No, don't expect to see windmills and solar panels -- consumers are leaning toward a different kind of green this holiday season: cash. Rather than hit their credit cards, shoppers will only be spending money they have (and can see and touch). Seventy-one percent of consumers are looking to cash and debit cards as their primary form of payment for holiday shopping this year, which the National Retail Foundation pegs as the highest level since 2005.

This could be a problem for the retailers.

Sure, you'd think that the merchant fees on credit cards make cash more attractive to the sellers. But, Ellen Davis, a spokesperson for the NRF, says that most retailers have found they can talk credit card buyers into up-sells more easily. That leads to a bigger basket size and more revenue. Done successfully, it should comfortably absorb the impact of merchant fees. James Roberts, a marketing professor at Baylor University, adds that using plastic makes consumers more likely to buy at all, let alone more.

With American Express Co., (AXP), it's best to look down the field, i.e. think long-term, which is why I'm reiterating my Buy rating for the company, first recommended on April 27, 2009 at a price of $27.28. If you bought AXP in April, you're up about 51%.

As forecast, institutional investors (IIs) have looked right past AXP's likely double-digit revenue decline for 2009, to the probable sunnier skies in 2010. In the year ahead, charge-offs should continued to stabilize, amid slowing delinquencies.

Consumer borrowing fell for the eighth straight month in September. This record-setting streak is due largely to tightening by lenders, unemployment and the conservative preference to pay down debt rather than spend. This widespread fit of fiscal responsibility, economists fret, could prevent a recovery from taking root, since consumer spending is responsible for 70% of the U.S. economy. This conventional thinking, of course, overlooks the fact that an eventual increase in spending that isn't fueled by consumer spending will yield a recovery that's more likely to last.

According to the Federal Reserve, borrowing fell at an annual rate of $14.8 billion in September -- it's biggest drop since July and much larger than the $10 billion predicted by economists. The behavior is exactly what you'd find in people worried about losing their jobs or focused on rebuilding safety funds and investment portfolios. Those who want to borrow are finding banks won't be complicit this time, as they clamp down on lending practices.

US Senator Bernie Sanders, independent from Vermont, is known for his straightforward and unbiased positions.

His new legislative proposal is to break up big banks that are deemed "too big to fail." To quote Mr. Sanders: "if an institution is too big to fail, it is too big to exist. We should break them up so they are no longer in a position to bring down our entire economy."

I've said on many occasions that I prefer MasterCard (NYSE: MA) to Visa (NYSE: V). No, I don't mean the card products themselves. I mean the stocks. I believe Visa has better brand equity associated with it, and I think it possesses a little more depth and fundamental prowess. However, both of these companies operate on the same basic economic model: collect fees on transactions, and don't take on loan risk. So, both MasterCard and Visa do offer compelling long-term investment theses.

And, even though there were some negative outlooks on MasterCard's latest earnings report, which was released Tuesday, I have to say that I didn't find the situation too disturbing. Revenues increased only 2%. The top line was inhibited by currency effects, but it's not like we haven't heard that story before. More importantly, MasterCard posted adjusted income of $3.48 per share, representative of a 40% increase over the adjusted income recorded a year ago.

Visa (NYSE: V) is one of my favorite businesses on Wall Street. It should be an excellent long-term investment. People will always use branded credit cards, and Visa doesn't take a lot of risk. It simply collects a little of the spoils on each transaction. What a model!

According to TheStreet.com, Visa increased top-line sales by 10% in the fourth quarter, and expanded per-share profit by 28% to 74 cents, excluding certain items. Forecasts were for 72 cents per share.

This was the day that could have been. Earnings were coming out favorably, yet the data just couldn't support the stocks. There were also trader comments that BofA/Merrill had large sell orders or sell programs throughout the day. It looks like the DJIA even closed out under the 10,000 mark on an unofficial basis.

Here were today's unofficial closing bell levels:

Dow 9,974.75 -106.56 (-1.06%)
S&P 500 1,079.73 -13.18 (-1.21%)
Nasdaq 2,154.47 -10.82 (-0.50%)

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Consumer debt levels fell again in August for the seventh month in a row. Facing continued instability in the job market, people are paying down their debt, as a way to protect themselves. Savings are up, and borrowing is down – which could weaken the recovery. Consumer spending accounts for 70% of economic activity in the United States.

