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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: marginnayan who wrote (70601)10/28/2007 8:03:03 PM
From: marginnayan  Read Replies (1) of 116555
 
Stressed US borrowers use plastic to delay default

"When credit conditions dry up, marginal borrowers turn to plastic," said Merrill Lynch North American Economist David Rosenberg. "We're seeing signs of that already."

In an October 5 research note, Rosenberg called rising credit- card delinquency rates as the "next skeleton in the closet."

It is one scary skeleton -- and a specter of bankruptcy.

The problem with using credit cards -- with their high interest rates -- to stave off default brought on by "reset" adjustable mortgage interest is that it merely postpones an inevitable crisis, said Gregary Brown, social policy director at Metropolitan Family Services in Chicago.

"Our biggest concern right now is that there are lot of people who will face a choice between bankruptcy or foreclosure," he said. "Either way, it's going to suck."

Link:
ca.today.reuters.com
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