So far, credit card debt is holding up remarkably well, The Economist tells us. Goldman Sachs (NYSE:GS) says losses from credit card debt could reach US$99 billion – if the problems in subprime leak over to the credit card industry.
No problem so far…customers are still paying…which is a bit surprising, since you’d expect the consumer to be getting a little behind.
From the housing market comes this little note from an Australian reporter:
“The last one out of Cleveland, please turn out the lights,” writes Paul Barry. Says Barry of the Ohio city:
“…the streets are lined with empty houses, dead gardens and demolition notices pinned to the front doors. One in 20 homes are now in foreclosure.”
Turning to the dollar, The Economist quotes an unreliable source, your editor:
“The long term value of all paper currencies is zero. That is the fond saying of Bill Bonner, goldbug and publisher of the Daily Reckoning, a contrarian financial newsletter.”
Readers take note: we are talking about all paper currencies, not just the dollar. We guessed that the dollar would fall to US$1.50 to the euro. So far, it’s gotten about a penny short of the milestone. But it looks to us as though the dollar may want to correct…meaning, go up. In the long run, it is worthless trash. But so are the others. Which of them becomes trash first…well, we wish we could say. At this point, we don’t have an opinion. Will the dollar go up…or down? We don’t know. But we certainly wouldn’t want to keep our wealth in it.
The dollar’s value comes in some measure from the fact that it is the world’s leading brand. That seems to be changing. The greenback seems to be going out of style. Already, in the film American Gangster hip- hop musician Jay-Z flashes a wad of cash. The cash is 500-euro notes, not dollars. The big euro bills are already a favorite of drug dealers. Soon, they will probably be everyone else’s favorite too.
Meanwhile, as predicted here…corporate profits are falling. Bloomberg says there’s a recession in corporate earnings, and “the economy might be next,” continues the report.
“The earnings recession has already arrived,” says a Merrill economist, “We are going to see an economic recession in ’08.”
The Daily Reckoning Australia