Total consumer debt outstanding dropped by $12 billion in August, according to the Federal Reserve, reflecting an annualized rate of 5.8%. Reality outpaced Wall Street's expectations, which were around $10 billion. In July, consumer debt outstanding fell $19 billion (9.1%), which was the largest in hard-dollar terms since 1943 and on a percentage basis since June 1975's 16.3%.

While consumer fear is playing a significant role, as a touchy housing market and dicey job situation leave little to lean on, the banks are also responsible for the change in direction. They aren't lending as easily, with stricter standards limiting the amount of credit available to consumers. You can't spend what you can't borrow.

I'd venture a guess that you have at least one, if not multiple, MasterCard (NYSE: MA) credit cards in your wallet right now.

In addition to its credit card division, the company provides transaction processing services to its customers that support its credit, deposit access, electronic cash, and automated teller machine payment card programs. The goal of the company is an ambitious one: to put the use of cash out of business.

The stock has certainly been on a tear since its 2006 debut, rising to over $300 per share near the midway point of 2008. Yes, the recession and accompanying customer spending pullback took its toll on MasterCard in late-2008 and early 2009, but despite the tough economic environment, MA shares are up over 50% year to date.

Discover Financial Services (NYSE: DFS), a credit card company that competes with Visa (NYSE: V), MasterCard (NYSE: MA), and American Express (NYSE: AXP), released earnings for the third quarter on Thursday. The company put analysts to shame by posting a profit instead of a loss according to an article from Reuters.

The projection was for a loss of 12 cents per share. Discover actually made 52 cents per share of profit, once you exclude monies received from an antitrust settlement. Wow, that's what you call being way off the mark! The disparity surprised me, so I went to our very own earnings preview to see what we were reporting for an estimate. Sure enough, it stated the exact same expectation for a loss of 12 cents.

Analysts were shocked to learn that consumer credit fell by $21.6 billion when they were looking for only a $4 billion dollar drop.

Consumer credit outstanding fell at a 10.4% rate in July to $2.47 trillion. In June, total credit tumbled $15.5 billion, again topping estimates. Analysts had expected a drop of $10.3 billion.

Nonrevolving credit, which includes loans for big ticket items like cars, boats, college education, and holidays, plunged a record $15.5 billion or at an 11.7% rate to $1.6 trillion.

For the fifth month in a row, consumers paid down their credit cards and other debt, as the worldwide recession continues to drive conservative financial behavior.

According to the Federal Reserve, outstanding consumer debt fell $10.3 billion (4.9%) to $2.5 trillion in June. Analysts expected a decline of only $4.7 billion, making the plunge unexpected -- and nearly twice the $5.4 billion by which consumer debt fell in May.

Visa (NYSE: V) is changing presidents and reorganizing the management team.

The biggest credit card network in the world is consolidating the oversight of its sales, client service, marketing, product development, and "innovation" (is that the group that thought it would be smart to securitize high-risk subprime consumer debt?) functions. John "Hans" Morris will step down as president but stay with the company through the end of the year in another role (wow, lots of euphemism in there).

American Express Company (NYSE: AXP), a company that competes with Visa Inc. (NYSE: V), MasterCard Incorporated (NYSE: MA), and Discover Financial Services (NYSE: DFS), issued Q2 results earlier in the week. Earnings from continuing operations dropped very steeply to 9 cents per share. How steeply? Well, the per-share profit lost 84% of its value this time around. However, it might make you feel a little better to know that 18 cents can be added back, since that was the net worth of repurchase activity relating to preferred shares from the U.S. Treasury department. Therefore, American Express took in 27 cents per share from continuing activities. According to this Reuters piece, that number met expectations.

The Reuters article also points out that revenues fell by 18% and that net charge-offs increased. Not a great picture. Reading through the press release, an investor might come away with a feeling of dread. Management mentions the not-so-strong spending by its cardmembers and the fact that loan losses are at historic levels.

From this writer's observation, it seems that we have two US economies. One economy is doing just fine. The people in this group have money. They are living well, eating out frequently and buying pretty much what they want.

Then we have a second economy made up of the unemployed and persons living on the edge of disaster. Here we see a growing number of credit card and home equity delinquencies. These people are in a downward spiral. Having lost their jobs, they are using credit cards to survive. This leads to double trouble -- no money and default on credit card debt and home mortgage.