I am planning on writing my next about the state of affairs of the Financial business' and Government action.
However, I would like to point out one specific problem, for which, needs to be addressed almost immediately. Hence, the reason for the posting.
The "credit" crisis was and still is a problem. There are way too many people over-extended, because banks allowed them to step in over their head, knowing full well people were unable to repay the credit extended.
The banking fees and charges continue to go up, raising your monthly payment(providing you are not making on-time payments for whatever reasons) and the hole continues to get deeper.
Credit cards should not be in the hands of many people and the irresponsibility of the banks and credit card companies for approving such people is absurd and foolish, because the government is forced to step in whenever the morons who run the banks get into trouble.
One solution is to eliminate all the credit cards that are presently in existence for American citizens, except for those who are responsible about owning and using them.
All other accounts should be closed/terminated. I would hazard to say that this would seriously dampen the economy, but would be able to reset the Economy, so as to provide a solid foundation.
It's just a thought, but you are more than welcome to weigh in.
In theory, a great idea, but why stop there then? Why not run the lives of morons so they don't do anything that is injurious to themselves or others? Then who decides who is a moron and who is not?
True the companies are taking advantage of people, but all the people have to do is say no!
The problem is the government that thinks it has to bail out everyone who makes a poor judgement! When we quit bailing out everyone for any little mishap or bad judgement, then people will be more judicious in their dealings or will not survive. In any case the problem would then be solved.
Logic, use some logic would you.
Your suggestion is filled with ignorance. Why not TEACH them better to handle their life? Instead of running their life.
It's not a matter of who is a moron and who is not. It is a matter of their actions, which are tracked and reviewed. If they were not responsible, then obvious they do not get another chance to do it again, for quite a while.
More money and you expect them to say no? You're a riot.
Bail out everyone who makes poor judgment? You're not making sense, because the government hasn't done anything to help the average person, but did help the banks. So, you have no ground to stand on with that argument.
Umm, I am just wondering where personal responsibility for own decisions went?
Hey Misha, on all accounts, it went out the damn window.
Well, until it is back I think any solution is illusory...
Interesting thought Misha. I'll take it under advisement.
I don't think we should blame it entirely on individuals. Marketing science is very advanced after decades of research. If you watch TV or listen to the radio you are bombarded by very scientifically prepared advertisements convincing you that you need this or that.
Our culture encourages consumption - in fact our economy is based on it. That's a big part of our problem.
This would be a serious infringement on one's freedom. Granted, the credit situation is a terrible one. I can't disagree with that at all. But people have the right to choose, simple as that. A credit card issuer can choose to loan money, and a credit card user can choose to borrow it. Both can also choose to act responsibly in that deal, or not to. But they have the right to choose is the main thrust.
Nice post, at least CAGSIL is finding ways and offering a solution, which is opened to all to comment and help. I will be reading all the responses.
In terms of credit card, technology and the system of purchasing and banking simply put us all into a plastic economy.
This is juts for micro economy, how about macroeconomy which is obviously more loopholed.
Thus, leading to more and more, deceitful practices by business and poor operations by government.
like what I read in some forums, you said integrity -- and that word is applicable to individuals and banks plus the government, that is purely lacking in our world today
It boils down to just individuals, because banks and government is operated by individuals. And, yes, integrity is seriously lacking in many aspects of society.
remember that individuals try to stay afloat, and the bankers take care of their own agenda (can be personal or to the good of the bank) government is the congregation of individuals with different objectives and preserve their own statuses.
Bankers are still and remain people, just like government officials who were elected to represent the citizenry.
Bankers answer to their shareholders, but use manipulation tactics to deceive the average person, because the average person knows nothing about how to operate a business. That lack of knowledge is what is hurting the average person.
As for government/political officials, these people are supposedly working for the best interest of the people, at least in America that is suppose to be the case.
Too many selfish people trying to get as much as they can before they die and not giving a damn about those who struggle to get by.
I find it appalling and very disturbing.
it is, it then boils down to degradation of moral values, what with the influx of cultural revolution like Internet etc. there is no personal liability plus the fact that there should be a check and balance between regulatory -- the government against capitalist entities like banks. To my mind, they have been in cohorts with one another for the longest time.
