Here comes the bust:

In early July, economist Dean Baker told readers to keep an eye on consumer credit numbers. In May, credit card debt spiked up 9.9 percent, a possible sign, said Baker, that consumers were beginning to rely on plastic for their purchases, rather than cash from their home refinancings. But one month did not make a trend, he noted. What about two months? The numbers were far worse in June. According to Bloomberg, overall “consumer credit, or non-mortgage loans to individuals, rose $10.3 billion to $2.19 trillion following a revised $5.89 billion increase in May. The two-month gain was the biggest since September-October 2004.”

And on the heels of that comes a tidbit from the Capital Spectator, which encourages us to look at what is happening in the world of home equity loans. According to a research note by Northern Trust analyst Asha Bangalore, home equity withdrawals are drying up. “Households tapped into home equity to the tune of about $600 billion in 2005 to support their expenditures,” but during the most recent 10 weeks of 2006, home equity loans have dropped every week.

Credit card debt … going up. Home equity loans … going down. Do you suppose the default management service companies are hiring?

UPDATE: Here’s more:

WASHINGTON (MarketWatch) - The United States is headed for a recession that will be “much nastier, deeper and more protracted” than the 2001 recession, says Nouriel Roubini, president of Roubini Global Economics.

Writing on his blog on Wednesday, Roubini repeated his call that the U.S. would be in a recession in 2007, arguing that the collapse of housing will bring down the rest of the economy. Read more.

Roubini wrote after the National Association of Realtors reported Wednesday that sales of existing homes fell 4.1% in July, while inventories soared to a 13-year high and prices flattened out year-over-year. See full story.

“This is the biggest housing slump in the last four or five decades: every housing indictor is in free fall, including now housing prices,” Roubini said. The decline in investment in the housing sector will exceed the drop in investment when the Nasdaq collapsed in 2000 and 2001, he said.

And the impact of the bursting of the bubble will affect every household in America, not just the few people who owned significant shares in technology companies during the dot-com boom, he said. Prices are falling even in the Midwest, which never experienced a bubble, “a scary signal” of how much pain the drop in household wealth could cause.