Creditcard Industry News

There is a lot going on in the financial sector these days. People are going broke from the oversaturation of debt and the lenders are starting to pay the price. Today the Congressional Budget Office reported that Fannie Mae and Freddie Mac bailout could cost taxpayers as much as $100 billion dollars. Where is the government going to get that money? They just create it from nothing and add it to the money supply. The ultimate result is inflation, the hidden tax. Get ready, because the dollar is under tremendous inflationary pressure with oil prices in the mix too. It is a good time to seek refuge in Gold to preserve the purchasing power of your savings.

Many people say that American Express cards are not credit cards, but "charge cards", like there is a difference. American Express reported today that second quarter profits are down 37% from the same quarter last year, due to unexpected consumer defaults. This puts American Express's profits down a shocking 96% from last year at this time. If this is happening to American Express, I wonder what is happening to VISA and MASTERCARD issuing banks. Those defaulting on mortgages are certainly defaulting on credit card debt. They are mounting up big losses as well from the combination. Citigroup down $2.5 billion for the quarter only. JP Morgan down 53% and Capital One down 40%. Merrill Lynch has a $4.5 billion dollar loss. Wachovia and Washington Mutual are expected to be down significantly as well. There has been unverified rumors of them both being on the edge of insolvency.

On the other side of this coin, bank cards in China (including debit cards) are up 30% this year. Officials in China are targeting to more than double credit card usage. Currently, Chinese consumers have racked up $10 billion in consumer debt. A small number compared to the U.S. However, it is growing fast.

Folks. Debt does NOT pay! Our government is so deep in debt, they'll never pay it off, and they appear to be taking the same path as previous countries with fiat currencies - where the currency becomes caught in hyperinflation and the system fails because the government creates new money to pay for everything until they spiral out of control. Banks are too big and too important to fail, as is Fannie Mae and Freddie Mac. So the government will bail them out by creating more money. With inflation already ready to drop the shoe on us, we're going to make it worse. That is scary.