Today there was a story particularly appalling and which is that of an Ohio man whose $3,200 credit card debt mushroomed to $10,700 with interest and fees. The most incredible is she was hit with over-limit fees on his Chase card account 47 times although he went over his credit limit only three times (!!!). The article goes on:

while the credit card practices in question are legal, Levin is threatening possible legislation to outlaw them as a spur to the banking industry for voluntary changes. Of course tales like this one abound, so finally several senators have began to denounce the industry for confusing billing practices and shifting interest rates. Americans weighed down by some $850 billion in consumer debt.

Sure clients are responsible too but why the heck can’t we teach people since a very early age that “living richly on plastic” is a fallacy?

Though the “living richly, the sky is the limit moto” is taking another nasty turn with Bernanke sending a dire and chilling warning about Freddie and Fannie: the firms are often viewed as two government-sponsored enterprises. While they are not. Both raise substantial systemic risk concerns, confessed the central banker.
What we’re seeing with the credit industry as a whole is utterly deceptive, although Congress is gearing up for hearings on predatory lending. After all fraudulent practices or misrepresenting the terms of a loan undermine the soundness of the financial system, Caroline Baum writes yesterday. Of course she right on.

But Congress is caught in a bind: any swift action could prompt a monstrous market sell-off. One way or another we’d call this financial terrorism. For more than a decade they have made everybody believe in The American Dream when a study ,just released by “Fidelity Investments”, came to the conclusion that a house should not be seen as an investment.

Don’t count on home equity to come through with a significant portion of retirement funding, cautions a new report by Fidelity Investments. According to the study, home values underperformed stocks and bonds over every five- and 10-year period from 1963 to 2005. Home values have been slightly above the returns on treasury bills during the same time, according to the report, “The Equity You Live In: The Home as a Retirement Savings and Income Option.” … Over the more than 40-year period, real compound returns on stocks outpaced that of residential real estate, according to the study, with 5.95 percent average annual returns on stocks compared with 1.35 percent in realty. A dollar invested in stocks in 1963 would have compounded to $12.36 by 2006, while the same dollar would have grown to $1.79 in real estate….

Although it is never to late to change gear, only Hercules could stop the Titanic. All we can do is shifting gear to get prepared for a hard landing at some point because there are much too many threats lurking out there. Like an Old Testament prophet, David Walker has been traveling the country, urging people to “wake up before it’s too late.” The CBS article continues:

David Walker is a prudent man and a highly respected public official. As comptroller general of the United States he runs he Government Accountability Office, the GAO, which audits the government’s books and serves as the investigative arm of the U.S. Congress. He has more than 3,000 employees, a budget of a half a billion dollars, and a message he considers urgent.

“I’m going to show you some numbers…they’re all big and they’re all bad,” he says.

So bad, that Walker has given up on elected officials and taken his message directly to taxpayers and opinion makers, hoping to shape the debate in the next presidential election.

“You know the American people, I tell you, we’ve been to 13 cities outside of Washington with the fiscal wake up tour. They are absolutely starved for two things: the truth, and leadership,” Walker says…..

Beginning next year, and for 20 years thereafter, 78 million Americans will become pensioners and medical dependents of the U.S. taxpayer.

“The first baby boomer will reach 62 and be eligible for early retirement of Social Security January 1, 2008. They’ll be eligible for Medicare just three years later. And when those boomers start retiring in mass, then that will be a tsunami of spending that could swamp our ship of state if we don’t get serious,” Walker explains. …

The dates he’s using don’t speak of tomorrow, I agree. Though should a full housing credit card crunches occur, the time frame given by David Walker would be drastically shorten. What are the odds do you think?