Oh, We’ve Got Trouble

This teaser caught my eye the other day while I was browsing over at the Daily Reckoning:

Today, reports show that foreclosures nationwide have gone up 93% when compared with July of last year. Almost every state in the country showed a significant bump in the rise of foreclosures, but California, Florida, Michigan, Ohio and Georgia take the cake.

The Daily Reckoning, Bailing Out the American Debt Business (fixed link)

The [Digg.com] article itself points to another article on Rude Awakening, which (regrettably) doesn’t actually cover the factual details of the foreclosure problem either. If, however, the numbers are accurate (and I have no reason to doubt that they are) then there is a financial disaster that dwarfs everything since the Great Depression looming on the horizon.


Editor’s note: Historically there were links to Digg.com articles in most of these blog entries. Digg was an early competitor to Reddit but never as popular. It has since been sold and repurposed as a raw aggregator and a clickbait spam source. I really don’t see the purpose in leaving these old bad links in the articles, so I’m pulling them out. Where possible I will reconstruct a link to the current home of the information, along with a label that actually communicates where it is the link sends you so that the next time the links break, at least a title search will be possible.

Major thanks to the Wayback Machine. Drop by and give them a contribution if you agree.

The Dirty Dozen Credit Card Traps

Credit cards are the most lucrative segment of banking, and not just because of the interest charges. Everyone in the industry wants to sell you a credit card. Don’t be fooled by the offers. We present a dirty dozen traps and tricks used by credit card peddlers to fill their pockets and empty yours.

here is a summary of the dirty dozen credit card traps:

The 0% APR is a marketing technique to gain new customers. It is temporary and often part of a bait and switch scheme in which you apply for the 0% APR credit card and are given a card with a much higher interest rate. Even if you do receive the 0% APR, the lender’s strict terms and conditions increase the likelihood of you losing the rate before the introductory term expires.

The default APR is the lender’s highest interest rate. An increasing number of good credit customers are being charged this penalty rate, at the whim of the creditor.

A fixed APR is a meaningless term. Credit card providers can change the interest they charge to lend you money at any time, for any reason. The fixed APR simply gives the consumer the right to be notified if the lender changes the interest rate for reasons other than those specified in the contract terms (i.e., any reason at all). A variable APR can also be changed at any time by the provider, but in addition it varies according to a national index, such as the Wall Street Journal’s survey of prime interest rates among U.S. banks.

Listing several APRs on credit card offers is a technique to confuse customers and prevent them from comparison shopping. It also makes it easier for a credit card provider to defend itself against lawsuits, since its advertising does not make a specific promise or claim to provide a certain interest rate.

Late fees are much higher than they used to be (currently around $40 or a percentage of the loan balance), and are imposed much sooner than in the past (payment must be received before close of business on the due date). Late fees are just one of a raft of financial penalties that credit card providers are using to increase their profits

Borrowing cash via your credit card is much more expensive than making a purchase, in terms of a higher interest rate and a cash advance fee. The cash advance loan remains on your unpaid credit card balance the longest in order to maximize the creditor’s interest rate profits.

Credit cards that have added value for the holder have annual fees, some of which are quite expensive. For the wealthy consumer, added value can mean exclusive concierge and personal shopper services; for the consumer with damaged credit it can mean obtaining and rebuilding access to credit. For those in between, added value can mean accumulated rewards such as free airline tickets. In all cases, the consumer should evaluate the annual cost of the card in relation to its value-added reward.

Charity affinity cards are frequently a deceptive marketing technique, designed to appeal to the consumer’s heart in hopes she will forget to use her head. Suspiciously, many charity credit cards do not disclose the amount that is donated to the charity, and when they do, the percentage is infinitesimal.

Two-cycle balance computation is a method of computing finance charges that is more costly to the consumer than the average daily balance method. Because there is no specific number (as with an APR or a fee) listed in the credit card offer disclosures, it is easy to overlook this trap, which could be an expensive mistake for those who do not pay their credit card balances in full every month.

Some credit card providers charge non-usage or inactivity fees. Although this is not an issue for most credit card holders, since we use our credit cards daily, it is important to be aware of in certain cases. For example, you may be trying to improve your credit score by paying off a credit card and not using it.

Foreign transaction fees are another invention of credit card providers to diversify and increase their profit-making activities. Purchases and cash advances from foreign countries are charged a fee that is frequently 3% of the purchase price.

Setting the minimum monthly credit card payment at a very low percentage of the loan balance is a practice that seems to be friendly to the consumer. It is not. Making low payments increases the cost of the loan and lengthens the time needed to pay off that loan.

www.careonecredit.com

I, for one, have sworn never to carry another credit card. They are worse than matches and gasoline. Best to never combine the two unless you like being burned.


Editor’s note: 2017. I wrote two sentences of this. Two sentences. My apologies to the writer at Careone Credit for this bit of copy and paste. However, in light of the fact that the Wayback Machine is the only place this can be found now, I see no reason to remove it.

