On the issue of credit card debt and the deteriorating health of the US consumer, the FT reports on Thursday:
Record credit card losses are pushing big US banks to come to the rescue of off-balance sheet vehicles they use to transform hundreds of billions of dollars in consumer loans into securities sold to investors. The support provided by Citigroup, Bank of America, JPMorgan Chase and American Express underscores how the deteriorating health of the US consumer is opening new fronts in the financial crisis.
Losses on US credit cards as measured by Moody’s Credit Card Index rose beyond 10 per cent of total loans outstanding in May, a new high in the 20-year history of the index and the sixth consecutive monthly record.
Meanwhile, on the issue of ‘ye olde credit card shuffle’ — which used to keep this problem in check — Bloomberg reports:
June 24 (Bloomberg) — JPMorgan Chase & Co. is raising some balance-transfer fees on credit cards to 5 percent, the highest among the nation’s largest banks, citing increasing regulations and costs after the U.S. put new curbs on the industry. JPMorgan, the biggest credit-card issuer, disclosed the increase in a notice mailed to customers this month that referred to “new federal regulations.” The New York-based lender starts charging more in August, just as the law to curb interest-rate increases, fees and marketing practices begins to take effect.
Who saw it all coming?
Among the notable divinations:
I estimate that the mortgage market will shrink for the first time in US history and that the credit card market will be 18 months behind it.
I would say that you shall see the death of Agamemnon.
While the credit card market is small relative to the mortgage market, it has grown to play a key role in consumer liquidity. Declining liquidity here will have disastrous effects on consumer spending and the economy.
Thus the great gods have sworn with mighty oath - why grieve then for myself? I, who have seen Troy suffer what she suffered, it is fit that those who triumphed over Troy should pay, by the just judgment of the gods the price of their iniquities.
Related links:
Sorry sir, your credit-card has been rejected due to insufficent lender’s funds - FT Alphaville
Yes Meredith, we know you’re worried about credit cards - FT Alphavill
Agamemnon, a tragedy - Google Books
