Bailout Nation mentality has hit critical mass. Just as we have walk aways from homes with "no sweat", we are now at the point our debts on credit cards are no longer an issue either. Just start failing to make payments and wait eagerly for the credit card company to call you to strike a deal. How they can afford to do this? They are backstopped by your taxpayer money of course... no major financial institution is allowed to fail.

See how it's circular? You are financing the bad behavior and defaults... your taxpayer money is the backstop that allows the credit card companies to settle. Because they can always raise more money with the government's implicit backstop. (Think Fannie Mae and Freddie Mac, but now extended to all our "too big too fail" financial institutions) Also don't forget all the new fees we are being subject to [May 29, 2009: Banks Find Ways to Boost Fees] Much like insurance, those who pay will subsidize those who don't - except this is financial insurance: the responsible pay for the irresponsible. So make sure to get that thank you note from Chuck for his boat; we all paid for it.

Most people won't go that far in the logic of it all - they will just say "finally a bailout for the little guy, we deserve one too." They don't understand that we are all paying these bailouts out of our pockets. Money does not go on trees contrary to popular belief in this nation.

Again, responsible people are simply suckers in America. If you are a renter it appears the credit cards are the thing to walk away from; if you are a homeowner the preferred choice of deadbeat-ism is the house. I am not even upset anymore about these sort of things - just charge it on my balance [May 29, 2009: In 1 Year US Taxpayerson Hook for $55,000 Per Household] I will never again question how people can spend so freely, buy whatever they want, empty out their home equity with loan after loan, and charge their cards as if their is no tomorrow. I see they were the brilliant ones in retrospect. Enjoy the trips, keep the toys, live above your means.... and send the bills to the rest of the populace. It's now an embedded national mentality from corporation to the citizen - I need to get on board.

NYT: Credit Bailout - Issuers Slashing Credit Balances

•As they confront unprecedented numbers of troubled customers, credit card companies are increasingly doing something they have historically scorned: settling delinquent accounts for substantially less than the amount owed.
•The practice started last fall as the economy worsened. But in recent months, with unemployment topping 9 percent and more people having trouble paying their bills, experts say this approach has risen drastically.
•They say many credit card issuers have revised internal guidelines to give front-line employees the power to cut deals with consumers. The workers do not even have to wait for customers to call and ask for a break. “Now it’s the card company calling you and saying, ‘Let’s talk turkey,’ ” said David Robertson, publisher of the credit industry journal The Nilson Report. (don't call us, we'll call you - just do your job and start defaulting on payments)
•Revolving credit, a close approximation of credit card debt, totaled $939.6 billion in March. The Federal Reserve reported that 6.5 percent of credit card debt was at least 30 days past due in the first quarter, the highest percentage since it began tracking the number in 1991. The amount being written off was also at peak levels.
•After a balance has been delinquent for six months, regulations require the card company to reduce the value of the debt on its books to zero. If a borrower has not paid by this point, chances are he never will.
•An example of how quickly the card companies are shifting their approach is in the behavior of HSBC, a major issuer, toward Mr. McClelland. Mr. McClelland’s credit card company was calling yet again, wondering when it could expect the next installment on his delinquent account. He proposed paying half of his $5,486 balance and calling the matter even. It’s a deal, the account representative immediately said, not even bothering to check with a supervisor.
•In April, HSBC offered him full settlement at 20 percent off. He declined. A few weeks later, it agreed to let him pay half.
•Traditionally, the creditors could play tough with any accounts that became delinquent because the cardholders had assets. The creditors could sue or place a lien on a cardholder’s house. As the recession grinds on, though, many cardholders have less to lose. Mr. McClelland, 42, is a renter. Since he is self-employed, he has no wages to garnish.

•“Having this over and done with was appealing,” he said. He raised the agreed-upon $2,743 and sent it off electronically last week. He has spared himself the prospect of years of collection calls.
•And there can be a Catch-22: those with the fewest assets are the likeliest to receive a settlement offer, but they are also the least able to come up with the cash for that final negotiated payment. Some creditors, though, are helpfully letting people stretch this out over months.
•Still, a line has been crossed, credit experts say. During the boom, nonpayers were treated more harshly because, paradoxically, their debt was more valuable. Collection agencies were eager to buy bundles of old debt from the card companies for as much as 15 cents on the dollar. In a healthy economy, even the hopelessly indebted can pay something. In this recession, where collection agencies have little hope of collecting from the unemployed, that business model is suffering. Experts say 5 cents on the dollar is now the most a card company can hope to get for its past-due accounts.
Now let me ask you.... how does one NOT have enough money to make a MONTHLY payment on a $5400 balance... which at 2-3% is $100ish ($1200ish a year). Yet HAVE enough money to PAY OFF ALL AT ONCE a $2700 STIPEND? It's a rhetorical question folks ... you can figure it out.

Now on the plus side for the bulls - as more Americans have no home payment to deal with as they enjoy sitting in foreclosed homes that the banks are reluctant to take on their books (I live payment free for 9 months! 12 months!) and more Americans expunge their debt at 50 cents (or less) on the dollar, that frees them up to restart the whole cycle over. Always a silver lining....

Of course, no one could see this coming...