Last shoe to drop

The last shoe to drop is the credit card debts of Americans. As the recent news showed that those that pay promptly are rewarded with higher interest rates, who would ever pay promptly in the future?

Default rate is bound to accelerate as jobs are no longer secure. Those that use credit cards are the ones who most likely can't afford to pay in full. Thus when inflows of income stops, outflow will stop and the musical chair stops.

What the consumer credit companies can do is to extend more loans to consumers to keep the velocity of money flowing. But it will eventually implode, just how the sub prime imploded.

It will be the last shoe to drop, it's just a matter of time.