Monday, October 27, 2008

Credit card debt will be next shoe to drop in pushing U.S. economic fortunes further down

My mentor, the Rev. Joe Pat Breen, was recently in the self-checkout line at Kroger's behind a couple with children.

The man took out one credit card and tried swiping it through the payment machine.


He took out another credit card.

The same result.

Finally, he asked his wife for a card. And it worked.

The reason for this situation was obvious. The family had racked up so much debt on the first two cards that there was no longer any credit left. That's probably $5,000 in debt on each at 18 percent interest. And who knows how much is on the third card. So you're looking at $12,000 in debt on this family -- at least, with the high interest rate quickly boosting the amount owed.

The same scene is being repeated in grocery stores across the country. And it explains why American consumers are holding $4.4 trillion in personal debt.

The ongoing economic downturn is going to result in families filing for bankruptcy and defaulting on their credit card debt. And the same banks now getting $250 billion from the federal government in bailout money are going to be back before Congress and the Department of the Treasury asking for more.

Look for this economic shoe to drop during the holiday season, further depressing the buying season and sending the stock market down, down, down.

Finally, a bailout from Washington, D.C., will have to be aimed at helping the people first, not the next industry. If the people perish, so will this nation.

No comments: