Economic Crisis of 2008/2009

[chikorita157]

Originally Posted by Xellos-_^

the financial illiteracy of the avg American continue to astound me. I am reading some of the post on washpost and sfchron regarding Wellsfargo 3billion profit. There were people compliant about how wells only produce a 3billion profit after been give 25bil in bailout money.

No wonder the country is having so much trouble when the majority country can't remember news form 6 months ago and can't understand the fact that the 25bil were loans on the asset sheet and is seperate form the 3billion in profit, how hard is that to understand?

Well, if banks who are starting to make profits should do in the best interests of the American people to start paying back some of the TARP to the government... But on the other hand, they still continue to charge outrageously high interest rates even with the TARP money, so it defeats the purpose of having TARP if it's intent is to make credit flow again and lower these interest rates.

Remember, recovery most likely won't happen until late 2009/early 2010 as predicted.

[Xellos-_^]

Originally Posted by chikorita157

Well, if banks who are starting to make profits should do in the best interests of the American people to start paying back some of the TARP to the government... But on the other hand, they still continue to charge outrageously high interest rates even with the TARP money, so it defeats the purpose of having TARP if it's intent is to make credit flow again and lower these interest rates.

Remember, recovery most likely won't happen until late 2009/early 2010 as predicted.

you just my point about the attentation span of the avg American. Wellsfargo was one of the banks that didn't need the tarp money. they were bascially told to take that money so people wouldn't know which needed help and which didn't need help. They are activly trying to give back the TARP money as they don't want gov''t to meddle with thier business.


as for interest rate, it is low for people with good credit. Which is AS IT SHOULD BE. People with good credit get good rates. people with avg credit get avg rates and people with lousy credit should never get loans.this whole mess started with banks giving loans to people with lousy credit, the fact that banks are strengthening their criteria on who to give loans to is in my opinion a good thing.

[Vexx]

But there needs to remain ways for people to repair their credit. Being overly strict means "one strike and you're out".

[Xellos-_^]

Originally Posted by Vexx

But there needs to remain ways for people to repair their credit. Being overly strict means "one strike and you're out".

there are many ways to repair credit, when i was working for BofA there was a introduction credit card with a credit limit of $500 for people with no credit or bad credit. If during the next 12months, the clients makes his/her payment ontime and doesn't go over the limit you can then apply for a normal card. The $500 limit is also final as you can't charge over the $500 limit. I sold it mostly to students as a introductary credit card but a few people with no credit history (recent immgrants) and people with bad credit got them as well. Another way to repair credit is just to pay your bills on time.

[Anh_Minh]

I don't know how American credit works. (Not that sure about French credit either, come to think of it...) Do you actually need to borrow to improve your credit and thus borrow larger sums?

[ClockWorkAngel]

Credit works somewhat like this;

They check your record of credit. How many cards you have, how long you have had them for etc. They check how much money you borrow, whether or not you pay your bills on time or not and if you're late, how long it took you to repaid those bills (This is a big reason why parents would pay for their children's stupid impulsive buying, so to keep their credit score nice and clean). Basically if you're responsible, own a card or so early on, use it occasionally (You can't have inactive cards, they just discount their existence) but repay it on time, you will have a good credit score and that what gives banks and other financial institutes a sign to give you a lower interest rate when you borrow; because you're more responsible and with a lower interest rate they're hoping to persuade you to borrow. While if you have a bad credit score they want to discourage you from borrowing because they have a hunch you won't pay it back on time or at all. It's basically their system to get people to be more responsible and if you got a bad score, be more responsible. It's a very useful system, but of course when banks stop worrying about the score and its meaning, they kick themselves in the ass when the bad lenders don't or can't return their lendings. Which of course screws the good lenders too.

[Anh_Minh]

Yeah... But it seems geared to screw people like me, who don't borrow unless they really need to.

Here, you can't borrow so much you'd have to pay more than a third of your income every month, but banks don't particularly worry if you haven't borrowed for frivolous purchases. At least, I don't think they do.

[chikorita157]

Originally Posted by ClockWorkAngel

Credit works somewhat like this;

They check your record of credit. How many cards you have, how long you have had them for etc. They check how much money you borrow, whether or not you pay your bills on time or not and if you're late, how long it took you to repaid those bills (This is a big reason why parents would pay for their children's stupid impulsive buying, so to keep their credit score nice and clean). Basically if you're responsible, own a card or so early on, use it occasionally (You can't have inactive cards, they just discount their existence) but repay it on time, you will have a good credit score and that what gives banks and other financial institutes a sign to give you a lower interest rate when you borrow; because you're more responsible and with a lower interest rate they're hoping to persuade you to borrow. While if you have a bad credit score they want to discourage you from borrowing because they have a hunch you won't pay it back on time or at all. It's basically their system to get people to be more responsible and if you got a bad score, be more responsible. It's a very useful system, but of course when banks stop worrying about the score and its meaning, they kick themselves in the ass when the bad lenders don't or can't return their lendings. Which of course screws the good lenders too.

