"For the stress tests, the indicative two year loss rate for the more adverse scenario was 18% to 20% for credit cards (around 9% per year). That test might have been too lenient. "
I think "too lenient" was the point.
I'm not sure whether there's an Evil Plan (TM) behind all this, or it's just about keeping the old order going as long as possible, month by month, until as many of the Important People as possible can bail. And because they can't think of anything else they want to do.
I'm curious as well CR if we just stress-test 2.0 assuming worse-case scenario that have already happened, assume re-capitalization positions, feign repayment, watch deterioration over-run our (wildest) expectations, and rinse, wash, repeat again.
Or do just kill the insolvent banks and start over?
You only need to keep paying your credit card bill until you have bought what you're going to need for the next 4 to 5 years. At that point, you can let your mortgage, auto loan, and card card bills all simultaneously default.
The actual default rates are probably worse - there was another post this morning that outlined how Capital One is bending it's accounting to make things look not quite so bad...
Someone on the last thread asked where the action is while we watch commodity charts - Here is a good link that was posted here before - ht to whoever posted it, I saved it... All the action you can handle...
I just want a new term to describe what we are going through. Recession doesn't cut the mustard. They won't let us call it a depression....we need a new phrase....maybe start a guinness book of economic records....
A recession bottom will be in June only because last year's "stimulus" checks will have queered the YoY numbers.
Q3 will likely be slightly negative to flattish YoY because of deterioration began in September 08, Q4 should be flat to slightly positive, emerge from recession offically April '10, NBER makes call September '10.
Recovery won't exactly be the right term, however.
"I just want a new term to describe what we are going through. Recession doesn't cut the mustard. They won't let us call it a depression....we need a new phrase....maybe start a guinness book of economic records...."
Not paying your debts, filing bk - this will come back to haunt people when inflation takes hold and if real estate starts going up fast again... And if you put credit card debt into a bk, you will not be getting another credit card ever without a co-signor - I know someone in that boat - Living on cash is the best policy anyway but it can make things really inconvenient if you have to go to the bank every time before you go buy something...
U-6 and continuing claims will continue to lead credit card default rates (along with prime mortgage distress)...when the second half recovery is revealed as really second half 2010 there will be another wave of layoffs...leading to the current record default rates being viewed with a fond nostalgia...
Both! For some reason I enjoy juxtaposing the positive connotation of the word "record" against the decidedly negative records our eCONomy keeps setting. My own personal anti-green shoot medicine.
I wasn't just being snarky, I was being ironical too!
"Living on cash is the best policy anyway but it can make things really inconvenient if you have to go to the bank every time before you go buy something..."
That's what debit cards are for -- credit cards' more reputable cousin -- makes it easy to spend, but won't let you spend what you don't got.
There are limits, supposedly on what you can charge per day on a debit card; but when I've made big-ticket purchases over the phone or on line, there's never been a problem. Checks still work, too, even for cars.
I just want a new term to describe what we are going through. Recession doesn't cut the mustard. They won't let us call it a depression....we need a new phrase....maybe start a guinness book of economic records....
If we're not in depression, how about the Great Frown? We're sad right now, but things will look up soon!
Debit cards are not safe, BH - there have been instances where a retailer retained the card info and then drained someone's account... With credit cards all you have to do is call the issuer and they will remove unauthorized charges....
For those keeping score today, BAC wins todays prize with most moderate increase in deteriorating green shoots with a month-over-month accomplishment of a 19.3% increase in its default rate.
Please join me in an enthusiastic round of applause for today's winner.
ShadowInventory - really inconvenient if you have to go to the bank every time before you go buy something...
I can't seem to go any where now days without a crack machine, I mean a ATM offering me money. I have to work hard to use my credit cards once a month just to keep them active.
@ShadowInventory
"Not paying your debts, filing bk - this will come back to haunt people when inflation takes hold and if real estate starts going up fast again"
At the 10% CC default rate, I would say the majority of Americans would have bad credit score/bankrupcy in a year or two. I would think the credit system would somehow reset in a few years, so they can loan again to the deadbeats. Otherwise, most of the credit companies would have to shut down due to lack of quality customers, in which case, the credit scores/bankrupcy history is also moot, since there's nobody to borrow from.
In other words, game the system before the system shuts down?
"Debit cards are not safe, BH - there have been instances where a retailer retained the card info and then drained someone's account... With credit cards all you have to do is call the issuer and they will remove unauthorized charges...."
There may have been, but my bank calls me whenever anything looks weird. Once made four large purchases in an hour during a power Christmas shopping trip, and they called me to make sure me was me.
What are most people's credit limits on this board anyways? I have a couple of credit cards that have 20k limits, and a few smaller cards with 8k limits, so I would say 100k total (not really worth defaulting over, but tempting)
Ah ok I stand corrected on the debit card safety issue.... Loaning money to people who have defaulted this time - well if they get away with it now, and then they can borrow again, guess what they are going to do once they are maxed out again???
Where is creditcriminalslovetarp - he processes consumer credit applications - one day he posted a string of FICO's from apps he had - I dont think any of them were over 700, some were in the 400's....
A change in bankruptcy processing resulted in an improvement in the U.S. Card charge-off rate that is reflected in the May results. The impact was approximately 50 basis points. While our internal guidelines require bankrupt accounts to be charged off within 30 days, our practice had been to charge off customer accounts within 2 to 3 days of receiving notification of bankruptcy. Due in part to an increase in the volume of bankruptcies, we have extended our processing window to improve the efficiency and accuracy of bankruptcy-related charge-off recognition. The new process remains within Capital One’s internal guidelines, as well as FFIEC guidelines that bankrupt accounts must be charged-off within 60 days of notification.
