CREDIT CARD PROVIDERS EVIDENCE BANK FEARS
Pop quiz: if Bank of America (BAC) loaned its retail customers $3 billion less in the third quarter than it did in the second, what’s that mean for credit card issuers? Probably – nothing too good.
And, in fact, Mastercard (MA) pretty much validated the spending slowdown with a report from its Mastercard Advisors unit that showed that worried shoppers, seeing the destruction wrought in their bank and retirement accounts, reined in spending fairly dramatically in September.
None of the categories surveyed by Mastercard showed year-over-year growth. Apparel sales declined 6%, with women’s apparel down 9%. Furniture sales slumped by the widest margin in over five years.
Additional Economic Notes:
- The middle class is being hit hard by the economic crisis. Families and white-collar professionals are struggling to pay mortgages, buy food and put gas in their cars.
- Business is up at the Silver Lining Jewelry and Loan in Portland, Ore. Customers are selling everything from jewelry to television sets. The Oregonian newspaper reports that a woman even pawned her diamond wedding ring to help pay for gas and car parts.
- The Wall Street financial crisis started with symptoms of panic, followed by an infection of fear and distrust. But what drives this type of psychology in the markets, and what might be the medicine to protect against future toxic thinking? Tim Harford, a columnist for the Financial Times, tells Ari Shapiro that the best thing to do is to follow Grandma’s advice: don’t borrow too much and don’t take too many risks.
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The 2008 Credit Crunch by MoneyBob 