Tag: Credit Debt

Shut The F*ck Up!

My days of Zen were interrupted by the downgrading of the US credit rating by S&P……all weekend it was it is the Tea Party’s fault…..no, it is the Dems fault…..no, it is the Pres, fault because he had a birthday….nope, it is the Repubs fault for their uncompromising stance……finally, it is S&P’s fault for not understand the nature of American politics……

Please, shut the f*ck up and get to work!  It is everyone’s fault….especially the dipsticks in Washington….it is the voters fault for trusting the typical lies of politicians……the blame game is being played because NOT one of the morons in the capital have any idea how to fix the sagging economy and the approach of a double dip…instead of working for what is best for the country…..let me repeat that…..WHAT IS BEST FOR THE COUNTRY……..they had rather sink back into their ideological cave and point fingers……

Take the GOP’s economic genius, Paul Ryan….the best he could do is blame the Dems and their spending….and then there is Sen. Kerry who blames the Tea Party and finally the Tea Party spokesmen just rattled on about nothing that makes sense, economic sense, that is……..in other words NOT one of these morons has any ideas….at all!

Once again, we are confronted with a government run off of talking points…….and not one of those points will solve the problem……and once again we are confronted by politicians that have NO interest in saving the country from ruin…..their only interest is their silly little talking points and their out dated ideology…..

The politicians have allowed this to happen…..the American voter has allowed this to happen.  Why do we allow these twats to continue to allow these types of people represent us?  I know someone out there will have a good answer…..for the life of me…..my thoughts are….we are just plain STUPID!

It is time for EVERYBODY to Shut the F*CK up and come together and find solutions to real problems and stop chasing those non-existent boogey men!

I say it again…….IT IS THE COUNTRY, STUPID!

Land Of The Lost (Decade, That Is)

I am sure when the word “Lost” is mentioned we will have a wealth of people that will tear up at the mere mention of the now defunct TV show……thanks to say this is NOT about a bunch of fictional people lost on the island of Manhattan…..but rather…..

Back in the 1990’s I was a frequent player on the stock exchange…made some money…lost even more….but I recall the days of my adventurism……Japan was a shining light of capitalism especially in the later 80’s….but that was about to change…..

The economic miracle ended abruptly at the very start of the 1990s. In the late 1980s, abnormalities within the Japanese economic system had fueled a massive wave of speculation by Japanese companies, banks and securities companies. Briefly, a combination of incredibly high land values and incredibly low interest rates led to a position in which credit was both easily available and extremely cheap. This led to massive borrowing, the proceeds of which were invested mostly in domestic and foreign stocks and securities.

This popped the bubble in spectacular fashion, leading to a massive crash in the stock market. It also led to a debt crisis; a large proportion of the huge debts that had been run up turned bad, which in turn led to a crisis in the banking sector, with many banks having to be bailed out by the government.

Overall, this has led to the phenomenon known as the “lost decade”; economic expansion came to a total halt in Japan during the 1990s. The impact on everyday life has been rather muted, however. Unemployment runs reasonably high, but not at crisis levels (the official figure is a little under 5%, but this is a considerable underestimate – the real level is probably around twice that).

I will bet you wonder why I mention this……does it sound familiar?  It should or you are not paying attention to your life.

I gave you a little economic history because I see this happening in the US and I am not alone….Paul Krugman writes:

It’s not that nobody understands the risk. I strongly suspect that some officials at the Fed see the Japan parallels all too clearly and wish they could do more to support the economy. But in practice it’s all they can do to contain the tightening impulses of their colleagues, who (like central bankers in the 1930s) remain desperately afraid of inflation despite the absence of any evidence of rising prices. I also suspect that Obama administration economists would very much like to see another stimulus plan. But they know that such a plan would have no chance of getting through a Congress that has been spooked by the deficit hawks.

We hear daily that the US could become the next Greece because of the growing deficit….which seems to be the call of most conservatives these days,,,,,,,but I see it differently….I see the possibility of the US becoming another Japan with a “Lost Decade” and many years of suffering for the working majority of the country.  Slow growth, high unemployment and a rise in the inflation rate.

One Way To Quit Smoking

Government is trying to force Americans to be more healthy and to stop smoking…..their attempts are not producing the results that they would like…at least not as quickly as they want.  But I read an article the other day that would put the liomber in your Johnson and be a hell of an incentive to stop smoking.

