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2008-11-06 Home Front Economy

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Posted by Anonymoose 2008-11-06 00:00|| || Front Page|| [11127 views ] Top

#1 They can't just take their earning from exorbitant interest rates and be happy can they?
They have to securitize the unsecured loans and dick around with the overblown credit default swap fiasco that is unraveling underneath them. They are doing it to themselves, and we will be strong armed into another huge bailout to 'save' the credit card companies who have given cards to every deadbeat that can fill out a form.

Posted by bigjim-ky 2008-11-06 00:24|| 2008-11-06 00:24|| Front Page Top

#2 Yup, they could borrow money from the Feds at 4%, lend it at 12 to 15%, charge the merchants another 2%, keep the defaulters at under 1%, and cry because they weren't making money.

Posted by Steve White 2008-11-06 00:33|| 2008-11-06 00:33|| Front Page Top

#3 Steve, for a lot of merchants, it's significantly higher than 2%. That charge is regressive dependent on volume, the less the volume, the greater the charge.

Posted by no mo uro 2008-11-06 08:09|| 2008-11-06 08:09|| Front Page Top

#4 12 to 15% is kinda low, Dr Steve. There's tons of people paying more than 18%, and they're not all deadbeats.

Posted by Cornsilk Blondie 2008-11-06 08:16|| 2008-11-06 08:16|| Front Page Top

#5 Snicker, so it's even worse than I thought and they STILL can't make money!

Posted by Steve White 2008-11-06 08:31|| 2008-11-06 08:31|| Front Page Top

#6 I've recently become a sort-of deadbeat, have bad interest rates, and have seriously thought about saying "hey, dudes, you got your bailout, you've got your shiny new president who voted for the bailout, stick your collection up your ass, I'm going to bankruptcy court."

And I've be tempted to say the same thing if McCain wins.

Posted by Thing From Snowy Mountain 2008-11-06 08:47|| 2008-11-06 08:47|| Front Page Top

#7 I mean "had won." You know what I mean.

Posted by Thing From Snowy Mountain 2008-11-06 08:48|| 2008-11-06 08:48|| Front Page Top

#8 Three points: While credit card companies make a lot of interest, they only do so by issuing enormous amounts of credit, which dwarfs their profits. The bonds underwrite this credit, and the yield on those bonds comes from their interest as well. If nobody will buy those bonds, they are out of business, and there are no more credit cards.

Already some of the credit card companies are canceling cards *not* based on their owners, but on the other owners in the same *class* as that owner. So if people somewhat like you, in the credit card companies opinion, are defaulting, they will cancel your card as well.

The third point is that a huge number of Americans are reliant on credit cards to pay their monthly bills. They have no substantial savings. If their credit cards gets canceled, they cannot pay rent or even buy food. If they have bank checking, so many of them will overdraft that banks will have to shut down checking accounts as well, or retailers will refuse bank checks.

This leaves only debit cards and cash as a way to make retail purchases.

Posted by Anonymoose 2008-11-06 09:04|| 2008-11-06 09:04|| Front Page Top

#9 Okay what does buffoon Biden's kid have to say about this?

Posted by AlanC 2008-11-06 09:33|| 2008-11-06 09:33|| Front Page Top

#10 This leaves only debit cards and cash as a way to make retail purchases.

Hell, I've been doing that for years now, NO DEBT, NO CREDIT CARDS.(Thank God)

They 26%ted me away from doing business with them, I view it as a wholy self-caused problem. And TO HELL WITH THEM ALL.

Posted by Redneck Jim">Redneck Jim 2008-11-06 10:30|| 2008-11-06 10:30|| Front Page Top

#11 I'm trying to remember the article I was reading, I think it was business week, but the Credit Default Swap market is bigger than the actual underlying loan market, much bigger. And when you combine that with the asset backed securities that they issue, its many times what the actual credit lines are worth. If I'm reading the numbers right and I think I am. But the point is, they are more concerned with he derivatives market than they are with their credit accounts.

Posted by bigjim-ky 2008-11-06 11:20|| 2008-11-06 11:20|| Front Page Top

#12 The third point is that a huge number of Americans are reliant on credit cards to pay their monthly bills. They have no substantial savings. If their credit cards gets canceled, they cannot pay rent or even buy food. If they have bank checking, so many of them will overdraft that banks will have to shut down checking accounts as well, or retailers will refuse bank checks.

In other words, there are a lot of satellite households with no reason for their independent existence. People need to double or triple up with family, friends or complete strangers in order to shore up their finances. The problem is that if this happens, rents will drop big time. Which will make home values drop even further, as rents become yet more attractive vs mortgage, property tax, HOA and insurance payments. My prediction is that efficiencies (studio apartments, in NYC lingo) and single bedroom apartments are about see big reductions in demand.

Posted by Zhang Fei 2008-11-06 12:33|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2008-11-06 12:33|| Front Page Top

#13 I'm trying to remember the article I was reading, I think it was business week, but the Credit Default Swap market is bigger than the actual underlying loan market, much bigger.

Essentially, corporations were gambling, without having to put the potential liabilities on their balance sheets.

Posted by Zhang Fei 2008-11-06 12:35|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2008-11-06 12:35|| Front Page Top

#14 This, by the way, is why a lot of banks are reluctant to lend - nobody knows what landmines are lying dormant. Nobody wants to get in line with the other creditors if there's a bankruptcy or liquidation. Remember - Lehman creditors got ten cents on the dollar.

Posted by Zhang Fei 2008-11-06 12:37|| http://timurileng.blogspot.com]">[http://timurileng.blogspot.com] 2008-11-06 12:37|| Front Page Top

#15 The consumer-driven economy of the US is under severe stress as consumers have cut back on their spending. A big drop in credit cards outstanding will damage that economy even further, resulting in businesses laying off even more workers and/or going out of existence. If Americans saved reasonable amounts for contingencies such as their retirements, and lived within their means, the economy would have turned out much different than it has.

Posted by Anguper Hupomosing9418 2008-11-06 16:00|| 2008-11-06 16:00|| Front Page Top

#16 IIUC, CAVUTO ON FOX NEWS AM > was ranting about how these credit card companies have begun asking Congress to get Govt Regulators out of the way in order to ENGAGE IN MORE OF THE VERY SAME TYPES OF DUBIOUS SPECULATION AND MARKET OPERATIONS, ETC., AND BEYOND, THAT GOT THEM INTO TROUBLE TO BEGIN WITH.

IOW, THE ANSWER FOR CREDIT CARD "MARKET PAIN" IS MORE MARKET PAIN, OR WORSE???

Posted by JosephMendiola 2008-11-06 19:19|| 2008-11-06 19:19|| Front Page Top

#17 I haven't cut back on my spending. Yet. But then, I don't spend much anyway. Might buy a car soon though - they're both 14 years old.

Posted by Glenmore">Glenmore 2008-11-06 19:21|| 2008-11-06 19:21|| Front Page Top

23:58 Anguper Hupomosing9418
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