It’s Everywhere You Want To Be

It seems incongruous.

At odds with the conventional wisdom.

Incompatible with the pronouncements of bailout-hungry politicians who want you to see the vultures circling overhead.

And yet against this backdrop of doom and gloom, at least one company’s quarterly earnings dazzled with a 35% increase in profits.

Of course, it’s not difficult to understand the reason for Visa’s spike.

People, becoming increasingly cashless, are looking to whatever credit they have left to finance their lives.

Rather than this being an indication of a recession, it may actually be evidence to the contrary.

While it’s true that the hard numbers of the economy can’t be denied, the fact that many companies’ earnings are down does not rule out the possibility that Americans – even now – are refusing to curb spending.

Which would make them little mini-governments, when you think about it.

The thing is, credits cards, despite their ubiquity, aren’t necessarily a cash substitute.

One can’t ordinarily charge their rent, or their car payments, or their babysitters, or their exterminators, or their repairmen, or their whores, or their drugs.

So what are people charging then, if not the necessities?

What sorts of charges have sent Visa’s profits skyrocketing 35 percent?

As it happens, Visa is benefiting from electronic payments on electronic items.

Of the companies that have released stellar earnings reports, the most successful among them are businesses that deal in electronics and technology.

Apple, for example, reported the highest earnings in its history.

This, despite broke customers, as well as serious concerns about the future of Apple products in the wake of speculation about CEO Steve Jobs’ health.

Nintendo, largely because of the success of the Wii, has also smashed company earnings and profits records – again, despite broke customers.

Online retailer Amazon reported an 18 percent earnings increase over the same quarter a year ago – despite broker customers.

Naturally, these are rare shining stars amid otherwise poorly performing companies.

Still, though, business is booming for them – and not only do none of them deal in necessities, they actually sell what should right now be considered luxury items.

It’s not a fluke that Visa’s performance is off the charts. With customers who, even in a recession, can’t differentiate between a want and a need, credit card companies can only fare better as the economy worsens.

By now, anyone smart enough to read between the lines of this article will argue that I’m mistaken, that people are in fact charging necessities to their credit cards, but in a roundabout way.

Those people will say that customers are charging their gas and their groceries, while using the cash they’d have ordinarily spent on quotidian stuff to pay the mortgage and the car payment.

That’s a solid argument – it explains away the Visa profit while also reiterating recessionary talk: People have to charge something, since they can’t possibly afford to live, so they’re charging whatever is chargeable.

The thing is, though, anyone smart enough to read between those lines realizes that people aren’t paying their mortgages or their car payments at all, and in fact haven’t been for some time.

(There’s a foreclosure crisis and a car repossession boom going on, in case you haven’t heard).

So it’s not like people are charging their iPods (which are chargeable) to pay the rent (which isn’t ordinarily chargeable).

What we get back to is the fact that Americans are charging lots of stuff, as indicated by Visa’s earnings bonanza.

That’s a fact, so what’s the explanation?

Judging from the companies that are prospering (Nintendo, Apple) and the companies that aren’t (necessity retailers like Wal-Mart, for example), it appears that people aren’t charging what they need but rather what they want to need.

Or need to want.

Look, it’s not like “borrowing from Peter to pay Paul” is a new idea. The lending business has always been a profitable one, and always profitable it will be.

Some financial advice?

Buy stock in Visa – and charge the stock purchase.