RSAAKS

Credit Card Crunch: Creating a New Generation of Subprime

when banks are allowed to charge 25% interest against their cost of funds at less than 3-4%, greed overtakes and reckless lending begins. That is what we had in last few years, every month there were on average 30-40 card offers in my bail box. Many in my shoes probably had those cards issued and will never be able to pay using 20+% interest rate. Greed could only go so far. Perhaps banks will learn to loan money to those who have HIGH probability of paying heir loans, and charge a reasonable rate for it. Those who can pay will not accept 25% rate, those who cannot pay, it is not worth charging any rate-meaning no loans.

Survival of the Longest

The market is not going down because of herd mentality of the baby boomers, It is the herd mentality of hedge funds and mutual funds that is causing this melt down. Unless the hedge funds are regulated like mutual funds, and there is some transparency of what the hedge funds are doing, this market is not coming back/ Individuals will surely be out at some point, whether now or in a year, if down turn persists. Going forward, funds will simply be selling to each other and will have very little individual participation directly or via funds.