[emphasis added]
So this implies that Capital One is in fact under reporting the actual charge off rate.
Avoid debit cards at all costs. If you encounter any fraud, your entire bank account will be emptied and you will be without money until the bank determines you deserve your money back. This happened to me four days before Christmas a couple years ago and it took almost two weeks to have my funds restored. Also, you can just as easily overcharge your debit card as you can a credit card. But, instead of having to just pay extra interest, you will be charged $30+ for EVERY TRANSACTION that's overdrawn. And since transactions take days (or even a week) to post, it's very (intentionally) difficult to keep track of.
At least with credit cards, there is a buffer that protects you.
In my view, we've been in shamflation for years. We CONstantly need a new sham to replace the previous sham.
We have entered the realm of eCONomic absurdity. In one way or another, all the shams have been backed by the fed & gov't . All the credit/debt created by these wall street shams can't possibley be repaid out of income or production, hence the urgent need for a new and bigger sham.
Our sham based eCONomy requires mass delusion thinking. And Bernanke claims that education is the key.
"I just want a new term to describe what we are going through. Recession doesn't cut the mustard. They won't let us call it a depression....we need a new phrase....maybe start a guinness book of economic records...."
Sounds like the relative safety of the debit card depends on how vigilant your bank is... A couple of years ago I heard about some outfit that was trying to give people debit cards on their 401k accounts... I sure hope no one fell for that one... That would be the worst thing in the world for people with no self control on spending...
Oh, right - Lawyers figured out how to get the state to pay them for it..."
Hahaha. Do you know there are 400,000 eviction actions filed every year in NYC?
Do you know the ones in which the tenant has a lawyer get processed faster?
Do you know the smarter attorneys usually advise their clients to proceed pro se in Housing Court?
Good luck beating the moratorium in CA. You may find it in your interest to donate to legal services, whose lawyers are paid less than most bus drivers. Or you may soon find your landlord service will be pro bono. And if you neglect them, and allow a hazardous condition, even if the tenant hasn't paid, the State will still pay for your lawyer, don't worry.
Shadow,
I used to use the term "premature congratulations" to such events.
I think those 401k debit cards are still available. You can also use your 401k to buy your own franchise business. You can also drive into a highway abutment.
ShadowInventory, Premature Exuberance captures it. Some people have mistaken not getting worse as rapidly, as getting better. I guess investor moods are relative ...
CR I hope you are watching the trailer racing on Speed - vehicles pulling something on a trailer racing on a figure 8 course... Become a redneck for a few minutes and enjoy the car-nage....
Sounds like the relative safety of the debit card depends on how vigilant your bank is... A couple of years ago I heard about some outfit that was trying to give people debit cards on their 401k accounts... I sure hope no one fell for that one... That would be the worst thing in the world for people with no self control on spending...
Why is it more irresponsible to borrow from yourself economically (which is what a 401k loan is) rather than to borrow from a bank at high interest cost?
rich,
Your 401k is liquidated immediately upon borrowing, but won't be liquidated even in bankruptcy.
For the masses, the bank will often say "no" when their own incorrect intuition says "yes".
Using your 401k as an ATM? Talk about irresponsible - It would not be a problem if everyone was in control of their spending, but if you have people spending their retirement funds for latte's, that is going to guarantee a whole lot of poor old people later on... I think we will have plenty of them anyway... Even people I talk to who are in their 40's dont seem to be so concerned about retirement... They havent hit the arthritis speed bump yet....
foolonthehill (profile) wrote on Mon, 6/15/2009 - 4:46 pm replyIgnore userIn Iran the opposition wears green scarfs etc. There was reported shooting there.
Green shoots?
I bought and consumed a pre-made salad from a grocery store a few weeks ago. Must've been bad. I was puking green for 2 days. Green shoots?
I think that you are spot on with regard to the new normal. If enough people with under water mortgages stop paying they will pay no price for having done so. Landlords couldn't possibly turn them away- who would they rent to then. The lending industry will cover their eyes and pretend that they didn't default again- if you haven't been a borrower up to now I don't think that is going to change so who will new customers be.
Borrowers of the world - you have nothing to lose but your loans!!!
The ultimate moral hazard - everyone stops paying their debts at once, overloads the system, the masses perceive that there is no penalty for default - It's hard to predict what the eventual fallout would be - the end of Western Civilization perhaps...
//For the stress tests, the indicative two year loss rate for the more adverse scenario was 18% to 20% for credit cards (around 9% per year). That test might have been too lenient.//
//The ultimate moral hazard - everyone stops paying their debts at once, overloads the system, the masses perceive that there is no penalty for default - It's hard to predict what the eventual fallout would be - the end of Western Civilization perhaps...//
Round up for green shoots in Iran....AK-47. Sadly......we jest about such a horrible incident. What do we expect from dictators and oppressive regimes? Does your government scare you????
Rent strikes, tax revolts, and currency collapses have occurred before, even in the US. It's mostly paper, unless the Constitution doesn't hold. That document needs to be respected.
Right Yogi - I wish the Federal Govt would fulfill their constitutional mandate to protect the states from invasion... Drugs, aliens, and also armies...
