Okay, quick quiz time. Family A has an income of $80,000 and owes $20,000 in credit card debt. It also has $100,000 in equity on its home. Family B has an income of $80,000 and owes $20,000 in credit card debt. It is $50,000 underwater in its mortgage. Which family is more likely to default on its credit card debt? Apparently the WSJ doesn't see a distinction between the situation of Family A and Family B. In a discussion of rising delinquency rates on credit card debt it never once mentioned the loss in home equity due to the collapse of the housing bubble. The WSJ largely missed the $8 trillion housing bubble as it grew and apparently still cannot see it even as its collapse throws the economy into the worst downturn since the Great Depression.
--Dean Baker