December 5, 2008
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News: CC's Can't Compensate for Unemployment & Low Pay
We've got prime borrowers with good credit ratings going into default for lack of pay. We've got responsible credit card lenders getting hammered by all these unexpected defaults. We've got sour speculators on Wall Street who could care less the reason why. We've got a retail industry that's going bust because consumers have low pay. We've got sincere consumers running up their credit card debt to feed, cloth and provide medical attention for their families because of low pay. If there's any good news at all, it's that credit cards have, at least, provided the buffer we didn't have in 1939.
The U.S. Labor Department is telling us that, just last month, out nation's businesses lopped off jobs more quickly than they have in 30 years. This has plunged our nation into the steepest unemployment jump we've seen in 15 years. Like everything else, we like to stay optimistic as long as we can (except for Wall Street). We've already swept past the 1994 recession in severity and now we're considering blowing away the even worse one back in 1981-1982. We're pressing hard on the brakes though. The Fed is getting ready to drop interest rates to those of 50 years ago. We're on a roll here, with 11 straight months of decline in employment and heading for the record set in 1974. Thank God for credit cards. Though our credit cards went in default a while back, we're only now being thrown out on the street from foreclosures.
A few of us can still buy food and fuel with our credit cards, though. That's a good thing. The unemployment rate went up another 0.2% last month to reach the pinnacle set back in 1993 at 6.7%. Alas, the 1993 record is brushed into obscurity as we continue on our path to 8% in the coming months. Then, who knows? Some say 10% by 2010 when we may level off.
Not to worry, we still have our credit cards. But don't quit your day job just yet (if you have one). It may be a few years before you find another one.