If the U.K. truly is a window to the future of U.S. economics the credit card industry must be on edge. Discover Card said this morning that it would take a charge to write off part of its Goldfish credit card business in Britain, where consumer credit has deteriorated. HSBC recently said they wanted to sell their Marbles credit card operation. Common sense tells us that credit cards will begin to sour, as did mortgages. On a related note, analysts finally admitted the so-called ‘subprime’ crisis is not related entirely to people with spotty credit.
Five major banks control 80 percent of the U.S. credit card market, and if the U.K. is a good indication, when any of the five already have huge losses from ‘subprime’ it will be a very bad 2008 when credit cards start to go bad.