Sunday, November 19, 2006

Repeat after me, class: credit cards are not your friends, either.

Entry for Thursday, 11 August, 2005

As you may have noticed, many credit card companies did not raise their rates immediately in August, as they were permitted to by the new law. There is an article in the Journal today concerning credit card rates which mentions in passing that MBNA, for example, plans to raise the minimum payments for new cardholders beginning in the 3rd quarter, and for existing cardholders in the 4th quarter (that is, starting in October). MBNA is a bank that issues cards for retail stores, such as Home Depot, Lowes, and various department stores.

The main point of the article, however, was that credit card companies are now charging "penalty" rates upwards of 30% interest. That means if you are accidentally late with your payment, or have some other malfunction, the interest rate charged on your cards will now be somewhere in the neighborhood of 30%. The article blames the Federal Reserve for raising the prime rate, but this is bologna. There is no law whatsoever requiring banks to have any penalty interest rate at all, much less one as exorbitant and usurious as 30%.

It is interesting that right beside this article on page D2 is another blurb complaining that home mortgage applications have declined for several consecutive weeks. Again, rising interest rates were blamed as the culprit. Apparently, it hasn't occurred to anybody that maybe people just can't afford to pay the bloated prices being charged for real estate, no matter how "creative" the mortgage appears.

Also in the news is the fact that the price of oil per barrel has now topped $65 and shows no sign of stopping.

Since most people have not yet received their property tax bills due this January, they are not yet aware of all of the tax increases that have been added to their mortgage payments, either. We are told to expect a 6% rate hike in order to satisfy an increase required for the local city bus system - which, by the way, so few people use that they blacked out the windows to stop criticism when people saw all the nearly empty buses driving around.

An Aside: Buses, as a form of mass transport, are a joke and are neither economical nor environmentally sound. I can't imagine why anyone in government thinks they are a good idea. Clearly the public doesn't, at least in this part of the country, because our bus system isn't making enough in fares to be self-sustaining.

To get back to the point, people's expenses are going up hundreds of dollars a month more than their income in the next six months. Is there any reasonable person who thinks we are all going to get a 10-20% raise in January? No? Well, then, how are we going to pay for gas and taxes and debt that we already have? Basically, there are two options. The first is to go into more debt. I hope you aren't considering this one.

The second is to cut back on spending until debts are paid off, since they are the only item in the above equation that can be eliminated.

The third is to default on your credit cards. Risky, but doable, actually.

I still think we should ALL boycott our credit card payments in September to protest their greed and usury. But most people are too afraid of their wrath to do this.

I predict a lot of people will go for option three when push comes to shove. When you get right down to it, food and electricity are simply more important than mastercard. You would think that the credit card issuers would realize this and lower their interest rates, but no - their greed has overcome every vestige of common sense (presuming they ever had any. that is). On the upside, the one thing they will accomplish by insisting on their "right" to obscene profit is putting themselves out of business. Either so many people will default that they cannot cope with the problem, or people will finally realize that credit cards are a scam and stop using them.

Seriously, class - there is no good solution to the financial problems that are looming even as we speak. I want to be the first to say the ugliest words in the economic language: global depression.

There it is, plainly stated. The banks and credit card companies and governments (federal, state, and local) have pretty much extorted everything they can out of the American people, and when we have to stop spending money on goods to pay taxes and debt, the rest of the world will suffer right along with us - because we buy most of their manufactured products. (That's why the US has such a huge trade deficit, class.) The unions have failed to protect American jobs, American pay is getting relatively less and less compared to expenses and insurance, and the greedy bloodsucking politicians and unaccountable robber baron CEO's will not stop bleeding American families dry. They purposefully made it more difficult to file bankruptcy before they pulled this stunt with the interest and minimum credit payments so they can squeeze every dime out of you, even if it means putting you out on the street.

After all, they did it before. They'll do it again, class. Just watch.

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