congress really solve any problems for consumers. The people who foreclosed on homes tried very hard before they gave up. They are broke. This crisis and the "solutions" are not helping any of those people. Anyone who was close to bankruptcy is now even closer. The only credit left, which anyone has access to, is on their credit card.

Levels of debit are sickeningly high. As we go into recession, people will be unable to make payments for either their credit cards or anything else they owe. Credit card companies are strongly protected by the current bankruptcy law, but when people are squeezed, they have to react somewhere. A lot of people are not going to get money they think is owed to them. A lot of people are not going to be able to buy things soon.

I predict depression.

The economy has been riding on credit for an unsustainable length of time. There is really no money in the bank and we have been shuffling money around trying to fool ourselves otherwise.