A New Hampshire man says he swiped his debit card at a gas station to buy a pack of cigarettes and was charged over 23 quadrillion dollars. Josh Muszynski checked his account online a few hours later and saw the 17-digit number — a stunning $23,148,855,308,184,500 (twenty-three quadrillion, one hundred forty-eight trillion, eight hundred fifty-five billion, three hundred eight million, one hundred eighty-four thousand, five hundred dollars).

That could give a person a stroke and that would permanently stop the urge to light up.

There is a bit of good news from this story:

Muszynski says he spent two hours on the phone with Bank of America trying to sort out the string of numbers and the $15 overdraft fee.

The bank corrected the error the next day.

As absurd as this story is the part that amazed me was the $15 overdraft fee……you mean that nowhere in the huge bank of computers that a red flag was not triggered by a $23 quadrillion charge….I mean we are talking about more money than all the cash in the world…and nowhere was this noticed?

Or maybe we should let him put the cost of Health care on his card……

All is well that ends well……..

2009 Anal-Ocity

I admire the Pres. for his oratory, but unfortunately he is NOT above making an anal statement.  And he has done just that, in my opinion.

In LA at a fundraiser, Obama was talking about the economy and how we have pushed back from the brink of disaster.  His rosy scenario was all well and good but he then said:

“We can’t return to a bubble-and-bust, borrow-and-spend economy based on maxed-out credit cards, over-leveraged banks, and financial profits that were only real on paper,”

But if you take a long hard look at what is being done with the economy, we are doing just that–returning to borrow and spend and a push to make credit more readily available, which in turn could return the maxed-out cards.

Sorry dude—anal is anal.

Credit Card Companies Still Win

Big News–the US Congress has finally come to the aid of credit card holders–we may all take a moment to rejoin and say a small prayer.

As of 21 May 2009 the credit card bill has been approved and passed by the House and the Senate and now awaits the official signing ceremony.  But what does the law require the companies to do?

Good question!

Basic provisions of the new credit card law.

  1. • Companies are prohibited from raising interest rates on existing balances unless a cardholder is 60 days past due.
  2. • Card companies can’t raise interest rates for the first year after an account is opened.
  3. • At least 45 days’ notice is required for a rate hike.
  4. • No over-the-limit fees except for cardholders who sign up for programs allowing transactions that would put them over their credit limit.
  5. • Consumers under age 21 would only be able to get a credit card with a cosigner or proof they can pay their bills.
  6. • Card bills must explain how long it would take to pay off the balance and how much interest would be paid by cardholders who make only the minimum monthly payment.

All looks pretty good, huh?  Take a closer look, people.  After about 45 days the companies are allowed to return to screwing you into poverty.  It will protect underaged people from the predatory pracxtices of the past, which will mean less monetary kick backs to the colleges.

This whole exercise is in futility–the companies will not lose that much revenue from this laand the people will still have to keep a jar of Vasoline handy.

Credit Card Crisis: Part 2

The more the recession deepens, the more concessions the banks are getting from the government.

President Obama held a meeting with prominent credit card industry executives during which he gave them some friendly advice that they should moderate their most egregious practices so as to deflect additional damage to their public image among the mass of the population. The executives listened politely, but gave no indication that they intended to follow Obama’s advice.

The banks remain determined to continue to exploit this, one of their few remaining sources of profits. Fitch Ratings reports that US credit card delinquencies and charge-offs exceeded record levels last month as a result of the economic crisis. Nevertheless, yields to the card issuers increased, indicating that terms are being manipulated to squeeze borrowers even more tightly.

The “scissors effect” between payment defaults on the one hand and rising interest rates and fees on the other is becoming ever more pronounced. The Washington Post reports, “Already some credit card issuers are seeing close to double-digit charge-offs. For example, Capital One Financial said its charge-off rate spiked to 8.4 percent in the first quarter, up from 5.85 percent in 2008 and 3.72 percent in the first quarter of 2007. The company said it expects further increases in its US credit card charge-off rate through 2009 as the economy continues to weaken.” Charge offs are losses that the companies remove from their balance sheets because they have no hope of collecting what is due. The amounts of money involved are substantial. According to Time, analysts predict credit-card defaults could total more than $75 billion this year.

Credit cards are a form of “predatory lending” as was the whole range of risky mortgages and mortgage-related “instruments” that have already blown up into a major financial crisis. Credit card debt has been “bundled” and sold off by the banks in a manner similar to what was done with subprime mortgages. For years, both of these investment categories were virtually unregulated mechanisms for banks and similar institutions to realize large profits by selling and reselling the same assets at increasingly inflated prices and with less and less relation to real value.

