That's why I posted it. It's a canary in the coal mine of debt as a product.

One of my consulting clients is a small air cargo company. They were recently complaining to me because Amex had suddenly imposed credit limits on their platinum card that they have had for 25 years. As they use this card to pre-purchase fuel at various airports, they were quite unhappy to learn they were now 50k over their limit, even though the bills had always been paid on time for 25 years. Needless to say the Amex card was soon canceled. It can be difficult to do business without a reliable source of rotating credit.

As other indicated, some large changes will be coming to the CC Market in the near future.

Greg

It's more complicated than that, but it's part of it.

For another maor par of the story chck out the value of dollars in yuan and see if you note a change in the trend in August 2008.

As a small business owner having to change/update credit cards that are used monthly is a MAJOR PITA. I can only imagine businesses slightly larger than me who use their card who now have to change 20, 30 or so + accounts due to this.

If some businesses don't do this in time or catch it they could lose business because something they rely on isn't auto billed, etc.

Either way it's going to be a PITA for business owners to update.

And it would appear the scale of the financial disaster has been greatly under reported in the general media circles with the Federal Reserve unable to account for $9 Trillion of off balance sheet transactions since Lehmans Brothers Investment Bank went bankrupt.

http://www.youtube.com/watch?v=cJqM2tFOxLQ&feature=related

I was listening to Bloomberg radio Thursday - there was a panel discussion with Jack Welch and a bunch of other business heavyweights. The all used the term "game" to describe the economy - "back in October, we were afraid the game would be over" and "we had to keep everyone in the game, so I think what the Fed did was right on" - stuff like that.

We are now officially living in a financial world that is - literally - unknowable. There's no good reason why it should be POSSIBLE for 9 Trillion dollars to be absorbed into the market without a trace and there's no good reason why fractional reserve currencies should work - except that we all agree to the rules of this game, and we're all of us perfectly well aware that if we all decide to stop playing - or if enough of us get kicked out of the game via unemployment, we have absolutely no idea what that would be like, but we know it won't be good.

The best description I've ever seem for a Worst Case Scenario is here over at the very good SeekingAlpha.com

Keep posting like that and someone will think you are an "Austrian school" economist or a similar subversive type. Have you been reading at mises.org?

It is a game to folks like Welch. Do you honestly think that folks like him haven't insulated themselves against everything but a literal worldwide economic collapse?

Once you get a few million in the bank or wherever, it's a game to keep it growing and protected against taxation, you move it around, invest it in a wide enough variety of instruments and unless that worldwide collapse happens, or your a complete idiot, you'll never be broke and thus you treat it as a game.

There's a fascinating story in today's L.A. Times about Michael Jackson's financial woes. He's getting bailed out yet again by some financier types who think that they can prop him back up, put him on stage and make a few hundred million off of a concert tour. Jackson himself has gone thru hundreds of millions of dollars, been sued by everyone and their brother for everything from sexually abusing children to failing to live up to performance contracts yet he not only survives, he's got other people willing to invest in him, in our world he'd be broke and on food stamps, in his rarefied world, it's all just a game.

I ran across this interesting article on Newsweek over the weekend about "quants"--the uber math geeks who used their mathematical models in quantitative finance to parlay "nothing" into billions of dollars of profit from all manner of derivatives, like the infamous credit default swaps. Although upper management is the target of most people's ire, very little attention has been paid to the math geeks who "enabled" all this unrestrained greed and risk-taking.

One interesting angle to this article is the effort--a crusade really--of one former Wall St. quant to train a new generation of quants who create mathematical risk models based more in line with reality, and not just abstract math, which in many ways is a game. Tweak your hypothetical model enough and in theory, we can't lose money!!! That's basically the sentiment and rationale that helped stoke the derivatives bubble.

I remember watching Alan Greenspan being interviewed for a CNBC program ("House of Cards" was it?) and he made the comment that he has an extensive mathematics background, has dozens of math PhD's available on his staff, and even they couldn't make heads or tails of the mathematical rationale behind these financial instruments. Or remember the almost-financial-collapse-that-never-happened in the late 90's with Long Term Capital Management? They used these models heavily. They even had not just one, but two, Nobel prize winners in economics on their board, and they almost failed spectularly, but were bailed out at the last minute by quick Fed-coordinated action and the help of Wall St. There was talk that LTCM's failure would trigger a global crisis because it was just so big, if it were allowed to fail. Really, that was a foreshadowing of what could happen as these models spread beyond just the elite circles of hedge funds like LTCM in the 90's, and onto Wall St. and even Main St. in the last 5-10 years.

The Austrians are not all that much better, IMHO.

No, I'm more a follower of http://www.paecon.net/ - although they didn't publish in 1Q 2009...that's worrisome. The spin-off site http://www.toxictextbooks.com/ is a must-read.