Originally posted by cigarshark
reply to post by Power_Semi
Great explaination on the current, Thanks. How about a futurecast?
I've been asking others and they can't tell me, maybe you can. Friends and I have been speculating what the next shock and awe might be and we came
up with credit cards.
Mortgages and stocks aside, there are many Americans with 1, 2, 3 maybe even 5+ maxed out credit cards. The circumstances could be from medical
problems, out of work, gambling etc. It could also be just a single mom that is using credit to buy clothes food and health care for the kids and the
bill is stacked up but not maxed.
What happens to these guys? Do the credit card companies (BoA, Chase, et al) raise the rates to the max to recoup instant cash? If the debtor
defaults, do they come get his paid for house and car? Prison for the j6p debtor?
Since the banks aren't trusting and not loaning to each other, seems like j6p is their only cash banquet. I would think they would eat us before
they turn on each other.
Your thoughts, please.
Hello,
yes I'd predict credit cards will be a major problem before too long. The bundling of mortgages into "securities" has caused obvious problems, a
lot of people don't realise that credit cards debts were also bundled in the same way & sold on, so you'd imagine that theres a similarly big
problem with that as well. It could well be that some of that has become apparent already, but I don't think so. The problems that triggered all of
this revolved around investment banks not being solvent, not individuals.
Undoubtedly as more & more people struggle & default on loans & debts, the insurance companies involved as in the first post will start to topple like
dominos & it'll have the effect of banks having to write their assets down further & further, making the liquidity problems worse & requiring more
government funding.
A lot of pension funds invested heavily into mortgage & other debt based securities so it might well be that a lot of people suddenly see their
pensions worthless.
Apart from that who knows where its going, but I think somewhere not very nice. An inflationary depression perhaps?
Various governments could end up unable to pay social security, government employees, etc - who knows, but to all intents & purposes I think that a
lot of banks, businesses, & even countries are technically bankrupt, the only thing holding it all together is confidence that the system still has
some value.
If that goes, which it may do if more & more bad news keeps coming, then it could be time to get out the wheelbarrows to be able to carry enough money
to buy a loaf of bread.
But me like him is wondering why the hell the dollar is not tanking. My only guess is that its so
bad everywhere else that even as bad as America is right now its the lesser of the evils. Crazy times indeed.
