The Crunch has Teeth!

Bloomberg is reporting that "Credit Card Bond Sales Plunge to Zero, First Time in 15 Years." Looks like the rugs being pulled out from under Joe the Plumber.

Top-rated credit card-backed securities maturing in three years traded at a gap, or spread, of 475 basis points over the London interbank offered rate during the week ended Oct. 30, JPMorgan Chase & Co. data show, 25 basis points higher than the previous week. The debt was trading at 50 basis points more than Libor in January.

The higher cost to sell the bonds makes it more expensive for banks and credit card companies to fund loans to customers. New York-based American Express Co. paid 160 basis points more than Libor at a Sept. 11 sale of the securities compared with 30 basis points over the benchmark at a similar sale in October 2007, Bloomberg data show.

A year ago, asset-backed credit card backed securities totaled over $17 billion. But the Fed's accepting asset-backed commercial paper, so it's okay. Not. American Express is toast. Burnt toast. I'm going to short them. Their book value per share is $11 and they're at $29. 3-month LIBOR is down to 2.5%, so AXP's cost of funding in the private market is 7.25%. Well, maybe I won't move so fast, because they're probably getting a lot of money from the Fed, and that's cheap.

The other thing I'm thinking of doing is selling PWE. At around $18, it's bounced almost 40% off the lows.