Historically there were links to Digg.com articles in most of these blog entries. Digg was an early competitor to Reddit but never as popular. It has since been sold and repurposed as a raw aggregator and a clickbait spam source. I really don’t see the purpose in leaving these old bad links in the articles, so I’m pulling them out. Where possible I will reconstruct a link to the current home of the information, along with a label that actually communicates where it is the link sends you so that the next time the links break, at least a title search will be possible.

Major thanks to the Wayback Machine. Drop by and give them a contribution if you agree.

I haven’t had a credit account since writing this. I’m not planning on ever having one again. If you don’t have the money, don’t spend the money. Easier to say than to do, but it seems to be the only way to keep from having to default on credit card debt.

Tasty Morsels of Deficit Spending

“And this pathetic performance occurs despite the fact that the government has been buying huge, huge, HUGE amounts of war materiel from the ‘defense industry’ and running up enormous, enormous, ENORMOUS deficits to pay for it!”

The Mogambo Guru, as usual, hits upon the most important economic points in his latest rant. The Fed is hiding the real extent of the problem, and you should probably buy gold, silver, or some other precious metal.

read more | digg story

Curtailing Jobs for the Young and the Poor

A minimum wage hike will only help the Democrat union buddies whose constituents have incomes keyed to the minimum wage.

Minimum wage in large cities is already over the proposed national minimum wage, and raising the price of employment in areas that have not exceeded it will simply drive more poor people into the unemployment line.

There really is very little debate about this among economists. The empirical evidence is also pretty clear. Increasing the minimum wage increases unemployment among the young and the poor and the disabled. As recently as a few years ago this was a “settled issue,” even in the minds of the editorial board of the “New York Times,” which argued strongly against the minimum wage.

This is bad law, and should be resisted at all costs.


Mea culpa review 2017. I have eaten a Big Bowl of Crow since publishing this and other thoughts on many subjects. Another post I would just delete if I had a choice. I’ll just point you to Robert Reich’s Big Picture for Fixing the Economy dear reader. Yes, my views have changed quite a bit. 

No Mugus Currently in Residence

Hardly a day goes by where I don’t get some variant on the Nigerian 419 scam. It amazes me that anyone would fall for these scams. All of them are written in very poor English, none of them correctly addressed to a single recipient, all of them clearly a scam to the skeptical eye.

But this was the subject of a 20/20 episode a few weeks ago. Thousands of people have been taken in by these stupid scams.

Years ago, back before e-mail was the medium of choice, they used to fax these scams to businesses. One of my former employers wanted to follow-up a fax that he received, offering to cut him in on a percentage of the millions if he just lent his bank accounts to the transfer of large sums of money from a country (Nigeria, of course) that was currently sitting on the funds. He probably would have done it if I hadn’t been loudly skeptical on the subject. I’d never heard of 419 scams then, I wish I could still say the same thing.

Clearly, the average American is far too gullible, or the scammers would have found another way to make a living; and the process will continue until Mugu Americans wise up.

Microsoft, It’s Just ON the Computer You Buy

If I had a nickel for every free marketeer that waxed poetic about the greatness of Microsoft and how we owed Bill Gates thanks for the computer boom, I could probably challenge big brother Bill for the title of richest man in the world.

But I don’t buy the scenario.

Microsoft doesn’t hold monopoly marketshare because they have a superior product. Microsoft wins because it is supplied on a PC system at no significant charge. It’s a lot like payroll deductions. Most people don’t notice the difference between net income and gross income. They don’t do their own taxes, balance a checkbook, etc. That’s why they support things like socialized medicine; it will be free to them because they don’t count the costs that come out of their pocket before they even know what they had. There isn’t a cost to them at point of purchase, so they think of it as free.

When you buy a computer system, there is a lump sum fee that you pay. There is no detailed record of what everything that goes into your computer costs. There is a software upchage of about a hundred bucks on the average windows system. I can buy a complete computer system with a Linux OS on it for 150 to 200 bucks. Windows systems are generally much higher than that.

If people had to pay for the software upfront, this would all be a different story. Microsoft would not have the marketshare they currently have. The MPAA and the RIAA would not have been able to advance their agendas because there would be no monolithic software giant to enforce their will. There wouldn’t be the problem that currently exists with viruses and malware, because there wouldn’t be a Swiss cheese OS out there that is specifically set up to be hijacked.

[The average windows system is shipped with a default user profile created, and an administrator account invisible on top of it. None of the accounts are password protected, and the average user doesn’t know about the admin account that anyone can log on to. When you plug the box into the network, it’s a simple thing for a cracker to ping it, load his software onto the system through one of a hundred or so open ports, log on to the administrator account remotely, and hijack the system. It generally takes about 15 minutes for this to occur, according to the last article I read on the subject. Systems set up to be hijacked.]

