The financial crisis enters the phase where the credit implosion will become visible. More than a year I've been warning now for the consequences of the levels of credit in Europe and the US.
Today more than a third (41%) of US workers are cutting back on utilities, nearly half have reduced food purchases (48.5%) and a large percentage are buying less clothing. The national survey of US workers, conducted May 12-14, 2008, also found that younger workers (between the ages of 18 to 29) are being hit the hardest by the economy and are the most desperate about their economic future. More than one third (34.3%) of young American workers say their financial situation has caused them to “feel hopelessness or despair about their economic future.” That compares with 28.8% of workers age 30 to 49, 23.5% of workers 50-64 and 17.9% of workers 65 or older. Nearly a third (31.4%) of workers report being occasionally kept awake at night because they worry they will not meet housing payments, credit cards, or other personal expenses, 36.8% of whom were between the ages of 18 and 29.
Meanwhile peak credit also reached Australia, where more than 50% of the Australian homes are loosing value. The situation is of such a kind that a wave of public school students is migrating to the public system; their parents simply can't afford private school any longer.
Meanwhie youngsters in Finnland can apply for credit by sending a text message and also in Sweden youngsters are spiralling into debt because of the same reason.
Peak credit has been reached. That final wave of consumer recklessness created the exact conditions required for its own destruction. The housing bubble orgy was the last hurrah. It is not coming back and there will be no bigger bubble to replace it. Consumers and banks have both been burnt, and now everything will change.