Toban Black

A credit card design

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Danny Schechter at Common Dreams -
“The Next Bubble Is on the Way: Credit Card Debt” (August 11th)

Selected exerpts -

“Few are paying attention to the next bubble expected to burst: credit cards. You would never know it by watching … slick VISA card ads.”

“The coupling of home equity debt and credit card debt has gone hand in glove for years. The homeowners at risk can no longer use their homes as ATM machines, thanks to their prior re-financings and equity loans, often used in the past to pay off their credit cards. Indeed, homeowners cashed out $1.2 trillion from their home equity from 2002 to 2007 to pay down credit card debts and to cover other costs of living, according to the public policy research organization Demos.

To compound the problem, fewer people are paying their credit card bills on time. And, to flip the old paradigm, more are using high-interest credit card cash to pay at least part of their mortgages instead of the other way around.”

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Credit cards generally are used to gain quick, short-lived relief from poverty, and/or to bring in a spurt of consumer ‘goods’ –
but often without nearly enough concern about future consequences (which may entail escalating poverty because of mounting consumer debts). The future thus often is sacrificed for immediate consumption — sometimes out of desperation, when poverty is a factor.

Of course, given high interest rates, credit card bills can pile up. Money — for groceries, and so on — may be increasingly scarce because of these rising debts.

As Schechter indicates in the writing quoted above, American credit card debts have been very bound up with the mortgage foreclosure crisis there — and thus also the rest of the recent financial turmoil (which I  blogged about here.)

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Related writing from Sharon Astyk on the cannibalism of U.S. assets (in a blog post back in May) -

“If you listen to the news reports, it sounds as though the economy is stabilizing, like we’re near the bottom. Don’t worry, we’re told. But it is worth noting that almost everything that we’re seeing now represents, at one level or another, the selling off of things that have in the past had value, often at very low prices. Last year, I suggested that the new economy was going to based on bottom feeding - scavenging off the leavings of our prior wealth. I see nothing in the news reports that suggests I was wrong - both the highest levels of finance and the lowest are showing the same things - the repackaging of increasingly worthless assets for sale at pennies on the dollar. There are already reports coming in of people stripping their attics of prized possessions and selling off anything they have, just to pay for basic bills. Pawnshops are doing a booming business. It seems mostly as though the economy is staggering along, but whether you are repackaging worthless commercial assets, worthless luxury vehicles or worthless tvs, they all add up to…worthless in the most literal sense. The days of keeping the bills paid this way are numbered. The days of home equity loans are pretty much over, as almost half of recent homebuyers now have no or negative equity. There’s simply nothing left - and when there’s nothing left and the money doesn’t meet the end of the month, off go the lights, and the heat, and the gas.

For now, it is mostly the working poor leading the way. But it won’t stay that way. Most Americans live beyond their means - statistically, we spend about 5% more than we make. Middle class Americans aren’t going to be able to eat the food bill, the heating bill, the electric bill, the mortage that isn’t worth much… something will have to give. ”

(Obviously that post has to be viewed in retrospect — in light of where we stand now. And the same is true of the next link below.)

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This article (from May as well) relates to those points made by Sharon -

Joyce Marcel at Common Dreams - “Junkie Nation”

… “the price of scrap metal has risen so high that people are selling everything they can get their hands on” …

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Ecological debts (e.g. using up fresh water faster than it is replenished) sometimes are referred to as “overshoot.”

At this page there is a summary of (socio-ecological) “overshoot.”

(The phrase “natural capital” is used there, however. I reject this notion of “natural capital” because it entails the assumption that ecosystems exist to be exploited for commercial gain; hence — given contemporary capitalist arrangements — profits from this exploitation of nature will be funnelled to the prominent few… as usual.)

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In short, there are various debt (or “overshoot”) problems, which involve and are linked to various forms of cannibalization.