Not a good day for those looking for green shoots with markets down strongly. And no wonder. Credit card problems with the U.S. consumer are off the hook as CapitalOne (NYSE: COF) charge-offs rose to their highest historical level of 9.91% (via ZeroHedge) and American Express (NYSE: AXP) rose to 10% (via Mish Shedlock).

Higher chargeoffs and retracting credit means further consumer spending retraction. A semi-annual survey by Collier Capital found that 20% of institutional investors plan to downsize their target allocation to private equity, (via PEHub) the largest negative response since the survey started in 2004. An article by two Harvard University economists found that the biggest reason for the growing income inequality is lagging educational improvement in the American workforce (via VoxEU). There is no quick fix for this so its fairly bad news (although better than blaming the inequality on globalization and some neo-capitalist cabal).

Alex Salkever is Director of Research at Piqqem.com, a stock analysis site powered by the Wisdom of Crowds.

New data regarding the growth in income for the rich vs. the poor came out recently, and the income gap appears to be expanding. According to the New York Times:

Income inequality grew significantly in 2005, with the top 1% of Americans -- those with incomes that year of more than $348,000 -- receiving their largest share of national income since 1928, analysis of newly released tax data shows.

The top 10%, roughly those earning more than $100,000, also reached a level of income share not seen since before the Depression.

Economists have debated, and will continue to debate what exactly the significance of the income gap is. But rather than focus on that, I'm going to talk about it from a psychological/behavioral finance angle.

Inequity aversion is the often irrational tendency for people to care more about how they fare in comparison to others, rather than in absolute terms. People care about how their salary compares to their coworkers, oftentimes more than about whether they are satisfied with the amount of money. And it's not just in people. According to a study published in Nature several years ago, monkeys like to keep up with Jones's too.

Monkeys were trained to hand a researcher a small stone, and were given a piece of cucumber as a reward for completing the task. Monkeys completed the task in pairs, separated by transparent screens so they could also observe each other. In cases where one monkey was given a more desirable prize -- a grape, more than half the time, the other monkey would refuse to eat the cucumber, sometimes becoming angry and throwing it.

So I'm not going to talk about the economics of income inequality. But it's an important issue if only for this reason: It bothers people.