The credit card industry is raising the claim that government regulations, especially via legislation rather than the more easily reversed moves by the Fed, would simply result in greater restrictions on the availability of credit to “good” borrowers, making them pay for the mistakes of “bad” borrowers. The hypocrisy of such statements is colossal given that the banks are already engaged in a major triage of credit holders after having practiced outright usury on a massive and uncontrolled scale.

Tied to this is the myth of “good” verses “bad” debtors—the former being those who pay their bills on time, maintain balances below the maximum and don’t behave in ways that the banks consider “risky.” Good debtors deserve the government’s help, but bad debtors don’t. This mythology is intended to justify the ruthless behavior of the banks by demonizing people who are being hit by the economic crisis. As a consequence, cosmetic changes can be heralded as restoring “fairness” for the good debtors, while the banks are pretty much left to do what they like. Of course, as the crisis deepens, more and more people will be driven into the bad debtor category.

But yet there is a paradox here.  We argue that the credit companies are screwing the consuming public, but are they?

Credit Card Crisis–Part 1

Banks have gotten more money than God has and still the credit that was promised to loosen up, is still ceased up with little hope of relaxation anytime soon.

A crisis in credit card debt is likely to be one of the next major shocks to the US banking system. Many large institutions, such as Bank of America and Citigroup, already effectively insolvent but for billions of dollars of bailout money from the federal government, will now see their financial positions deteriorate even further.

Personal debt, primarily in the form of home equity loans and credit cards, has been one of the principal mechanisms whereby working class families have attempted to counteract the decline in real income since the 1970s. Indeed, much of the consumer spending that has buoyed the US economy over the last few decades was facilitated by credit cards and other forms of personal debt. At the same time, the provision of “credit” has become one of the most substantial sources of income for banks in the face of an increasingly frenzied drive to raise profitability. However, this situation is now undergoing rapid change.

As banks have suffered major losses in mortgages and other “toxic assets,” they have continued to make money on credit card debt by increasing interest rates and fees and through a range of deceptive practices that are being imposed on card holders abruptly and with little or no justification. The growing anger over these practices, which affect working class and also more well off middle class people, has been receiving increasing attention in the media; so much so that bills have been introduced in both the House and Senate to address the issue.

One such bill is the Credit Cardholder’s Bill of Rights:

Ends Unfair, Arbitrary Interest Rate Increases
•    Prevents card companies from unfairly increasing interest rates on existing card balances – retroactive increases are permitted only if a cardholder is more than 30 days late, if a promotional rate expires, if the rate adjusts as part of a variable rate, or if the cardholder fails to comply with a workout agreement.
•    Requires card companies to give 45 days notice of all interest rate increases or significant contract changes (e.g. fees).

Lets Consumers Set Hard Credit Limits, Stops Excessive “Over-the-Limit” Fees
•    Requires companies to let consumers set their own fixed credit limit that cannot be exceeded.
•    Prevents companies from charging “over-the-limit” fees when a cardholder has set a limit, or when a preauthorized credit “hold” pushes a consumer over their limit.
•    Limits (to 3) the number of over-the-limit fees companies can charge for the same transaction – some issuers now charge virtually unlimited fees for a single violation.

Ends Unfair Penalties for Cardholders Who Pay on Time
•    Ends unfair “double cycle” billing – card companies couldn’t charge interest on debt consumers have already paid on time.
•    If a cardholder pays on time and in full, the bill prevents card companies from piling additional fees on balances consisting solely of left-over interest.
•    Prohibits card companies from charging a fee when customers pay their bill.

Requires Fair Allocation of Consumer Payments
•    Many companies credit payments to a cardholder’s lowest interest rate balances first, making it impossible for the consumer to pay off high-rate debt.  The bill bans this practice, requiring payments made in excess of the minimum to be allocated proportionally or to the balance with the highest interest rate.

Protects Cardholders from Due Date Gimmicks
•    Requires card companies to mail billing statements 21 calendar days before the due date (up from the current 14 days), and to credit as “on time” payments made before 5 p.m. local time on the due date.
•    Extends due date to next business day for mailed payments when the due date falls on a day a card company does not accept or receive mail (i.e. Sundays and holidays).
Prevents Companies from Using Misleading Terms and Damaging Consumers’ Credit Ratings
•    Establishes standard definitions of terms like “fixed rate” and “prime rate” so companies can’t mislead or deceive consumers in marketing and advertising.
•    Gives consumers who are pre-approved for a card the right to reject that card prior to activation without negatively affecting their credit scores.
Protects Vulnerable Consumers from High-Fee Subprime Credit Cards
•    Prohibits issuers of subprime cards (where total yearly fixed fees exceed 25 percent of the credit limit) from charging those fees to the card itself. These cards are generally targeted to low-income consumers with weak credit histories.