I wrote a story on the "Degeneration of Value", and it is based on America's money supply, and sort of a history lesson.
The Federal Reserve Bank is NOT owned or operated by the U.S. Government. It's a collection of International World Banks and Central Banks.
Those banks are operated and controlled by the UPPER .05% of the population. It's a fact that 20% of the world's population controls about 80% of the entire world's wealth.
In America, the top 1% control 95% of all the wealth.
what do you mean own?
the amount of debt to the International Monetary Fund or in terms of capitalist imperialism, or the top five countries at the World Trade Organizations, IMF etc
federal reserve, oh I thought that the Governors are appointed by the US President
The U.S. President is allowed to appoint people to a position within the Federal Reserve Bank, but those people answer to the World Banks before Government. Hence, they do not work for the U.S. Government. It is a cooperation between Government and World Banks.
Edit: The Federal Reserve Bank is separated from Government, as an independent source/entity. The government is not allowed to print paper money.
Why don't you tell us something we don't already know. This isn't shocking or anything new.
Really, it isn't anything new? You are kidding right?
The average person knows nothing about credit, yet has it. Or are you just mocking?
You're not acting very intelligent in your post and apparently have no knowledge on fixing the problem or addressing the problem.
Do you have a solution that isn't common knowledge to citizens? NO! You don't! So, sit down and be a good little boy.
The fact is - this POST is something new to most. Most people should NOT have credit cards in the first place. It's a gimmick!
Got it! Good!
If you have credit, you know about it, if you don't have credit, you don't care about it. Obviously given the way the government spends money it doesn't have it isn't going to help anyone learn about credit. You could write a hub about it maybe someone from the government will read it but the forum isn't the place for it because it isn't something new, according to your rules.
Really, apparently you lack the awareness to understand that when it comes to money, people lack knowledge. Credit is money in another form. They DO NOT know the in's and out's of it. So please.
See, like I said before...so much for you grasping the concept.
Actually, the forum is a great place to START, so as to inform other people. Or did you not know that is ONE way to TEACH people?
WOW! You must have your eyes closed when reading. It is that or you are in serious need of something else, which I'm not going to get into in this thread.
You're not making sense and have limited vision.
Just repeating the same criticism you used elsewhere. It seems you are the only one that knows what's new, relevant and important for others to know about. It must be quite a weight to carry that kind of responsibility.
Your comment is foolish and shows your arrogance, and lack of knowledge.
It is not about ME you know. It's about being more consciously active in one's own life or are you missing that fact?
You complain, just to hear yourself talk. I do not.
Cagsil, I'm sot sure I agree with what I perceive as the tone of your post. It sounds like you are taking away any personal responsibility for loans away from the purchaser and putting it on the bank - banks are not, and should not be, the nanny for an irresponsible consumer. For mortgages, business loans and other secured loans I offer another suggestion: let the irresponsible bank go under. If they have made too many questionable loans with defaulting customers they need'nt be in business. Their loans may be sold to other banks at a discount - let the savings pass along to the consumer. For instance a $100,000 loan from a failed bank might be bought for $50,000 with the consumer now owing only $50,000 to the new owner of the loan.
Consumers that have accepted a loan they can't repay to a bank that stays in business should lose their collateral; they have their own responsibility not to step over their financial abilities and purchase something they can't afford.
A similar concept with unsecured loans. Banks that make too many poor decisions on these need not be in business and should fail. Consumers can take bankruptcy, but that has become too lenient, even with recent changes, to really be a problem to too many people. Many come out of bankruptcy owning what they went into it with or even more - they therefore have no responsibility except their own integrity to pay back loans (such as credit cards) they have taken out. Strengthen bankruptcy laws with the bankrupt paying back what they can.
I understand what you are saying Wilderness and I agree with a lot of what you are saying.
However, my point was that Banks making the loans already know in advance(they can find out everything about your entire life), whether or not the loan is repayable. I thought that is what I was getting at in the first place.
