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  • lbxjh.blogspot.com/
  Right now, credit card debt is still priced with unemployment at a peak of 7.5% in mind.
  
  Watch what happens to the default rates when unemployment hits 10+%.
  
  Whats more, most credit card companies failed to price in the consequences of default rates being triggered on many / or all of a holder's accounts simultaneously, at which point, what was a manageable problem (e.g. 15-19% interest) becomes an unmanageable one at 30+% interest.
  
  If the cards are close to the limit, the credit line is quickly exhausted, and the whole thing blows up, leading to predictable outcomes of default.
  
  From a systems perspective, once these issues arise on a significant number of cards, the default rate can spike very quickly.

  2008 Nov 17 04:59 PM | Link | Reply