http://news.yahoo.com/s/ap/20071223/ap_on_bi_ge/credit_card_crunch;_ylt=AkYCsnkfuA6MZnzfkxtxo52s0NUE looks like more rough times are ahead, and people are looking for more credit to splurge for christmas in a few days... we went extremely simple this year for christmas- we figure it happens, oh well. no splurging for us, and we get 2008 off to a nice clean start. but man, it freaks me out to see all this happening... i wonder how bad the economy's going to get here. this can and will affect everyone, even those of us who have worked hard to stay out of credit card debt.
Don't be surprised if 2008 brings with it a recession. A recession will be the latest present of dubya's leadership. He really has been a bad experience.
i thought we were already at a recession... anyhow i just got out of my credit card debt... i wanted to have clear of credit cards for 2008... but i'm not surprised.. many people seems to be hit by this whole housing department... a friends company released 50 workers a week before christmas... kinda sad... actually.. really sad
Question 1) Spot the disconnection in the following snippits: "Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come." . . . "people are looking for more credit to splurge for Christmas in a few days..." I realize the first quote is from the article and the second is from G, but it's true and it's sad. How do people just not make the connection? Wasn't there a time once when if you couldn't afford it you didn't buy it. Sure it sucked to have to explain that you can't afford it, but at least you weren't in debt because of all the frivolous consumables you bought on credit. The feeling you get from reducing or eliminating debt is a much more positive feeling than the one you get when the collection agency calls or the bank files foreclosure on your house.
Putting typical AP hyperbole into clearer perspective, if the credit card default rate rises, for example, from 4% (normal in any economy) to 5%, that translates to a 25% (double-digit) increase. Hardly a reason for a bank run or to jump into the bunker. It's perfectly normal economic cycle, made worse by far too many people trying to live well beyond their means for the sake of impulse buying and instant gratification.
No recession yet, at least not the formal definition. We need two quarters of economic decline to qualify as a recession. Tom
First off, as I have lamented in another thread, the great majority of Americans are innumerate: They do not understand numbers, are afraid of numbers, and therefore they refuse to think about numbers, including how their current debt affects their overall finances. Second, their ability to think rationally is so utterly absent, that they are not able to judge rationally the future impact on their lives of present debt spending. (Congress suffers from the same inability, leading to huge national debt.) Third, they suffer from the perfectly normal human desire to have more stuff. And finally, banks are willing to give people more credit than is good for them. They are able to charge enough for that credit that the good accounts pay for the deadbeats, and the banks make money in spite of the defaults. And like any business in a capitalist economy, their purpose is not to provide a service to the public: their purpose is to make money. But it's nothing new. Before there were credit cards, stores sold durable goods on credit. Cars, furniture, appliances, you name it; all were sold on credit, and a certain percentage of people failed to make their payments and the store took the merchandise back. This is very true. But the answer would be, "But I need this stuff now! There is an analogy to eating that a lot of folks here will understand: The overall good health of eating healthy foods, and eating them in moderation, feels much better than the transitory pleasure of eating unhealthy foods, or eating in excess. And yet most Americans eat unhealthy foods, and eat them to excess. Every time you eat an excessive quantity of meat or sweets you go into "health debt" for the momentary pleasure of the taste of the food. And yet only a small number of people eat a healthy diet. Credit card debt is essentially the same thing.
as my dad put it, they're all out there madly buying shiny crap they can't afford using money they don't have. . _H*
Don't overlook that virtually all the schools teach algebra and more advanced subjects....but never cover how loans work. Had to learn that on my own. On my first (and only) loan, I figured out that if I paid one dollar extra, that the total amount saved over the life of the loan was $12. WHAT!!! HOLY CRAP!!!! PAY THAT SUCKER OFF ASAP!!!!.....Banks have gone all out to maximize their return at the expense of the person being loaned!!!!......Oh.....Duh!
it's most important to pay hardest when the balance is largest, to top it all off... geez it's all so complicated... far less important to save $10 paying my last 2 car payments together than to pay harder when i still owe twenty grand and watch the savings trickle down over the life of the loan. and most people's credit cards charge FAR FAR more than a car loan! and there are people who DO owe twenty grand on a credit card! yet, when balances are the highest is usually when people are overwhelmed and making minimum payments...
With the way the current administration (with a little help from Bernanke) is responding, I think there is better than a 50-50 chance of seeing the 2 quarters of negative economic growth in 2008. My guess is Q1 & Q2. Of course, if the Xmas shopping season tanks, then it could be Q4 2007 & Q1 2008. The real risk is 1980s style stagnation with inflation.
It's 1976 all over again. We'll have a horrible recession, which of course President H. Clinton or President Obama, whichever one gets elected, has no way of cleaning up in only four years, so of course they get the ENTIRE blame for it, which leads the way to a one-term presidency. On the other hand, the news isn't as glum as it seems.