-
I was thinking of the coal strikes, the only reason I don't call for the ending of unions is they do provide a balance, I just don't like the checks they write.
nades: generally, a debt is not discharged under section 523 of the BK code if the debt was procured under "false pretenses, a false representation, or actual fraud." In theory, misrepresenting one's ability to re-pay could be considered misrepresentation. Additionally, the code also states that the following are presumed to be non-dischargeable, so that the debtor must prove otherwise:
"(I) consumer debts owed to a single creditor and aggregating more than $500 for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable; and
(II) cash advances aggregating more than $750 that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relief under this title, are presumed to be nondischargeable; and "
Speaking of mansions, does anyone know if there has been any action out at John Thain's estate, or Stan Neal or Dick Fuld or the rest of them??? I think there were some demonstrations at the gates at least a while back... I'm waiting for the day when an out of control mob loots one of those 'Country Cabins'...
The reason not to call for end of unions is that they are protected by the Constitution.
Playing devil's advocate for a second. Yes, the right to organize is protected under the First Amendment, but by its very nature, collective bargaining is a restraint of trade that could be outlawed by Congress.
Not one Cent,
I have really good health insurance. Between my boss and me, the cost is about $18,000/yr without a governmental oversight bureaucracy.
Does $18k x 300 million = $200 billion?
Hopefully, they won't bother burning down Fuld's private squash court in Greenwich. Just four walls and a floor. According to legend, squash got started in debtor's prison.
Courts have strange ideas of luxury v. necessity. Someone can spend thousands a year on cigarettes while not paying the thousands they owe you and the judge couldn't care less.
//Yes, the right to organize is protected under the First Amendment, but by its very nature, collective bargaining is a restraint of trade that could be outlawed by Congress.//
Thanks for the research. So it sounds like you would have to pay the minimum interest on the credit card for 3 months (after 90 days), then you'll be able to discharge the debt. Or you will have creditors hound you for ~7 years, but the lack of land line/overseas stay will solve that.
"The wealthy will find their mansions scant protection from the hungry hordes...
It did not work for the French, may a fast boat with some gold fixtures? "
I used to hang out on a military board to talk about Iraq issues -- it eventually devolved, but some interesting people there. One claimed to be a charter pilot who had made numerous cargo flights to the very-well-stocked, very remote retreats of a couple of extremely wealthy gentlemen. And knew other pilots doing the same sort of thing.
Take it as you will; but the French nobility didn't have private jets; and today's mob doesn't have missiles.
"//Yes, the right to organize is protected under the First Amendment, but by its very nature, collective bargaining is a restraint of trade that could be outlawed by Congress.//"
The First Amendment is supposed to be more powerful than Congress.
Historically, it has more likely been the Supreme Court, dominated by old white men from the leisure class, or its help, that has stood between Congressional attempts to bust the monopoly power of capital in restraint of organized labor.
"One claimed to be a charter pilot who had made numerous flights to the very-well-stocked, very remote retreats of a couple of extremely wealthy gentlemen. And knew other pilots doing the same sort of thing."
So the pilots knew where they were?
The wealthy gentlemen knew of the possibility of a universal collapse, and all they could do about it is to arrange to run away and hide?
lama (profile) wrote on Mon, 6/15/2009 - 9:09 pm
I have really good health insurance. Between my boss and me, the cost is about $18,000/yr without a governmental oversight bureaucracy.
Does $18k x 300 million = $200 billion?
I don't think so.
If about 80% of Americans already have health insurance, and only 20% do not, what is $200B divided by 60 million people?
There is the issue of paying these people in a currency they can buy stuff with.
Power is a drug that many get addicted to, just look at the children soldiers in war lord territories. Give a punk a weapon, let him beat rape and kill at his pleasure and you have no problem with recruitment.
for how long? remember those child soldiers have external support..
//Power is a drug that many get addicted to, just look at the children soldiers in war lord territories. Give a punk a weapon, let him beat rape and kill at his pleasure and you have no problem with recruitment.//
"Roberts, however, indicated his desire to overturn Adkins immediately after oral arguments on Dec. 17, 1936.[10] The initial conference vote on Dec. 19, 1936 was split 4-4; with this even division on the Court, the holding of the Washington Supreme Court, finding the minimum wage statute constitutional, would stand.[13] The eight voting justices anticipated Stone—absent due to illness—would be the fifth vote necessary for a majority opinion affirming the constitutionality of the minimum wage law.[13] As Chief Justice Hughes desired a clear and strong 5-4 affirmation of the Washington Supreme Court's judgment, rather than a 4-4 default affirmation, he convinced the other justices to wait until Stone's return before both deciding and announcing the case.[13]
President Roosevelt announced his court reform bill on February 5, 1937, the day of the first conference vote after Stone's February 1, 1937 return to the bench. Roosevelt later made his justifications for the bill to the public on March 9, 1937 during his 9th Fireside Chat. The Court's opinion in Parrish was not handed down until March 29, 1937, after Roosevelt's radio address. Hughes wrote in his autobiographical notes that Roosevelt's court reform proposal "had not the slighest effect on our [the court's] decision," but due to the delayed announcement of the decision, the Court was characterized as retreating under fire.[6]"
Autobiographies are (attempts at) literature, not history. Hughes didn't say they didn't know about the bill. Either way, the decision's reasoning stands. Court-packing is still a big stick, usually kept in a locked closet.
