September 05, 2008

The next shoe

Steve Pearlstein’s article (last post) describes the subprime mortgage crisis fallout. Fortune’s
Geoff Colvin now warns us about the next shoe that’s about to drop:
“The next credit crunch: why our easy access to plastic is about to dry up.”

Many of the dysfunctional dynamics - and more-must-be-better bankers – behind the mortgage mess are also threatening the consumer credit market.

Past bubbles-and-busts (such as and telecom) primarily affected investors and industries. The current mortgage and upcoming credit card crunches go much deeper into the heart of the American economy. It’s an economy driven by more by consumers than businesses, which makes these bubbles much more explosive when pricked.


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