Boundaries of Executive Power (2) — Plastic Fantastic Credit Crash
…As with the auto industry in Detroit, some of the credit-card industry’s current problems have been years in the making. Over the past decade, U.S. households have been loading up on debt, with credit-card balances rising 75% since 1999. Yet families’ real wages have increased only slightly — by just 4% during that same time period, according to Innovest. The savings rate has similarly declined relative to credit-card balances. Meanwhile, home equity, the biggest source of wealth for most families, has been drained by the mortgage crisis. “There isn’t a cushion for anyone who has a bump in the road,” says Levitin. “Credit cards are often the first place where we start to see all the other problems show up, from medical bills to divorce to a death in the family.” And then, of course, there’s unemployment. Thus, it’s not surprising that credit defaults are up dramatically, at the highest rate in six years….
Stan Moore:
My personal view is that the credit card industry will, indeed, implode and that forthcoming reality will result in the panic that breaks the back of the system.
It is terrible for people to watch their savings and their retirement funds disintegrate. But people cling to hope that the system will right itself, that the economy will improve, that the government will eventually intervene, etc.
But many people use credit cards to buy perishables and the necessities of life when their paychecks run short, which happens regularly. When a lot of Joe Citizens go down to WalMart to buy formula for their baby, or a quart of oil for their engine, and their credit cards are declined, the panic will form quickly.
When panic builds beyond a certain point, revolution occurs.
The government will intervene against dissidents as effectively as possible to prevent dissent from organizing into revolution. Ways this could be accomplished will be military control of the internet and emails, preventative detainment of agitators, misinformation campaigns by military psychological warfare operators, government manipulation of the public media to control information, final removal of Posse Comatatis (spelling?) and stationing of military forces throughout the public areas of the country, including urban areas for purposes of “public safety”, and so forth.
Only the wealthy and the government elite will qualify for the new Amerikard.
Stan Moore
14 November 2008, 9:27 pmPetaluma, CA
Craig:
The article you linked to is not one of Time’s strongest efforts.
“Yet families’ real wages have increased only slightly — by just 4% during that same time period, according to Innovest.”
Median or mean, and what is a family? This statement is worthless, because if you consider the lowest quintile of working adults, for example, their median wages have not kept up with inflation at all, and of course this adjusts using the core component of the CPI, which is not really a good indicator.
“Banks, forced to keep more debt on their books, are less willing to lend to anyone who doesn’t have a high FICA, or credit quality, score.”
FICO, not FICA.
If you’re looking for your dreams of capitalist Armageddon to come true, (FYI, I am, too), I’d focus on the awful retail numbers, hedge fund redemptions, commercial real estate, and option ARM and jumbo mortgages before considering credit cards, whose significance comes from being yet another source of income that is denied the banks. One must ask how banks can make money in this deflationary environment.
15 November 2008, 12:22 pmLegume Sam:
I like that song “Plastic Fantastic Lover,” from the Jefferson Airplane’s (1967) Surrealistic Pillow album — it’s about people who watch too much TV — I presume that’s where you get your post’s title…
STAN: I am found out. (:
17 November 2008, 2:22 pmKevin:
The Secret History of the Credit Card
18 November 2008, 4:10 amMichael Anderson:
Couple of Noami Klein links from this A.M. that flesh out more of the details of the holdup, er, bailout. This gives me a pretty good idea of the funky movie that next year (an maybe a few more years) will look like…Obama is going to be playing the role of a willing hostage, and we the ransom. This will definitely require that his campaign organization and personnel keep going….the perpetual re-election machine, with YouTube Fireside Chats to boot. I allowed myself the luxury of (a little) hope for a couple of weeks. Well, as Firesign Theatre once put it…”fun’s over, back on the bus!” (We’re all bozos on this bus)
http://www.alternet.org/workplace/107458/?page=entire
http://www.thenation.com/doc/20081201/klein
18 November 2008, 9:49 amcharles:
http://www.fpif.org/fpiftxt/5765
29 December 2008, 3:37 pmThe Coming Capitalist Consensus
December, 26 2008
By Walden Bello