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The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.
"In other words, we expect available consumer liquidity in the form or credit-card lines to decline by 45 percent."
Bank of America, Citigroup and JPMorgan Chase represent over half of the estimated U.S. credit card outstandings as of Sept. 30, and each company has discussed reducing card exposure or slowing growth, Whitney said.
A consolidated U.S. lending market that is pulling back on credit is also posing a risk to the overall consumer liquidity, Whitney said.
Mortgages and credit cards are now dominated by five players who are all pulling back liquidity, making reductions in consumer liquidity seem unavoidable, she said.
"...We are now beginning to see evidence of broad-based declines in overall consumer liquidity."
She also said credit lines to consumers through home equity and credit cards had been cut back from the second-quarter levels.
"Pulling credit when job losses are increasing by over 50 percent year-over-year in most key states is a dangerous and unprecedented combination, in our view," the analyst said. http://www.cnbc.com/id/27993643
And, by the way, the credit card companies also need to be regulated ~ Last week, while Congress was engineering a bailout package of the taxpayers’ money to rescue Citibank and save the economy, Citibank was sending out notices to its cardholders of a new and usurious policy ~ a policy that could drown consumers and help sink the economy. http://www.informationclearinghouse.info/article21316.htm
Remember, the credit card crisis is just the second leg of a three stage collapse of the economy ~ the third stage being the 900 pound guerilla in the room, which no one wants to talk about, the 650 trillion dollar unregulated Derivative market. See ~ UNSPOKEN CAUSE OF MARKET COLLAPSE IS DERIVATIVE TRADING http://blogs.salon.com/0002255/2008/10/13.html
Of course, along with the credit card crisis and a dramatic pullback in consumer spending ~ the next round of foreclosures will be Retail ~ for Malls from Michigan to Georgia are already entering foreclosure, commercial victims of the same events poisoning the housing and credit markets. http://www.cbsnews.com/stories/2008/11/28/business/main4637008.shtml
Happy Holidays !
