Posted 8/20/2008 07:01:00 PM by Douglas

Interesting article on the next financial bubble that's going to pop: credit cards.

We made it through the bursting of the Internet bubble and now the bursting of the real estate bubble. Next we may be approaching the end of the most worrisome bubble of all: the standard-of-living bubble.

That conclusion comes from the latest data on credit card debt. It's growing fast, but the problem is bigger than that - and to understand what it means, we have to take a few steps back.

[. . .]

But bottom line, the credit card money window is going to start closing - and soon.

That's going to be quite a shocker to most. Not that they're not willing to go hip deep in plastic debt to pay for a smoothie or new rims for the Hummer, but that they can't do it because they can't get the credit because it's not there. But don't miss this little nugget:

In 2005 our personal savings rate went negative, but even that didn't slow us down, because our homes were still appreciating - and rising home values meant that household net worths weren't declining. (Don't be fooled by that saving-rate spike in this year's second quarter; it was probably a one-time event resulting from the federal stimulus payments.)

Thanks, Bush. Your package stimulated nothing.