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Next up in the financial crisis story
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The sudden announcement by the Bush administration in October that the financial system needed an immediate $700 billion investment to stave off collapse, took a lot of people by surprise.
Here's an advance heads up on the next big financial system crisis, due during the first quarter of 2009. The first quarter is typically the worst for credit card delinquencies. Many people go a little overboard with holiday spending and get behind on their payments during the succeeding months. This year, there's going to be more at play than just some people who got a little carried away with shopping.
Some people who see foreclosure and bankruptcy in their future are going to decide "If I'm going to have bad credit, I'm going to have bad credit and a widescreen TV. "If I have to move out of my house, I'm bringing a new gaming system, Blue Ray DVD player and surround sound system to my new apartment. " Feeding the frenzy are news stories featuring "experts" predicting that things are going to get a lot worse before they get better, and others suggesting that it's the almost our patriotic duty to go out and shop to save the economy.
Credit card processors wont be hurt so much as the institutions that actually make the loans. Who are they? You'll have to do your own research on that. I'm observing the forrest rather than the trees. If you want to take advantage or avoid damage in the market, look into which companies have large exposure to credit card debt. Of course the inevitable government "rescue" plan is a wildcard. If you're thinking about going nuts with your own plastic in advance of Armageddon, remember there's a fair possibility the world as we know it is not actually coming to an end. Don't pour salt on your own wounds.
