Geoff Colvin from Fortune Magazine Online has written a brilliant article exposing the soft underbelly of America. He clearly shows the next financial bubble about to pop.

Do you remember the 1970’s in the United Sates, when gas prices went up?  No one really used credit cards then for everyday purchases. There was no free and easy credit back then.

A few people had cards but most did not.  When you pumped, you paid cash, at least that is what I can remember.

As the price of gas went up, people stopped driving.  Those two events occurred almost the same month. Higher prices meant less driving and there was no ‘lag time’. After prices rose and stayed up for a month or two, people sold their big cars for Japanese imports which delivered higher mileage.

Those big gas guzzling American cars like the Buick’s were out and the high mileage imports quickly became the norm. Does anyone remember the Datsun B210? How about those first Honda Civics?

Over the past few years gas prices have skyrocketed. While American’s complained a lot, they DID NOT stop driving.  Those SUVs kept rolling off the assembly lines and Detroit even tried to bring back “muscle cars”! WTF.

Meanwhile, as gas prices rose each month, the TV news interviewed drivers at gas stations asking them questions like this, “Well, gas has hit $3.00 per gallon has that slowed you down any? What price does gas have to top which will cause you to stop driving?”

No one talked about quickly selling their car and for for the past several years, no one really mentioned driving less.  This has been going on for almost 3 years, basically since Hurricane Katrina.

Katrina seems to have been the point in time and the catalyst event which caused gas prices to really make a run up in price.

Yes, the price has risen drastically since the storm, but unlike the 70’s American driving has not slowed down until last month, early summer.

For the past several years, there were more TV interviews and more images of an American man or woman standing next to a gas pump saying something like this, “Hey, we all have to get to work right?” or “I suppose I’ll slow down when it tops $5 per gallon, I love my car.” (I heard that a lot…American’s love their cars)

What happened the past three years?

Why did EVERYONE with a car in the 70’s stop driving, sell their vechicles and begin carpooling but in 2005 no one even seemed to slow down?  Why don’t high gas prices of today have that same effects?  How is it possible that soccer mom, can still afford to drive her family Suburban to the gym each day and stop by Starbucks for a latté on the way home?

Well the answer is simple.

Personal credit cards.

These past three years as gas prices rose, American’s simply ‘CHARGED IT’.    No driver sitting behind the wheel of an SUV wanted to give it up their comfort…. so they charged the gas.

“Oil prices are up but we can charge it and wait for them to fall.”  When American’s ran low on cash, they reached for plastic. I’ve actually heard this one, “we have 6 more cards in our purse, we have plenty of money.”

Sure I say, you have plenty of money left because you still have checks in your checkbook too….

Today, it is three years later after the storm and it’s time to pay the piper.

The only problem here, is that after years of living on charge cards and supporting that high quality comfortable lifestyle, no one has any real cash left.  No one can make those payments because wages and savings have slumped during this period.

Here is the number one looming problem which will push America over the financial cliff by next year. The article is by Geoff Colvin from Fortune online CNNMoney.com

“The next credit crunch”

Our easy access to plastic is about to dry up – and with it our ability to fake living the good life.

(Fortune Magazine) — We made it through the bursting of the Internet bubble and now the bursting of the real estate bubble. Next we may be approaching the end of the most worrisome bubble of all: the standard-of-living bubble.  That conclusion comes from the latest data on credit card debt. It’s growing fast, but the problem is bigger than that – and to understand what it means, we have to take a few steps back. (Read the full article…)