"The scope of the economic fallout was evident even among our longer term, superprime cardmembers." (thats SUPERprime not SUBprime)

American Express executives said the company has begun to notice problems even among cardholders with credit scores ranging from 650 to 750, and those who hold mortgages on multiple properties. As a general rule, those with a credit score above 650 receive the lowest interest rates.

The pinch felt by American Express' superprime cardholders mirrors a similar trend among borrowers at JPMorgan Chase & Co. The bank said last week that even its more creditworthy borrowers are now failing to make their mortgage payments -- the charge-off rate for prime mortgages nearly doubled from the first quarter to the second.

"We now believe the economic weakness in the US will likely worsen throughout the remainder of the year and negatively impact credit and business trends," said Dan Henry, Chief Financial Officer. (2nd half recovery? not so much?)

Revenue from its international card services division increased 20 percent to $1.3 billion, due to higher cardmember spending and borrowing. (again, thank god for non Americans)

Again folks - every 8-12 weeks we have these oversold rallies in the worst of breed - I have contended each time that these are simply times to rebuild shorts at much more attractive levels once the animal spirits peter out. I continue to advocate that position. How will these Americans already struggling - without rebate checks to help them this fall/winter be contending with the lagged effects of food inflation, and home heating - even if their gasoline drops to $3.40 or heck $3.00. There is no 2nd half 2008 economic recovery and when the pundits start to spin the 1st half 2009 economic recovery, that's a bowl of Kool Aid too. Maybe with oil $75 (if/when) we can talk 2nd half 2009 recovery but only if home prices crash quickly and let the new cycle begin anew. I'm thinking it won't be that early. We'll revisit in 2010 ;)