A Little Late, Buddy
June 4th, 2008 by Buck Woodford
This headline hit my screen today.. I believe the author’s name was Captain Obvious.
Surge in credit card use could bring more woes
Analysts warned that the situation likely will lead to long-term problems for the consumers, banks and the overall economy.
Ya think? Excessive credit card debt is not anything new. If it were, there wouldn’t be any big deal as we drew down the first portion of our credit lines. Unfortunately the newsclip continues..
The problem is exasperated by the fact that many Americans, as well as Europeans, are already delinquent on their credit card bills.
Consumers have seemingly always been encouraged to spend, spend, spend (in this decade as a way to show our “patriotism”). Events have been headed this direction for a long time — and it’s not the fault of Bear Stearns, subprime mortgages, Miami condo flippers, or Ben Bernanke. It’s simply the inevitable topping out of growth in a mature, credit-drenched economy. Nobody/nothing stays young forever.
As several notable traders have mentioned, MasterCard (MA) and Visa (V) don’t take on credit risk, but are paid for transaction processing. They are the only two financial stocks I’d consider pursuing in this environment.