One of the main, defining characteristics of a capitalistic society is for its lenders to have the ability to make loans to the country's average citizens and for its borrowers to have the capacity to pay back that debt. To break down this financial meltdown into its principal causality, which came into full view last summer, we now know that loan defaults are occuring at a faster rate than the bankrupt banks can create new loans. Only the government's idiotic and massive borrowing intervention has allowed this catastrophe to drag on and be made worse, with only a delayed, but more fateful ending to come later. Even if you are a moron banker and not a bankster, this would give you pause to at least slow down using this vehicle that society has endowed and trusted you with in order to use it much more prudently to make honest money and not be a burden to society by creating an even bigger black hole with an even more massive ensuing bailout than that which already exists. Between outsourcing, insourcing, and illegals entering this country, the idiots and well fed crooks in Washington continue to ignore the primary causes of the country's problems. Bernanke is going to realize, if he hasn't already, that his only stopgap measure to distribute money to the people that does not come back to bite him and his fellow bankster friends in the ass immediately is the printing press, and its use, as with all banana republics, will have to increase parabolically if his fairy tale green shoots don't become weeds. China and the rest of the world now realize this and are reluctant to lend. They will soon realize that if they demand their money back or demand that the dollar's reserve currency status end, they will see nuclear missiles delivered into their backyard. To maintain peace, maybe those running a trade surplus with the US like China, India, Japan, Germany, Mexico, and Canada should buy much more of our goods right now. Maybe China, which recently announced it had stopped buying our Boeing planes and started a gigantic buildup of their own plane building industry, should buy our Boeing planes that are much better made than those of Airbus and also buy everything they can from us with their excess 2 trillion instead of just our corn and soybeans to promote world peace and not precipitate WWIII.
"n Iran the opposition wears green scarfs etc. There was reported shooting there.
Green shoots? "
It would be interesting if all the weapons sent to support the insurgents in Iraq, start coming back the other way. That would almost be blow back on a US scale.
Will the recipients of CC company largesse receive a 1099 on their forgiven debt? I helped prepare returns this year and we had a couple people in this situation. One just threw up his hands and said he didn't have the money (for the additional tax) and that he was old enough that the IRS would probably not catch up to him before he died. So he didn't file.
Looks like we should prepare for more this coming year.
Default lies not in our stars, but in ourselves.
wow, nemo is back in form... nice
....mmmmm....Elmo loves to eat green shoots
Oooooh, good one, Nemo!
I want to go on record that this eCONomy is like a broken record the way it keeps setting records.
what is with the might have been too lenient? They missed on all counts, and this one already badly.
Angry Saver - keeps setting records.
On what going down? Or debt levels?
guess the PPT didn't take their Enzyte
"For the stress tests, the indicative two year loss rate for the more adverse scenario was 18% to 20% for credit cards (around 9% per year). That test might have been too lenient. "
I think "too lenient" was the point.
I'm not sure whether there's an Evil Plan (TM) behind all this, or it's just about keeping the old order going as long as possible, month by month, until as many of the Important People as possible can bail. And because they can't think of anything else they want to do.
I'm curious as well CR if we just stress-test 2.0 assuming worse-case scenario that have already happened, assume re-capitalization positions, feign repayment, watch deterioration over-run our (wildest) expectations, and rinse, wash, repeat again.
Or do just kill the insolvent banks and start over?
--bh
You only need to keep paying your credit card bill until you have bought what you're going to need for the next 4 to 5 years. At that point, you can let your mortgage, auto loan, and card card bills all simultaneously default.
The actual default rates are probably worse - there was another post this morning that outlined how Capital One is bending it's accounting to make things look not quite so bad...
Someone on the last thread asked where the action is while we watch commodity charts - Here is a good link that was posted here before - ht to whoever posted it, I saved it... All the action you can handle...
S&P 500 Map Heatmap
You mean "too lienient." ;>)
Like I said before, it's getting really really hard not to just charge up your credit cards to the max, and declare bankruptcy.
And Hussman has a good posting up touching on valuations, I don't know if it has been posted before.
Hussman Funds - Weekly Market Comment: The Outlook is Not Up, But Very Widely Sideways - June 15, 2009
"Like I said before, it's getting really really hard not to just charge up your credit cards to the max, and declare bankruptcy."
Not for those of us who never had any.
I just want a new term to describe what we are going through. Recession doesn't cut the mustard. They won't let us call it a depression....we need a new phrase....maybe start a guinness book of economic records....
BBAD ducking debt
Default is not just a crack in the ground in California.
it's getting really really hard not to just charge up your credit cards to the max, and declare bankruptcy.
With some credit card transactions, there is a presumption against dischargeability, meaning BK won't protect the debtor from creditors.
On topic.....
Citigroup CEO: Accept new world of tighter credit
Yahoo! 404 - Page Not Found
Off topic........
Woman admits guilt in sex-games slaying of banker
Yahoo! 404 - Page Not Found
A recession bottom will be in June only because last year's "stimulus" checks will have queered the YoY numbers.
Q3 will likely be slightly negative to flattish YoY because of deterioration began in September 08, Q4 should be flat to slightly positive, emerge from recession offically April '10, NBER makes call September '10.
Recovery won't exactly be the right term, however.
4:01pm EST Memo from PPT to JPM - Good call on betting short today!
"I just want a new term to describe what we are going through. Recession doesn't cut the mustard. They won't let us call it a depression....we need a new phrase....maybe start a guinness book of economic records...."
The Great Default?
Not paying your debts, filing bk - this will come back to haunt people when inflation takes hold and if real estate starts going up fast again... And if you put credit card debt into a bk, you will not be getting another credit card ever without a co-signor - I know someone in that boat - Living on cash is the best policy anyway but it can make things really inconvenient if you have to go to the bank every time before you go buy something...
