December 10, 2008
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News: Wall Street Continues to Buffet CC Industry
Like movie critics, analysts are wielding their sway on Wall Street by targeting poor earnings and lower stock values for major credit card lenders. Forecasting problems into 2009, credit card industry stock prices continued downward for the second day in a row. Perhaps raising interest rates was the wrong message. Perhaps the lenders should have perceived that debtors would police themselves better and regulate their spending more responsibly on their own…naaaaah! Can't fault them for that…this may be the first time it has ever happened. It's a positive thing that credit card holders have stopped running up debt they can't pay. It's a good thing that consumers are adjusting down to their actual means. But this does cause the momentum of the huge ship, named ‘the credit card industry' to ram the dock pretty hard.
This ship, however, is known for having flexibility and resilience and seems to survive like wisteria. Even with less spending, consumers are drawn to credit cards for their convenience and protection. With the recent governmental contributions, both for the credit card industry and for consumers, our nation will likely be more robust then it ever has been.
That said, it's widely accepted that credit card spending will be somewhat subdued into 2009. Card industry earnings will falter for a while as will the fragile retail industry. Both MasterCard and VISA have implemented successful measures to prevent a freefall and are gaining more stability. As debt is reduced to more healthy levels, consumers should begin start to charging more responsibly. Unemployment, however is another story. Bush-whack economics will continue in carnage until our new President can implement completely different strategies and get them up to speed. Until then, depressed paychecks will rule the day for the near future.
So the lashing on Wall Street continues, as our nation evolves to survive the philosophical shift to living within it's means. Major Wall Street analysts have hammered AmEx, chastened Chase and the others while deigning Discover. Capital One came out all right for it's diversified relative strength.