More Debt Madness Upcoming?

I'm on a number of specialty email lists, including one from a major international risk management firm. It ran an opinion piece from a reader who noted something that I hadn't realized: companies have created the same types of security derivatives based on debt for the credit card market as they have for mortgages. This should shake everyone's shoes.

People have been living on credit, at least in the US, as many have noted. Fueling much of their buying has been low mortgage rates. People refinanced, pulled out cash, and made purchases, thinking that higher housing prices would cover their rears. Now that it's ending, and many mortgages are suddenly rising in price, they will start turning to credit cards.

According to this opinion piece, the US has a total of $904 billion in revolving credit debt - mostly credit cards. The UK has $100 billion on plastic. Bank of England data says that British banks have written off $18 billion in bad debt over the last 12 months. Moody's suggests that American credit card companies have seen bad debt jumping by almost a third in one year.

Credit cards are the last refuge of those not making more money who are trying to manage higher costs of living, and that's piling a lot of weight on what appears to be a flimsy structure. If you thought the sub-prime mortgage situation was a fiasco, what do you call what will happen with credit cards? Unmitigated disaster? Or depression?