I don't get the credit card defaults. If debt is really money, then this eCONomy should be drowning in money.
U-6 and continuing claims will continue to lead credit card default rates (along with prime mortgage distress)...when the second half recovery is revealed as really second half 2010 there will be another wave of layoffs...leading to the current record default rates being viewed with a fond nostalgia...
Seems possible. The consumer isn't coming back in full force then tho....
@Basel Too
Visa is everywhere in the world...even in China. But creditors aren't
I'm from the FED and I just want to say: just hang in there a bit longer.
The third half recovery is on its way!
Bwahahahahaha!
B2 do you have an example? TIA
4:07pm EST memo JPM to PPT - Thank-you. Back to business as usual tomorrow.
ShadowInventory,
I see your point but it is called a debit card.
--bh
On what going down? Or debt levels?
K. Kahuna,
Both! For some reason I enjoy juxtaposing the positive connotation of the word "record" against the decidedly negative records our eCONomy keeps setting. My own personal anti-green shoot medicine.
I wasn't just being snarky, I was being ironical too!
"Living on cash is the best policy anyway but it can make things really inconvenient if you have to go to the bank every time before you go buy something..."
That's what debit cards are for -- credit cards' more reputable cousin -- makes it easy to spend, but won't let you spend what you don't got.
There are limits, supposedly on what you can charge per day on a debit card; but when I've made big-ticket purchases over the phone or on line, there's never been a problem. Checks still work, too, even for cars.
I just want a new term to describe what we are going through. Recession doesn't cut the mustard. They won't let us call it a depression....we need a new phrase....maybe start a guinness book of economic records....
If we're not in depression, how about the Great Frown? We're sad right now, but things will look up soon!
Debit cards are not safe, BH - there have been instances where a retailer retained the card info and then drained someone's account... With credit cards all you have to do is call the issuer and they will remove unauthorized charges....
TCA,
I'm voting for The Great Regression.
And it's a Mean one.
--bh
This rate is following unemployment nicely. As expected.
Depression...Recession....Amerika the Broke....Comrade Money-less Man
Great Regression is funny, at least for standard deviants.
Is this the "Green Shoots" they were talking about on CNBC?
We're in the pre-recovery phase of the downturn. Perhaps "pre-upswing".
For those keeping score today, BAC wins todays prize with most moderate increase in deteriorating green shoots with a month-over-month accomplishment of a 19.3% increase in its default rate.
Please join me in an enthusiastic round of applause for today's winner.
I like that.
ShadowInventory - really inconvenient if you have to go to the bank every time before you go buy something...
I can't seem to go any where now days without a crack machine, I mean a ATM offering me money. I have to work hard to use my credit cards once a month just to keep them active.
re - name for current economic cycle
out of the synonyms for depression, I vote for the Great 'Blue Funk', though maybe a change to 'Green Funk' would be in order.
@ShadowInventory
"Not paying your debts, filing bk - this will come back to haunt people when inflation takes hold and if real estate starts going up fast again"
At the 10% CC default rate, I would say the majority of Americans would have bad credit score/bankrupcy in a year or two. I would think the credit system would somehow reset in a few years, so they can loan again to the deadbeats. Otherwise, most of the credit companies would have to shut down due to lack of quality customers, in which case, the credit scores/bankrupcy history is also moot, since there's nobody to borrow from.
In other words, game the system before the system shuts down?
TII,R?
Well they can have my 795 FICO when they pry it from my cold, dead hands.
Too bad I don't need to borrow anything...
First harvest of GnomeGrown tomatoes tonight!
Delicious
"Debit cards are not safe, BH - there have been instances where a retailer retained the card info and then drained someone's account... With credit cards all you have to do is call the issuer and they will remove unauthorized charges...."
There may have been, but my bank calls me whenever anything looks weird. Once made four large purchases in an hour during a power Christmas shopping trip, and they called me to make sure me was me.
What are most people's credit limits on this board anyways? I have a couple of credit cards that have 20k limits, and a few smaller cards with 8k limits, so I would say 100k total (not really worth defaulting over, but tempting)
Ah ok I stand corrected on the debit card safety issue.... Loaning money to people who have defaulted this time - well if they get away with it now, and then they can borrow again, guess what they are going to do once they are maxed out again???
Where is creditcriminalslovetarp - he processes consumer credit applications - one day he posted a string of FICO's from apps he had - I dont think any of them were over 700, some were in the 400's....
A footnote to Capital One reporting:
A change in bankruptcy processing resulted in an improvement in the U.S. Card charge-off rate that is reflected in the May results. The impact was approximately 50 basis points. While our internal guidelines require bankrupt accounts to be charged off within 30 days, our practice had been to charge off customer accounts within 2 to 3 days of receiving notification of bankruptcy. Due in part to an increase in the volume of bankruptcies, we have extended our processing window to improve the efficiency and accuracy of bankruptcy-related charge-off recognition. The new process remains within Capital One’s internal guidelines, as well as FFIEC guidelines that bankrupt accounts must be charged-off within 60 days of notification.
[emphasis added]
So this implies that Capital One is in fact under reporting the actual charge off rate.
Change the FFIEC guidelines from 60 days to 5 years. Problem solved.
Avoid debit cards at all costs. If you encounter any fraud, your entire bank account will be emptied and you will be without money until the bank determines you deserve your money back. This happened to me four days before Christmas a couple years ago and it took almost two weeks to have my funds restored. Also, you can just as easily overcharge your debit card as you can a credit card. But, instead of having to just pay extra interest, you will be charged $30+ for EVERY TRANSACTION that's overdrawn. And since transactions take days (or even a week) to post, it's very (intentionally) difficult to keep track of.
