Thread: The strongest economy in the world
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Old 06-11-2007, 10:46 AM   #548 (permalink)
Milkman
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This may be an exaggeration, but U.S. Auto-Loan dilinquincies were at a record high recently. subprime, Alt-A + auto loand + almost $1 trillion in credit card debt, higher gas prices eating into consumer spending to pay bills and feed 70% of the economy.

This may be a recipe for the perfect financial storm. We'll have to wait and see.

Quote:
The $915B bomb in consumers' wallets

Americans have record credit-card debt and banks are starting to sweat an uptick in default rates, reports Fortune's Peter Gumbel. Why some fear this could be the next subprime.


By Peter Gumbel, Fortune
October 30 2007: 1:15 PM EDT

(Fortune Magazine) -- This past summer's subprime meltdown involved about $900 billion in now-suspect securitized debt, reckless lending, and consumers who buckled under the weight of loans they couldn't afford. Now another link in the consumer debt chain - credit cards - is starting to show signs of strain. And the fear that the $915 billion in U.S. credit card debt (an uncannily similar figure) may blow up has major financial institutions like Citigroup, American Express, and Bank of America strapping on their Kevlar vests.
Last month, as banks reported their worst quarterly results since 2001, concerns about rising credit card delinquencies began to make their way onto earnings announcements alongside mentions of subprime woes


First Citigroup (Charts, Fortune 500), reporting a 57% decline in earnings, cited higher consumer credit costs and said it would put aside $2.24 billion in loan-loss reserves to cover future defaults.
Link: The $915 credit-card bomb in consumers' wallets - Oct. 30, 2007
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