February 4,2009
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Brave New CC World, Pt.1
Man Cannot Live by Loans Alone.At least, not for now. We cant simply drop a quarter into the economy slot and expect to get a cute little economic trinket. Neither can we cant simply drop a billion-dollar coin into a credit card lending-industry slot and have a billion-dollar credit card account drop out the chute. In just a few short months, we've seen our credit card industry titans devaluated on wall street to a dime on a dollar. That's like having all your dollars suddenly turn into dimes.
Blame it on those who justify perception as being reality. Sadly, this may be the rule today (and has been for at least eight years). If spokespeople and authorities were called to account more speedily, maybe we could stop it. But, for now, we will have to live with it. The credit card industry will have to shore up its image in the face of the worst economic conditions in most of our lifetimes. Unprecedented credit card defaults will rule the rest of the year. This looks bad to investors. All perception stuff.
This is not an entity analogy but a perception analogy: Would you invest in the cockroach survival industry? Of course not, because cockroaches are so ugly. But you'd lose a golden opportunity (at least on wall street). Cockroaches will probably out-survive humans, the way were going. The only analogy here is perception vs. reality. The credit card industry has inherent survival attributes that surpass almost every other industry.
But, perception is crippling them on Wall Street and speculators will drag recovery to a snails pace while they squeeze every nickel they can out of anything that moves in the market. So don't expect rapid progress in the credit card market anytime soon.