I am not talking about forgiving the mistakes or the fact that people are not responsible, because a individual should be responsible about their household income. However, it is the banks who are the ones that make the loans and take advantage of people's inability to be responsible.
That was my point. The banks are not being held accountable, and a prime example of that is the bailout that did happen.
Well, it seems we are after the same thing, just in different ways. Bankers don't take advantage of peoples "inability" to be responsible; they take advantage of peoples unwillingness to be responsible.
They do it because they, too, are unwilling to loan money responsibility; the politicians will bail them out of bad loans and they can therefore make money that way. If government would just keep their sticky fingers out of business, stop trying to solve societies problems by forcing or encouraging unwise business or personal decisions, and leave the free market place alone I think most problems would solve themselves.
Instead the government gets involved by strongly encouraging banks to make poor mortgage loans because "everyone deserves a house" or some such nonsense.
We don't need more government "nanny" action; we need less of it. I'm sick and tired of some ignorant politician telling me how to live my life and to make laws restricting what I can buy (loans) because some politico doesn't think I'm smart enough to make the decision myself is abhorrent to me. Just like children, if consumers and bankers both knew that had to pay for their actions they would be a little more careful about how they handle their money.
Hey Wilderness, everything you said and even more is in my hubs. Too many people being ignorant in the ways of money and unwilling to be responsible, both banks and governments, as well as the individual person.
More consciously aware a person is about their life, can make them more active in being responsible, especially, if they know there isn't anyone to hold them up....(i.e. government bailouts and such garbage).
I realize the bailouts were essential to the Economy, however, if banking regulators had done their job properly, then it would have been caught sooner than it did.
The behavior of the individuals were not the only ones at fault and I'm not pinning it directly on the banks either, because the marketing aspects is what drew people in. So, everyone has a hand in it and it must be realized by all, so it cannot happen again.
Thank you very much for your input on the topic.
You're more than welcome for the input - it's been interesting. However,
"I realize the bailouts were essential to the Economy, however, if banking regulators had done their job properly, then it would have been caught sooner than it did." - someone else to blame.
On the issue of blame, I remember reading about a year ago 2 or 3 comments that the whole recession/depression was caused by the collapse of the mortgage industry at the root. And that was caused by government promoting and pushing loans for people who couldn't afford them. I expected a great uproar with all the normal finger pointing and cries of innocence, but never heard any more.
You've obviously studied the issue more than I have - do you think there is any truth to it? Was it all caused by a social agenda for home ownership in our government? I'm certainly not one to jump on a "conspiracy" bandwagon, but this sounds just too believable and I know that banks have increasingly made poor mortgages that under other circumstances wouldn't have been acceptable.
The blame is not on one individual but more on irresponsibility of all individuals involved.
As I said above, you cannot simply point one finger at one entity, because all are to blame. The time is now to move ahead and solve the problem, but first people have to accept the fact that they had a hand in it, and people on an individual level are constantly blaming banks and government. Yes, banks and government had their hand in it too, but not solely responsible.
Yes, the government screamed at the banks to make loans, however, reasonable business people should have seen where that would lead to and refuse to cooperate. It should have been done, and not create such a false or fake marketplace, that just threw good money toward bad investments.
Thank you again. And, no there isn't any conspiracy theory, just the fault of everyone involved.
I like your bold solution. We definitely can't continue "status quo."
Banks absolutely bank on (sorry for hellatious pun) the knowledge that Joe Consumer doesn't really understand credit or read the fine print of their credit card agreement. Whose fault is that? The new credit card law requires credit cards to show you on your monthly statement how long it would take to pay off your balance if you only pay the MINIMUM vs a little EXTRA.
Great so far -- the only problem with that is, the calculations assume you do not make any more purchases on the card. So basically they are worthless.
Unfortunately, with the jobless rate what it is, people who might have been quite responsible with their debt 2 years ago are digging holes for themselves with their credit cards. They simply don't have the income level to support their spending habits.
This also applies to mortgages. Where a $2,500 a month mortgage may have been within reason before (when the loan was made) it is out of reach today. Not to mention the home is worth 1/4 to 1/3 less (or more) than the loan is for.
