Bad Credit-Card Debt Could Be Next Shot To Economy, Researcher Says

[Purveyor]

CHICAGO (MarketWatch) -- Credit-card debt is on the brink of imploding and will be the next storm to hit the fragile finance industry, an investment research firm predicted this week.

According to Innovest StrategicValue Advisors, banks will charge off $18.6 billion in delinquent credit-card accounts in the first quarter of 2009 and $96 billion in all of 2009, more than double the research firm's forecast for all of this year.

Innovest projects that amount would be high enough to damage some of the biggest card issuers.

Credit-card charge-offs are "defying gravity" when compared with the problems in the mortgage market, according to Gregory Larkin, senior banking analyst for Innovest. But that will change as they catch up with mortgage charge-offs, which have spiked eightfold since the third quarter of 2007.

"If history is any indicator, there should be an equivalent surge of credit-card charge-offs very soon," he said, though he concedes that an eightfold increase would be very aggressive.

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[mrJJ]

1. same ole same ole

$596 trillion in derivatives debt (Thank You, Sen Gramm), over $2.5 trillion in credit card debt, and $58 trillion in credit default swaps

http://www.wallstreetdigest.com/hotline.php

[meegbear]

2. I'm sure them being able to raise the percentage rate up to 31% has nothing to do with it

:grr:

[daninthemoon]

3. I've been wondering how much the predatory credit card and

interest rates has to do with this mess. I suspect it has quite a bit. My only problem with biden is the credit bankruptcy bill.

[Warpy]

4. Per capita credit card debt is staggering

but the real bomb goes off next year when all those bad mortgages the sleazy outfits like Countrywide wrote in the waning days of the real estate bubble start to reset and default.

Most people can handle those monthly minimum credit card payments. What they can't handle are balloon payments on an interest only mortgage on a $500,000 shack in California or Las Vegas.

The problem with the credit card debt is DEPRESSED WAGES. If that is ever addressed, that debt will likely be far less problematic than the bad mortgages were.

[dkofos]

5. Will there be money left in the treasury to cover this? NO

Time to NATIONALIZE THE BANKS!!