Feb 8, 2005

Spending Our Money, For Protection and Other Incidentals

If you're reading this you most likely care about politics and how our country does business. Well, in a democracy we collectively get what we deserve. If most people vote against their economic interests, they get what they deserve....along with the rest of us in the minority. Ok, I understand, certain social issues and ideology may take precedent over economics, but I find it fascinating that the Republicans have made this into an art: to push the right buttons to get so many people excited and fool them into voting for more tax breaks for the rich, big cuts in the social programs that the rich don't usually need or use but are essential for the middle/poor classes, and for not demanding "goods" such as universal health care & education--staples of any modern society (I mean elsewhere, not in the US)...Of course, they don't want you to learn science or get a critical, thinking mind in school. All theories are equally good....the unicorn flew the tooth fairy to meet Santa...Imagine how much money we could save if along with Amtrak we cut all subsidies for subways, buses and other means of public transportation. Heck, the rich don't use them anyway. Now, lets wave the flag and sing "America the Beautiful"...

President Bush proposed a tight budget, cutting everything in discretionary spending, except for an increase in spending for Homeland Security and Defense. Did I mention that Republicans also don't know how to balance budgets? They do know how to create huge deficits. A deficit is an "IOU" that our government signs in our name. Well, maybe not in our name, but definitely in our children's name since the latter are going to pay for it. Did I mention that Bush is cutting Veterans' benefits? OK, but the death gratuity went up. That's good and long overdue.
Speaking of money, did you watch PBS Frontline's report on credit cards the other day? Do you know that consumers are less protected today after Bush took away the states Attorney General's authority to bring lawsuits on behalf of the consumer against credit card companies. Also, under the present rules, a credit card company, like MBNA, can hike your APR and put you into a "high-risk" category without telling you even if you have a perfect history payment with MBNA! If you're late with any bill payment, like your phone bill, then tough luck!
Senators Kerry and Dodd introduced legislation to forbid this practice, but the Reps in Congress won't even allow this to come to a vote. MBNA was one of the biggest Bush contributors in the last election. It also has the highest consumer complaints in its industry. Do you want to know why ending usury ceilings was a good thing for the consumer? I didn't know this!..
Are you still with me? Do you still maintain that politics don't matter? Do you know anyone who depends on Social Security? Do you expect to collect some day? If yes, you might want to pay closer attention to the on-going debate.


Anonymous said...

A billion here a billion there, soon we'll be talking about serious money! By the way, have they located the $9 billion of spare ..change in Iraq? Or, Halliburton just tweeked their Quicken to reconcile the statement?

Anonymous said...

Did you mean "protection" as in buying protection from the mafia?

Anonymous said...

From Frontline's web site, Edward Yingling's interview. He's the incoming president of the American Bankers Association--an industry which had a record profit year.

Q: That's one part of this that's really interested me, because usury is a traditional value, if you will, in Judeo-Christian tradition, as well as a Muslim tradition. And yet it's disappeared in the last 25 years because of the Marquette decision [Marquette National Bank v. First of Omaha Services Corp. (1978)] in legislation.

A: We used to have usury ceilings in virtually every state, and we didn't really have national usury ceilings. And they went away for a variety of reasons. I think just in terms of basic economics, a usury ceiling is a price control. The interest rate is the price of credit.

Q: But traditionally it was to stop loan sharking, if you will.

A: Right. But in this country, we have a strong bias against controls on prices. We don't have the government set prices. And we do that for a very good reason, because it tends to mess up the economy. That's the kind of thing they do in command and control economies, and it didn't work very well in East Germany and the Soviet Union to have price controls.

But getting away from the general to the specific, in the case of a usury ceiling, what it tended to do is two things, neither one of which were good. It tended to cut out the availability of credit to low- and moderate-income people, and because of other problems in our society and our history, it disproportionately hit minorities, who tended to be disproportionately represented in the low- and moderate-income groups. And so an interest rate on a loan goes up with the riskiness of the loan. And so if you had a really binding interest rate, what you basically were saying is, "OK, loans will not be made to this group," when you have another public policy that says to lenders, "No, no, no, we want you to lend more to this group." And then what would happen is, well, if they couldn't get loans from those that paid attention to the law, where did they go? They went to the loan sharks anyway. So for that reason, you saw usury rates basically phased out in the states slowly but surely. ...

Weren't they put there to protect people so that they couldn't get charged over a certain amount? And isn't the industry to a certain extent already policing itself a little bit, because you see 24.99 percent, let's say, in New York state because 25 percent is criminal usury?

Well, I think usury ceilings were put in to protect people, and that was the theory, and they were put in to help people. They were good motives. But the end result usually was, if they were binding -- it depends on where you set them -- but if they were binding, they ended up cutting out people from legitimate providers of credit, who otherwise could [not] get credit.

If you say to a lender, "I am not going to let you charge the rate you need to charge to cover your risk," that lender will say, naturally, "Then I won't lend to those people that were in that risky pool." And so then where do they go? They either don't get a loan, or they go to somebody that doesn't pay any attention to what the law says. And so the feeling was, let's get rid of these ceilings, because while the intention's good, they're counterproductive. I think also what happened is you had credit markets that became very, very competitive, and so to some degree you could say the competition is going to work to keep the interest rates where they should be.