My suggestions (and believe me, I am NOT an economist, just another Joe Consumer) are as follows:
1. Banks should immediately lower the APR on ALL credit cards substantially. 5% would be nice.
Even nicer would be to wipe clean everyone's slate of existing debt -- ha ha. Dream on, Mighty Mom!
2. Banks should be legally banned from sending ANY new credit card offers to any existing credit card customer or to anyone known to have $x amount in debt(let's say $10K). Imagine the amount of money the banks would save on writing,producing, sending and processing these offers!
This would keep people from taking on new debt and let them concentrate on paying off their existing debt at a lower rate.
3. Mortgage companies. I have my own personal feelings about them. For a variety of reasons, I would hope that lenders would prefer to work with existing homeowners to help them keep their home than to force foreclosure or short sale. Is a giant inventory of empty bank-owned homes really in anyone's best interest? I think not!
Like my proposal to banks, above, I would propose that lenders reset their loans to current interest rates and market values of homes. Will they be getting a smaller payback in the long run? Yes. But I bet if they averaged out all their loans they would still be making more money by keeping the loans affordable than by insisting on full value and having people default.
Another thought that just occurred to me is rather than putting people out on the street, lenders could offer homeowners the option of remaining in THEIR house at a lower, rental rate. The bank might own the house, but the people could stay living there rather than having to move and the bank try to sell the property. Assuming our economy eventually does rebound, the rent paid on the house could be applied to a reset mortgage once the tenants get back on their feet.
Hope I've given you your laugh for today, Cags! MM
Thank you Mighty Mom. I like a lot of what you said. I am not an Economics(super-dude) either.
@William R. Wilson, I'm just trying to engage public about the use of credit card and the banks actions with regards to them. I realize business operates on credit, which is a run-off of the government handling it's business...debt creation.
It's completely foolish to operate a business that creates debt, just try and erase said debt, when the business model wasn't built on that basis to begin with.
Profits should be reinvested back into the company, wisely to ensure growth. Taking loans or using credit, is precisely how the banks control the Economy of the country. As seen by the recent events.
Thank you for bring it up and showing another point of view.
Just some thoughts: as long as there is money to be made lending, people will lend. The problem goes way beyond personal credit cards, to mortgages, etc. People are sold on the idea of buying a home as the ultimate wealth builder because the lenders will profit every step of the way. This obsession with home ownership (as opposed to savings) as the way to build wealth is a big part of the economic problem we are facing right now. We were so focused on home ownership, as a society, that there are now more houses than there is demand for them. So we lost all the jobs building houses, those who own houses have lost wealth because their value has gone down, and many people ended up defaulting on their mortgages for a variety of reasons, which just exacerbated the problem.
I'm not saying you're wrong for focusing on consumer credit cards, but that's only the tip of the ice berg.
You might want to also read up on the role of Commercial Paper in the 2008 credit collapse. There was actually a good reason for the bailout - it wasn't just rich folks saving other rich folks (well, ok, it was a little bit). If not for the bailout businesses would no longer have been able to borrow money to do very basic things like buy inventory and pay employees. Thousands of businesses would have closed overnight.
The problem is that our entire society, not just consumers, runs on credit, which requires constant neverending growth.
Issuing credit card after credit card to customers is downright stupid, my ex had about 6 or 7 cards each with between GBP5000 and GBP10000 limit, there is no way she could have ever managed to pay them if she maxed each one. But the banks still gave her card after card and are still sending her offers!
If the banks lose money because of this more fool them! They should shoulder all the pain for it, not be bailed out!
There should be a very strict amount available as a credit limit for a credit card, if the person has reached it then no other bank should be offering an additional card with additional spending power..
This is dismaying. A perfectly good topic once again turned into personal attacks.
Well, at least the sniping isn't based on race-baiting .
Hey leeberttea: My credit score's higher than yours! nyah nyah!
should have a credit system like Canada's where it is almost impossible to get credit if you don't come out on the plus side of the lending equation. I never quite understood how Americans were able to get so many credit cards with so little income. Regulation is important it seems.
Yes, regulation is a problem, but just one of the problems. Many people say that the banks would regulate themselves? Which is completely foolish to think that they would.