It is the massive market share (and sweet deals for exclusivity with Microsoft) that has gotten peripheral suppliers (like cameras and scanners) to program their drivers for Windows only. There was a time when driver disks had multiple OS options on them. I almost never see that anymore. It’s not the fault of Linux programmers that peripherals aren’t recognized, it is the fault of the manufacturers who don’t support anything but Windows; and will in fact build their hardware to rely on Windows (as in the case of some printers) to the exclusion of everybody else.

It’s a corporate disease, much like a free-government-provided disease.

Shut up and Sing

I’m not a Country Music fan (My profile should show that pretty clearly) but I’m interested in the Dixie Chicks movie, Shut up and Sing all the same.

When the Dixie Chicks dared to criticise President Bush a few years back, I was actually more outraged at the response of their fans, and the media outlets that egged on the boycott, than I was at them.

With the mid-term elections now behind us, their opinions have been vindicated by a (slim) majority of the voting public. The war in Iraq is going badly, the economy is in a rut, and ‘W’ and his advisors are to blame for it.

Of course, those of us who understand economics realize that no one president and his policies are to blame for the state of the United States economy. In fact, while the Federal Reserve bears direct blame for most of the problem, it is the government-addicted average american, the person who just wants his benefits and a tax cut too, who enables the draining of the US economy. But it is pretty hard to point fingers in any other direction when it comes to the state of affairs in the Middle East. ‘W’ wanted his war in Iraq, he worked hard to get us involved in hostilities over there, and he is the Commander in Chief of the armed forces. There really isn’t any one else to blame for the situation.

To take a country singing group to task for saying what the rest of the country is now saying, that many people outside of country music were saying long before them, is offensive. It is an insult to the spirit of the Declaration of Independence, and the First Amendment to the Constitution. They spoke their minds and were figuratively dragged through the mud for it.

I’ll probably ante up to see the film, even if I don’t listen to their music. I’m just curious enough to see what they might have to say now.



Mea culpa review 2017. I have eaten a Big Bowl of Crow since publishing this and other thoughts on many subjects. I never did see the movie, largely because I don’t think it ever made it to the Austin market.

Another instance of me spouting off about subjects I only vaguely understood at the time. Probably the biggest reason I hesitate to continue the EPHN posts. I seem to know just enough to make myself dangerous on a whole host of subjects. Still, I have to follow where the logic takes me. I’ll get around to it eventually.

Quiz Across Texas

So I finished hanging the last of 900 of the little beauties at left today, in a 4 hour marathon walk that might have been a marathon in length. Frankly I lost track of how far I walked. I found myself wondering several times “just how many of these things do I have left?”

In the end I ran out of door hangers before I ran out of doors to hang them on.

The important part of the Quiz across Texas (a statewide effort to distribute 250,000 door hangers and other campaign materials) the part that makes it worth my time to participate, is the quiz itself.

Changing politics as usual in the United States means redefining what politics means; and that starts with education. The left-right line that has traditionally been used to illustrate political thought is completely inadequate for the task. The Nolan Chart, and the World’s Smallest Political Quiz that has evolved from it, is one of the best ways to illustrate the real range of political opinion that can be found in society.

Getting the quiz into the hands of people who have never seen it before, is a good place to start the education process. I’m proud to have been a part of this.


For those people (and I know you are out there) who wonder about the origins of the Nolan Chart and the World’s Smallest Political Quiz, Check out the Wiki entry on the subject.

And for those other people (I’ve run across a few of you, too) who think that the WSPQ is too simplistic, check out this enhanced version of the quiz (with go fast stripes even) authored by an LP activist in North Carolina.

The Enhanced-Precision Political Quiz

Funny, I’m a Libertarian on that quiz, too.


Mea culpa review 2017. I have eaten a Big Bowl of Crow since publishing this and other thoughts on many subjects. As this is a Nolan chart entry I will take a bit of time to explain the problems that arise with the second metric for measuring political orientation in the chart as it was conceived.

The problem is quite easy to expose. The first metric is social freedom. A solid majority of people agree with most of the questions involving social freedom. Nearly everyone who claims conservatism publicly is someone who is careful to say they are socially liberal and fiscally conservative. This is where the problem lies. The second metric is economic freedom. What, exactly, is economic freedom and how is it achieved? Every question on the World’s Smallest Political Quiz comes at this question as if money was archetypal, foundational, a recognizable concrete that we can all agree on.

However, money is nothing of the sort and the origin of money is not what most people think it is. Value is not found in commodities because they exist; rather value is subjectively assigned to commodities based on the desire of the individual and so varies based on subjective factors such as hunger, rest, thirst, security, etc. If you are dying of thirst everything you have is what that drink of water is worth. That is hardly the basis for measuring economic freedom.

More to come when I get around to writing the EPHN dealing with money and economics.