/biz/ - Business & Finance

>>12289755
>If all the booked revenue came from people's credit cards, that would only hurt the banks, which would still be on the line for paying up.
Banks know how to make profit on credit card lines in normal circumstances. They expect defaults to be within a certain margin. It's only in a crisis of payments that the leverage hurts the banks.

>You mean the people that understand finance and understood the importance of gaining valuable skills during their education?
I'm not making any value judgement of the skill or character of capitalists, what's important is that they exist and that they, as a class, have a very different dynamic of savings and consumption than workers as a class.

>I maintain that the P/E ratios look sustainable.
And I maintain that the P/E ratios only look sustainable when extrapolating current earnings forward. When you consider those earnings are powered by leverage they suddenly don't look so sustainable. These are empirical facts.
>“Outstanding credit card debt is at the second-highest point since the end of 2008, after reaching an all-time record high for a third quarter in Q3 2018,
>Looking at the average credit card debt per household, it increased 2 percent from $8,107 in the third quarter 2017 to $8,284 in the third quarter 2018. The third quarter balance is approximately $177 from being “unsustainable” for consumers, according to WalletHub.
https://www.acainternational.org/news/credit-card-household-debt-studies-show-increasing-consumer-balances

All that has to happen is one debt laden industry sees a sufficient fall in demand for it to default, especially a durable good industry, where debt markets are heavily centered around. The effect will cascade, as creditor after creditor goes under, dragging down corporations who layoff workers who then default on their debt and stop buying. So on and so on.