Fuel costs are having their impact. I can observe one blue collar community where the commute averages over 100 miles per day round trip, the local eateries are nearly vacant. Evidently people are having to cut back on discretionary spending to fund their fuel costs and probably financing fuel costs as well. The doubling of credit card minimum payments is going to be a shock and a backbreaker to half the workers in the US probably. I read that half of all workers have maxed out cards and can only make the minimums, when those payments double the default rate is going to be real high.
Recent reports show that half of all current mortages are interest only, the majority of which closed over the last one to two years. So, what happens in 2008/09 when the average house payment goes from $2000 to $3200? The average American would need a 65% salary increase to handle the payment increase - Highly unlikely.
I can tell you what happens - I buy a real nice home in foreclosure & rent my current one out for the next 5-7 years until housing values start rising again.