Tsk, tsk... Do these people believe their own lies? So, MBNA was more profitable than McDonald's last year? Of course, it's supporting Bush and the Republicans--they won't even allow Congress to vote on any bill benefiting the consumer if the banks and big business are going to lose a % of their huge profits!

Big money is not made because those businesses are geniouses! They don't operate in a vacuum. They depend on the favorable laws of the US and on the ignorance of the people and on buying politicians (who are elected by the ignorant people).


Anonymous said...

This is turning into a credit card discussion, but, why not, the US is a heavy credit card user, right? How do you think we're paying the $200 or more billions Bush asked for Iraq? They're charging it! (to future earnings, or to our kids).

Now, credit cards are located in Delaware or North Dakota where there are NO usury ceiling! Also, the "universal default" scheme means that a creditor checks your "credit score" often, so being late in one case for whatever reason, you're hit with increased APR everywhere! Oh, yeah, it's written in those tiny print inserts that no one can read/understand.


Anonymous said...

A professor of law at Harvard University, Elizabeth Warren is an expert on bankruptcy and an outspoken critic of consumer lenders.... She says, we're a nation of debtors! Collectively and individually!

She argues that there was no religious freedom to be obtain by the first Europeans who escaped their homelands! They ran away from their debts! Very interesting!


Anonymous said...

Consumerism should be a course in high school. On the other hand, it's these issues that affect everyone. Consumer protection legislation has to do with the quality of life for most ordinary people. The rich and powerful can escape the harsh reality and even create their own reality.
Americans are being fleeced and Congress won't even discuss this matter, because the powerful interests control the Republican majority.

Sadie Frost

Gothamimage said...

What I found interesting is comparing Bush's SOTU speech with others- and it is so clear that Bush did not mean half of what he said.

This is a new development, when a President tells mostly untruths, and his allies know he is lying (otherwise why would they support many of his statements, which are to Clinton's left).

Yet, despite a whisper hear and there, no one talks about- because the lies are so unbelievable that thet are literally unbelievable.

That is not to say others did not lie before, but not like this.= also, others were wrong, but not intentionally wrong about things- this administration punishes people for correct intelligence, not fake intel.

We are in a decadent moment.

Anonymous said...

A lie has a greater chance of being believed if it's repeated often and by many people. Further, like in law (murder 1 to manslaughter) there is a big difference between lies! Lying to send American soldiers into war and causing immense casualties and committing the nation's resources in a costly, long effort is different than lying about a marital infidelity! Many times I lie in a week when people ask me how I am, and I reply "fine" when I don't feel well.

As for the Bushies, of course they know they're lying, but, perhaps, they think it's necessary to promote their agenda. For many, it's a game how big of a lie they can pass on the American people. But, hey, most of these people were known qualities, so, I believe, any person who spent a little time analyzing the facts and the news would realize this. However, the American people had a chance to send a signal to the liers. Remember, the liars didn't start after November 2nd, 2004! So, the voters are part of the lying game too!

Sam D.

Anonymous said...

I had many credit cards and over the years I charged mostly living expenses (honestly) as life is expensive here in the Northeast. I kept paying more than the minimim and on time. As my balance grew, I noticed that my APRs krept up! In the summer, I lost my job and had some health problems, so I missed a couple of payments.
In the beginning they were nasty--calling me, sending threatening letters, etc. I gave up. Now, they are very nice & polite saying that "extra-ordinary circumstances happen to good people....so, we're here to work with you"!!! They offered me to pay much less, and not the entire balance!!!

To me, consumer protection is paramount, because we are all consumers and not in charge of the laws that govern our relations with big business. Yes, I agree, this is a true "quality of life" issue.


Anonymous said...

I heard a rumor that some Democrats are secretly hoping that Bush's Social Security reform would pass! If so, then they believe that they can re-take the House in 2006! This will become more evident as they won't fight too hard against it when it comes to the Congress for discussion/vote.
The Insider, DC

Anonymous said...

The budget President Bush submitted to Congress imposes $5.3 billion in new, regressive taxes. (They are conveniently listed in table 18-3 on page 305 of the Analytic Perspectives supplement to the budget.) The administration's budget contains new taxes that will increase the price of a six pack of beer, an airline ticket and prescription drugs for veterans. Meanwhile, the budget cuts funding for education, public health and environmental protection and includes $1.4 trillion in new tax cuts for the wealthy...
No, not on my 6pack! A veteran coming home from the war, will pay more to have a drink, fly home, and treat that VD he picked up in Iraq.... What's next? A sex tax?

Geeshus X

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

In his speech in Detroit, President Bush said he was committed to improving education in America.

FACT: In his 2006 budget, President Bush is eliminating “$1.1 billion in state vocational education grants, $496 million for educational technology grants, and $437 million for safe and drug free schools.”

John D

Anonymous said...

Yeah, but Bush is proposing a $500/year increase in the Pell grants! Well, over 5 years! So, maybe the poor students can buy a book or two with the extra $100 they'll get! Who says we can affort to educate our people?
Studius X, NY

Anonymous said...

I was tired and was not able to elaborate on my use of the Kipling poem about Bloomberg- but I just filled in the blanks.

But I think your rendition is excellent