At least with credit cards, there is a buffer that protects you.
OT: According to TDA, the $80 put on SPY was one of the most actively traded options today. Hmmmmmm......
re - name for current economic cycle
In my view, we've been in shamflation for years. We CONstantly need a new sham to replace the previous sham.
We have entered the realm of eCONomic absurdity. In one way or another, all the shams have been backed by the fed & gov't . All the credit/debt created by these wall street shams can't possibley be repaid out of income or production, hence the urgent need for a new and bigger sham.
Our sham based eCONomy requires mass delusion thinking. And Bernanke claims that education is the key.
This seems to be more a product of the denominator getting smaller than the numerator increasing.
MyKillK,
We now keep two separate checking accounts just for this very reason. And I do not trust the banks anymore. Nada.
"I just want a new term to describe what we are going through. Recession doesn't cut the mustard. They won't let us call it a depression....we need a new phrase....maybe start a guinness book of economic records...."
The Great Pre-Recovery
Not One Cent: The Great Pre-Recovery and other Orwellian Newspeak
Sounds like the relative safety of the debit card depends on how vigilant your bank is... A couple of years ago I heard about some outfit that was trying to give people debit cards on their 401k accounts... I sure hope no one fell for that one... That would be the worst thing in the world for people with no self control on spending...
we need a new phrase... - Premature Exuberance
smlandlord:
"What ever happened to Pro Bono work?
Oh, right - Lawyers figured out how to get the state to pay them for it..."
Hahaha. Do you know there are 400,000 eviction actions filed every year in NYC?
Do you know the ones in which the tenant has a lawyer get processed faster?
Do you know the smarter attorneys usually advise their clients to proceed pro se in Housing Court?
Good luck beating the moratorium in CA. You may find it in your interest to donate to legal services, whose lawyers are paid less than most bus drivers. Or you may soon find your landlord service will be pro bono. And if you neglect them, and allow a hazardous condition, even if the tenant hasn't paid, the State will still pay for your lawyer, don't worry.
"Sounds like the relative safety of the debit card depends on how vigilant your bank is"
Yea, I would agree somewhat with that. My banks was WaMu at the time...
Since CNBC is so drab, I suggest that you tune over to the Speed channel if you get it - Trailer Racing!!
Shadow,
I used to use the term "premature congratulations" to such events.
I think those 401k debit cards are still available. You can also use your 401k to buy your own franchise business. You can also drive into a highway abutment.
Well, I guess that explains some of the 'green shoots' associated with PCE.
ShadowInventory, Premature Exuberance captures it. Some people have mistaken not getting worse as rapidly, as getting better. I guess investor moods are relative ...
best wishes
CR I hope you are watching the trailer racing on Speed - vehicles pulling something on a trailer racing on a figure 8 course... Become a redneck for a few minutes and enjoy the car-nage....
CalculatedRisk (profile) wrote on Mon, 6/15/2009 - 1:41 pm
ShadowInventory, Premature Exuberance captures it. Some people have mistaken not getting worse as rapidly, as getting better.
From this morning:
Rob Dawg (homepage, profile) wrote on Mon, 6/15/2009 - 7:01 am
Worse is the new better after so long experiencing nothing but more worse.
In Iran the opposition wears green scarfs etc. There was reported shooting there.
Green shoots?
Why is it more irresponsible to borrow from yourself economically (which is what a 401k loan is) rather than to borrow from a bank at high interest cost?
rich,
Your 401k is liquidated immediately upon borrowing, but won't be liquidated even in bankruptcy.
For the masses, the bank will often say "no" when their own incorrect intuition says "yes".
Using your 401k as an ATM? Talk about irresponsible - It would not be a problem if everyone was in control of their spending, but if you have people spending their retirement funds for latte's, that is going to guarantee a whole lot of poor old people later on... I think we will have plenty of them anyway... Even people I talk to who are in their 40's dont seem to be so concerned about retirement... They havent hit the arthritis speed bump yet....
foolonthehill (profile) wrote on Mon, 6/15/2009 - 4:46 pm replyIgnore userIn Iran the opposition wears green scarfs etc. There was reported shooting there.
Green shoots?
I bought and consumed a pre-made salad from a grocery store a few weeks ago. Must've been bad. I was puking green for 2 days. Green shoots?
"Green shoots? "
Nope, that a Technicolor Yawn.
I think that you are spot on with regard to the new normal. If enough people with under water mortgages stop paying they will pay no price for having done so. Landlords couldn't possibly turn them away- who would they rent to then. The lending industry will cover their eyes and pretend that they didn't default again- if you haven't been a borrower up to now I don't think that is going to change so who will new customers be.
Borrowers of the world - you have nothing to lose but your loans!!!
The ultimate moral hazard - everyone stops paying their debts at once, overloads the system, the masses perceive that there is no penalty for default - It's hard to predict what the eventual fallout would be - the end of Western Civilization perhaps...
You think so?
//For the stress tests, the indicative two year loss rate for the more adverse scenario was 18% to 20% for credit cards (around 9% per year). That test might have been too lenient.//
Jubilee?
//The ultimate moral hazard - everyone stops paying their debts at once, overloads the system, the masses perceive that there is no penalty for default - It's hard to predict what the eventual fallout would be - the end of Western Civilization perhaps...//
Round up for green shoots in Iran....AK-47. Sadly......we jest about such a horrible incident. What do we expect from dictators and oppressive regimes? Does your government scare you????
