The last couple of weeks have been all about the collapse of hubristic capitalist animals like Bear Stearns. But it's so much worse than that. Remember when the subprime mortgage morass seemed like the hottest economic disaster of our time? Well, that was just the vanguard of the four horsemen speeding our way.

Even though we're not hearing about it as much as we did a few months ago, subprime is still picking us off like a brain-sucking zombie that won't stop until we're all face down in the mud. Why isn't this stuff front and center in coverage of the presidential race? Blame the hamster wheel of mindless news cycles. It's like the war in Iraq -- all shock and awesome in the beginning, and then the media moves on to Britney Spears.

James Hamilton, an economics professor at the University of California, contributes to Econbrowser, a blog on what's shaking with the money tree in this country. In a recent post, he writes: "The discussion is increasingly shifting from 'are we in a recession' to 'how long will the recession last?' The latter question is one that I'm very hesitant to answer. Historically, the average postwar U.S. recession has lasted 10 months, with the longest being 16 months. However, current developments do not look to me like a typical recession, but instead seem to be something without clear precedent in the last 50 years."

For a simple explanation, see Steve Waldman's "Credit Crisis for Kindergarteners," which is as good as anything spouted on cable TV.

Apparently, commodities prices are falling because -- surprise-- they were being forced by speculators much higher than actual demand warranted. Bloomberg reported that last week commodities prices fell further in one week than they had since 1956. One hedge fund founder called the rollercoaster a "buying orgy," which is now being brought into sharp correction by the fact that we're all screwed.

Basically, what's happening is that people with money to invest are just wildly plunking their gold into whatever sector hasn't yet collapsed, which then creates an unsustainable bubble that quickly bursts. So they move from real estate to commodities to now, believe or not, government bonds. You know it's bad when the high-flyers are seeking refuge in the predictability of government debt.

At the same time, guess whose bottom line is healthy as can be? Yep, the credit card industry. VISA just went on the public trading block with a massive IPO of $19 billion, the largest in U.S. history. A Chinese insurance company immediately bought up $300 million worth of shares, which should indicate where the market is going -- east on the Orient Express.

But, lest VISA and its cohorts at Mastercard, Discover and American Express feel too comfortable, the demons of the financial crisis may not be too far behind in the credit card industry. This industry, which netted something like $40 billion in profits last year, is about to get hit with the crunch we’re all feeling. Simply put, we can’t pay the bills.

There’s a bill under consideration in Congress called the “The Credit Cardholders’ Bill of Rights: Providing New Protections for Consumers,” which seems like a good idea, if too late to help many people already crushed under mountains of debt.

According to CardTrack, American credit card debt spiked to $937 billion last year, up $90 billion from 2006. Bankruptcy is booming, up 28 percent in February 2008 compared to the same time last year. 

If you live in Alabama, Florida, Georgia, North Carolina, South Carolina, Virginia or West Virginia, you are twice as likely to be late on your credit card payments as any other region in the country. So says the FDIC, which last week added its bit of doomsaying to the overall economic disaster awaiting our next president.

For more on the evil that men who run corporations do, check out this Frontline show on the “secret history” of the credit card industry. It’s a few years old, but still holds up well.

Meanwhile, the Fed and Bush Administration economic policy types are running around, trying to figure out how to look like they're doing something (an interest rate cut here, a bank bailout there), without actually making any long-term policy changes to prevent this sort of thing in the future.

Back at Econbrowser, professor Menzie Chinn (University of Wisconsin), calls the bullshit: "It seems that the Administration is engaged upon a delaying action, and hoping to unload this problem upon the next Administration (an understandable, albeit less than fully public-minded, impulse). ...In so doing, it's allowing an even bigger build-up of contingent liabilities, surreptitiously. But by virtue of being less transparent, it threatens to present a bigger, and more unpleasant, surprise for future policymakers (of either party)."

 

So, whoever wins the election in November will not only have to figure out Iraq, but will also have to take the massive PR hits that come with inherited economic crisis. Yum!