Personal credit, should be extremely difficult to get and in some case, should not even be available to those who are evidently unable to repay.
I think it would be terribly difficult (now) to take away credit for anyone because it seems to me that so many people are living on it...and when they have used up their 'allowance' they just go and get another card or more credit and pay off the old and start all over again. How did our society end up so far in debt and how is it continuing to be perpetuated is my question?
I remember when my kids were in HIGH SCHOOL and they were getting credit card applications in the mail! I couldn't believe it and promptly shredded them all. I guess I could be in trouble with the US Postal Service but that is my point - they try and 'hook' people from an early age and lead them to believe that they can be responsible with their use of credit - until there is a quasi-emergency or something they 'just have to have' and the spiral begins.
We are being gouged by our government on so many levels these days - this is just one more way I think for us to fall into the trap and find ourselves without an escape hatch. I admit I do not know what the answers are - I will look forward to your hub!
Unfortunately, a lot of people just aren't very good at math. Which leads to being unable to balance their expenses. Many people are also unable to control their spending, and living beyond their means..an illusory attempt to "keep up with the Joneses".
Rather than take away credit cards, there needs to be a massive education on how to manage your money on the income you actually have to work with. Credit should only be extended to those who are normally able to control their spending without getting into debt, but, as we all too well know, life sometimes throws us a curve and we need some emergency cash.
If you're not making enough to support a modest standard of living, you need to either learn a new skill that pays more, or as Cagsil frequently suggests, create your own wealth, by starting your own business. Yes, it's hard work, but much more rewarding in the long run. You quickly learn to make responsible decisions about spending, since you're not relying on anyone else to pay your wages.
And, that's the competitiveness people have with trying to 1-Up the next person. It's a silly game construct taken from business and personalized.
It's meaningless without completely understanding everything involved.
Nice addition to the thread Timorous. Thank you for responding.
I think people in general do have problems getting in over their head when it comes to credit. I deal with people and their credit ratings on a daily basis and I can tell you that people who walk away from debt come from all walks of life.
I think one solution is in the twelve years of government paid-for education one of the things that should be taught in school is the use and abuse of credit.
Most people that I have run into lately have serious credit difficulties.
This was manufactured by the banks over the last 18 months or so.
If you had a credit card with a $10,000 limit and only had $2500 charged to the card your credit rating would rise. Recently the banks have been taking away available credit, making it look like these people were maxed out on their cards thus lowering their score.
When the score drops below a certain level the rates go up. This was done mostly before the new credit card laws were put into effect recently.
People need to be better educated on "money" itself also. Show them what power it has and how detrimental to their life it can be, when not paid the respect it deserves.
Money can and will break anyone who does not understand it or it's power.
Edit: Thank you Arthur.
I suppose 'ignorance of money' can be a factor but I have always maintained the theory that we all know that we have X amount of money and that we have X amount of expenses - and no matter how you wiggle those numbers and try to get around them, they keep coming out the same. So with that in mind, how can you justify spending more than you make? Especially by just adding to your overall debt month after month and paying off tiny pieces while building up more interest than the payment covered?
I'm not a math person per se but I guess growing up hard and poor and working since I was 10 (begin the violin background music now please), I have a very good concept of money and its value. I also have a very healthy respect for being able to live within my means and being able to take care of myself at all times.
I think that credit though is one part in the erosion of our society. No accountability - you see it in government and you see it in personal spending trends. You can just keep spending and spending, borrowing and borrowing but no one stops to ask when does it get paid BACK? I just think it is a simple math equation - you add up what you can afford and that's all you get! No pass Go and receive a free pass and $200 - just live within your means. If the world could grasp that concept, I think we'd see some stability.
But as always, disclaimer....I'm now blond so I know nothing!
I realize it is important to know math and living with your means, but the view people have about money isn't consistent.
Some think it grows on trees and should be provided to them? This is foolish. I wrote a hub on the misconception- the unrealistic power of money. It was with regard of understanding the concept in itself. Greedy people, at least most, do not understand the power of money, because all they can think about is money itself and not the repercussions that come from not understanding it.
The same works with credit.
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