That heat map reminds me of Whack-a-Mole...when you see green push the sell button
But ayn rand and the austrians said that businessmen are god and we should have no regulations.
//I bought and consumed a pre-made salad from a grocery store a few weeks ago. Must've been bad. I was puking green for 2 days. Green shoots?//
Rent strikes, tax revolts, and currency collapses have occurred before, even in the US. It's mostly paper, unless the Constitution doesn't hold. That document needs to be respected.
Government has scared me now for a while.
I really didn't believe, in my heart of hearts, they'd go this far to protect wealthy interests. Now I doubt there are any limits to what they'd do.
dupe.
You have not read pre-1930 history?
//I really didn't believe, in my heart of hearts, they'd go this far to protect wealthy interests.//
Right Yogi - I wish the Federal Govt would fulfill their constitutional mandate to protect the states from invasion... Drugs, aliens, and also armies...
You are but dust and clay. Electing these heartless bastards...we shall rue the day.
Lucifer -
You have not read pre-1930 history?
-
I was thinking of the coal strikes, the only reason I don't call for the ending of unions is they do provide a balance, I just don't like the checks they write.
The wealthy will find their mansions scant protection from the hungry hordes...
nades: generally, a debt is not discharged under section 523 of the BK code if the debt was procured under "false pretenses, a false representation, or actual fraud." In theory, misrepresenting one's ability to re-pay could be considered misrepresentation. Additionally, the code also states that the following are presumed to be non-dischargeable, so that the debtor must prove otherwise:
"(I) consumer debts owed to a single creditor and aggregating more than $500 for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable; and
(II) cash advances aggregating more than $750 that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relief under this title, are presumed to be nondischargeable; and "
US CODE: Title 11,523. Exceptions to discharge
I didn't read about the Molly Maguires until last year.
"Round up for green shoots in Iran....AK-47."
Green tracers, maybe?
ShadowInventory-
The wealthy will find their mansions scant protection from the hungry hordes...
It did not work for the French, may a fast boat with some gold fixtures?
Speaking of mansions, does anyone know if there has been any action out at John Thain's estate, or Stan Neal or Dick Fuld or the rest of them??? I think there were some demonstrations at the gates at least a while back... I'm waiting for the day when an out of control mob loots one of those 'Country Cabins'...
Obama claims that his health care will cost $1T over 10 years (according to NPR).
Based on the accuracy of the stress tests, what are the odds that Obama's health program will cost no more than $200B/yr?
I figured Michelle's vegetable garden would cost $200B/yr.
The reason not to call for end of unions is that they are protected by the Constitution.
What more do you need?
Label them subversive, Constitution gets used to wipe up the blood?
The reason not to call for end of unions is that they are protected by the Constitution.
Playing devil's advocate for a second. Yes, the right to organize is protected under the First Amendment, but by its very nature, collective bargaining is a restraint of trade that could be outlawed by Congress.
Not one Cent,
I have really good health insurance. Between my boss and me, the cost is about $18,000/yr without a governmental oversight bureaucracy.
Does $18k x 300 million = $200 billion?
Hopefully, they won't bother burning down Fuld's private squash court in Greenwich. Just four walls and a floor. According to legend, squash got started in debtor's prison.
Courts have strange ideas of luxury v. necessity. Someone can spend thousands a year on cigarettes while not paying the thousands they owe you and the judge couldn't care less.
What about the AMA?
//Yes, the right to organize is protected under the First Amendment, but by its very nature, collective bargaining is a restraint of trade that could be outlawed by Congress.//
@Basel Too
Thanks for the research. So it sounds like you would have to pay the minimum interest on the credit card for 3 months (after 90 days), then you'll be able to discharge the debt. Or you will have creditors hound you for ~7 years, but the lack of land line/overseas stay will solve that.
"The wealthy will find their mansions scant protection from the hungry hordes...
It did not work for the French, may a fast boat with some gold fixtures? "
I used to hang out on a military board to talk about Iraq issues -- it eventually devolved, but some interesting people there. One claimed to be a charter pilot who had made numerous cargo flights to the very-well-stocked, very remote retreats of a couple of extremely wealthy gentlemen. And knew other pilots doing the same sort of thing.
Take it as you will; but the French nobility didn't have private jets; and today's mob doesn't have missiles.
and today's mob doesn't have missiles.
I think you seriously underestimate today's mob.
"//Yes, the right to organize is protected under the First Amendment, but by its very nature, collective bargaining is a restraint of trade that could be outlawed by Congress.//"
Pauperize your customers?
Louis the XVI lost control over the army, if you remember history. They had issues about not getting paid.. and all.
//Take it as you will; but the French nobility didn't have private jets; and today's mob doesn't have missiles.//
I'd like to think so... but I suspect not.
The First Amendment is supposed to be more powerful than Congress.
Historically, it has more likely been the Supreme Court, dominated by old white men from the leisure class, or its help, that has stood between Congressional attempts to bust the monopoly power of capital in restraint of organized labor.
Probably a good reason to prolong the wars, rather than having a bunch of unemployed ex-servicement around, too.
"One claimed to be a charter pilot who had made numerous flights to the very-well-stocked, very remote retreats of a couple of extremely wealthy gentlemen. And knew other pilots doing the same sort of thing."
So the pilots knew where they were?
The wealthy gentlemen knew of the possibility of a universal collapse, and all they could do about it is to arrange to run away and hide?
All Wrong ....
If TSHTF we will have a police state ...