Bars Issuing Credit Cards to Vulnerable Minors
•    Prohibits card companies from knowingly issuing cards to individuals under 18 who are not emancipated.
Requires Better Data Collection from Credit Card Industry
•    Requires reports to Congress by the Federal Reserve on credit card industry practices to enhance congressional oversight.
Swift Implementation of 45-Day Notice Requirement
•    Requires card companies to send out 45-day notice of interest rate increases 90-days after the bill is signed into law; the remainder of the bill takes effect 12 months after enactment.

But will this be enough to protect the credit consumer from the predatory practices of the credit companies?

Do Not Screw With Our Money!

Basically, that is what China is telling the US.

In a public statement raising questions about the solvency of the US government, Chinese Premier Wen Jiabao said Friday that China, the largest holder of US treasury debt, was “concerned about the security of our assets.”

Wen’s remarks came at a news conference following the annual session of China’s parliament, where he commented on the economic policies of the new US administration. “President Obama and his new government have adopted a series of measures to deal with the financial crisis,” Wen said. “We have expectations as to the effects of these measures. We have lent a huge amount of money to the US. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.”

He called on the United States to “maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.”

Chinese officials fear that the huge borrowing in world credit markets required to finance the US government’s budget deficits—a projected $5 trillion over the next four years according to an estimate released by the Obama administration last month—will lead to a decline in the value of the dollar.

Since Beijing now holds about $1 trillion in dollar-denominated assets, including nearly $700 billion in US Treasury debt, a decline in the value of the US currency would hit China hard.

Not only are we a country of credit addicts…our country is a credit addict…….we have been told by Washington and the conservs that the country should live within its means…all the while they assisted in turning the people of the country into the world’s biggest credit junkies.

Would they foreclose on the country?  Doubtful, they would lose too much money, but it is an interesting developement and watch the news…….to calm China nerves they will get all sorts of special deals from Washington.

New Rules

Cash-strapped consumers might get some welcome news on Thursday when regulators vote to rein in controversial credit card practices.

The proposed rules, which have received overwhelming consumer support, prohibit banks from practices like raising the interest rates on pre-existing credit card balances unless a payment is over 30 days late, and applying payments in a way that maximizes interest penalties.

The Federal Reserve Board, the Office of Thrift Supervision and the National Credit Union Administration, are all expected to approve the regulation. The rules are expected to take effect by 2010.

If approved, the Fed’s rules will mean an end to double-cycle billing, which averages out the balance from two previous bills. That means that consumers who carry a balance can get hit with retroactive interest on their previous month’s bill – even if they’ve already paid that off.

Consumers would also be given a reasonable amount of time to make payments, and payments would be applied to higher-rate balances first, to reduce interest penalties and fees.

Credit card statements would clearly list the time of day that a payment is due, and any changes to accounts would be in bold or listed separately.

And, finally, no more universal defaults – policy which allows credit card issuers to increase the interest rate on one card if a customer misses a payment on another card.

Consumer advocacy groups say credit-card reform couldn’t come soon enough. Travis Plunkett, the legislative director for the Consumer Federation of America said new rules are “essential” at a time when “so many Americans are falling behind on their loans.”

In the midst of a credit crunch, Americans have about $976.3 billion in revolving credit and 4.9% of all credit cards were delinquent in the third quarter, according to the latest data from the Federal Reserve.

Personal Debt Shrinking?

The American consumer’s long-running love affair with debt appears to be on the rocks. But like a lot of soured romances, the reasons are open to debate.

What’s known is that the debt held by U.S. households shrank in the three months ended Sept. 30. That’s the first time that has happened since the government began keeping records more than 50 years ago, the Federal Reserve said Thursday.

Economists say consumers appear to be curbing their spending and displaying a healthy prudence about taking on new debt — something financial planners have been admonishing Americans to do for decades.

What economists don’t know is whether people are bringing down their debt voluntarily or whether it’s being imposed on them through foreclosures or the denial of credit.

Household debt declined 0.8% in the third quarter, mostly as a result of a 2.4% decline in mortgage debt, the Fed reported. Other consumer debt, which includes credit card debt, rose a modest 1.2%.

The Fed also noted that household net worth continued to decline in the same quarter, largely because of shrinking home equity. Homeowners’ equity as a percentage of the value of their homes has fallen to just 44.7%. Until this year, that percentage had not fallen below 50% since 1945.