All the actors, laws and plans have already been finalized ...
That's what the Patriot Act was all about ...
There is the issue of paying these people in a currency they can buy stuff with.
//All the actors, laws and plans have already been finalized ...//
lama (profile) wrote on Mon, 6/15/2009 - 9:09 pm
I have really good health insurance. Between my boss and me, the cost is about $18,000/yr without a governmental oversight bureaucracy.
Does $18k x 300 million = $200 billion?
I don't think so.
If about 80% of Americans already have health insurance, and only 20% do not, what is $200B divided by 60 million people?
You're surprised? I've read about wealthy people, back in summer/fall '07, stashing millions in cash under the floorboards at home.
There are just as many dweebs among the wealthy as among the general population (I'm being charitable here).
Lucifer-
There is the issue of paying these people in a currency they can buy stuff with.
Power is a drug that many get addicted to, just look at the children soldiers in war lord territories. Give a punk a weapon, let him beat rape and kill at his pleasure and you have no problem with recruitment.
Just read that LA is kicking in 1 million bucks for the Lakers' Parade.
Hilarious.
Lucifer
There is the issue of paying these people in a currency they can buy stuff with.
~~~~
LOL !
Germany was broke but managed to build the most formidable military in the world.
The USA will just be a fascist state, probably along the lines of Mussolini ...
They can already monitor millions of transmissions ... phone, internet etc
Most will go along peacefully like the lambs they are ...
for how long? remember those child soldiers have external support..
//Power is a drug that many get addicted to, just look at the children soldiers in war lord territories. Give a punk a weapon, let him beat rape and kill at his pleasure and you have no problem with recruitment.//
@ Kahuna
Wall St. Green Shirts?
Wiki:
"Roberts, however, indicated his desire to overturn Adkins immediately after oral arguments on Dec. 17, 1936.[10] The initial conference vote on Dec. 19, 1936 was split 4-4; with this even division on the Court, the holding of the Washington Supreme Court, finding the minimum wage statute constitutional, would stand.[13] The eight voting justices anticipated Stone—absent due to illness—would be the fifth vote necessary for a majority opinion affirming the constitutionality of the minimum wage law.[13] As Chief Justice Hughes desired a clear and strong 5-4 affirmation of the Washington Supreme Court's judgment, rather than a 4-4 default affirmation, he convinced the other justices to wait until Stone's return before both deciding and announcing the case.[13]
President Roosevelt announced his court reform bill on February 5, 1937, the day of the first conference vote after Stone's February 1, 1937 return to the bench. Roosevelt later made his justifications for the bill to the public on March 9, 1937 during his 9th Fireside Chat. The Court's opinion in Parrish was not handed down until March 29, 1937, after Roosevelt's radio address. Hughes wrote in his autobiographical notes that Roosevelt's court reform proposal "had not the slighest effect on our [the court's] decision," but due to the delayed announcement of the decision, the Court was characterized as retreating under fire.[6]"
Autobiographies are (attempts at) literature, not history. Hughes didn't say they didn't know about the bill. Either way, the decision's reasoning stands. Court-packing is still a big stick, usually kept in a locked closet.
With help from US based bankers?
//Germany was broke but managed to build the most formidable military in the world.//
@ Lucifer
and one Prescott Bush.
One of the main, defining characteristics of a capitalistic society is for its lenders to have the ability to make loans to the country's average citizens and for its borrowers to have the capacity to pay back that debt. To break down this financial meltdown into its principal causality, which came into full view last summer, we now know that loan defaults are occuring at a faster rate than the bankrupt banks can create new loans. Only the government's idiotic and massive borrowing intervention has allowed this catastrophe to drag on and be made worse, with only a delayed, but more fateful ending to come later. Even if you are a moron banker and not a bankster, this would give you pause to at least slow down using this vehicle that society has endowed and trusted you with in order to use it much more prudently to make honest money and not be a burden to society by creating an even bigger black hole with an even more massive ensuing bailout than that which already exists. Between outsourcing, insourcing, and illegals entering this country, the idiots and well fed crooks in Washington continue to ignore the primary causes of the country's problems. Bernanke is going to realize, if he hasn't already, that his only stopgap measure to distribute money to the people that does not come back to bite him and his fellow bankster friends in the ass immediately is the printing press, and its use, as with all banana republics, will have to increase parabolically if his fairy tale green shoots don't become weeds. China and the rest of the world now realize this and are reluctant to lend. They will soon realize that if they demand their money back or demand that the dollar's reserve currency status end, they will see nuclear missiles delivered into their backyard. To maintain peace, maybe those running a trade surplus with the US like China, India, Japan, Germany, Mexico, and Canada should buy much more of our goods right now. Maybe China, which recently announced it had stopped buying our Boeing planes and started a gigantic buildup of their own plane building industry, should buy our Boeing planes that are much better made than those of Airbus and also buy everything they can from us with their excess 2 trillion instead of just our corn and soybeans to promote world peace and not precipitate WWIII.
"n Iran the opposition wears green scarfs etc. There was reported shooting there.
Green shoots? "
It would be interesting if all the weapons sent to support the insurgents in Iraq, start coming back the other way. That would almost be blow back on a US scale.
Will the recipients of CC company largesse receive a 1099 on their forgiven debt? I helped prepare returns this year and we had a couple people in this situation. One just threw up his hands and said he didn't have the money (for the additional tax) and that he was old enough that the IRS would probably not catch up to him before he died. So he didn't file.
Looks like we should prepare for more this coming year.