Well there is one easy way... Don't spend the money if you don't have it. People should create a saving account and put part of their salary in so when there's something bad happens like losing your job or getting sick for a long period of time, you still have money and don't need to depend on credit cards. Also, the saved money can be used to buy things that you want as long you have enough money.

The problem is that people spend too much money on credit and not pay on time or pay later... which in turn makes the credit cards richer... and last year these credit card companies made billions of dollars in late fees.

[Xellos-_^]

Originally Posted by ClockWorkAngel

Credit works somewhat like this;

They check your record of credit. How many cards you have, how long you have had them for etc. They check how much money you borrow, whether or not you pay your bills on time or not and if you're late, how long it took you to repaid those bills (This is a big reason why parents would pay for their children's stupid impulsive buying, so to keep their credit score nice and clean). Basically if you're responsible, own a card or so early on, use it occasionally (You can't have inactive cards, they just discount their existence) but repay it on time, you will have a good credit score and that what gives banks and other financial institutes a sign to give you a lower interest rate when you borrow; because you're more responsible and with a lower interest rate they're hoping to persuade you to borrow. While if you have a bad credit score they want to discourage you from borrowing because they have a hunch you won't pay it back on time or at all. It's basically their system to get people to be more responsible and if you got a bad score, be more responsible. It's a very useful system, but of course when banks stop worrying about the score and its meaning, they kick themselves in the ass when the bad lenders don't or can't return their lendings. Which of course screws the good lenders too.

you don't need to repay the loan in full for good credit. You just need to pay on time.

Originally Posted by Anh_Minh

Yeah... But it seems geared to screw people like me, who don't borrow unless they really need to.

Here, you can't borrow so much you'd have to pay more than a third of your income every month, but banks don't particularly worry if you haven't borrowed for frivolous purchases. At least, I don't think they do.

you don't actually have to borrow, just get a credit card and not use it. The recommanded number of CC a person should have is 3 or 4. Having too many credit card will also pull down the credit score. Also credit scorers are beginning to included things like ultility bills in credit score calculations.

What i done with my credit card is to charge my purchase to my card but pay it off at the end of the month so there would no balance. I get the convenience of a card card without having to pay any fees or interest. Also raise my credit score as someone who pay his bills on time. Do that for a couple of years and you can have a score near 800.

[Nosauz]

Well the thing is most credit cards work like this, you borrow the money on a monthly basis they don't charge you anything, the amount you can borrow up to is your credit limit. At the end of the month if you don't pay the amount you can pay a portion or just the interest, so in essence your not borrowing anything, but for your credit score its applied as if you return the money quickly and that improves your credit score. So for me my credit card is basically a bank card thats accepted in more places, and is more convenient, also I don't even know my pin to my bank card because I prefer not using it online because of ID theft, but I do check everything online.

[Irenicus]

Yes, it's very useful. On the other hand it smacks of capitalism gone wrong. This grading system just doesn't feel right.

1) It's a trade secret with only the generalities known to the public. Yes, being transparent usually means some smartass of a math-head will figure out how to manipulate the scores. But does anyone here remember the open source-closed source debate?

The score that determines your financial reliability is run by a few private companies. Call me suspicious, but, well, I'm goddamn suspicious. If those economists and financiers are so good that they can figure out how good someone is then why the hell aren't they stepping up and blow everyone away and win Nobel Prizes on Economics by saving the world from itself? This very thread is about the Economic Crisis and I think such heroes are very much welcome right about now!

2) It encourages consumer borrowing. Yes, it also encourages paying back on time, but when one realizes that "paying back on time" apparently makes no difference between someone who pays only the minimum required from a credit card each month and someone who pays it all every time...

That, and what the fuck are they trying to do when it seems that my financially responsible checking account doesn't at all count towards the all-important credit score and that I *must* borrow, at least temporarily with a credit card, to improve my score?

3) It's a nice dehumanizing thing. But let's not go there; modernity debates are the purview of philosophy departments and Michel Foucault, whichever one prefers.

4) Special circumstances are hardly acknowledged and only then with difficulty. An oops here and there that isn't about the user being a credit card whore but a financial statement mistake or some other thing can really ruin someone's life for a time. "Resolving" the issues waste a whole lot of ado on nothing. It doesn't help that the credit score is secret and even *looking* at it apparently takes off some points (What. The. Fuck.): so a consumer can be screwed without even being aware of it. Cute.

5) People with no history is stuck in a vicious cycle. The path upwards is painful and unnecessarily costly. Class system much? The poor gets poorer woohoo? And one wonders why there are so many skeptics of capitalism today...

Like, yeah.

[Xellos-_^]

Originally Posted by Irenicus

Yes, it's very useful. On the other hand it smacks of capitalism gone wrong. This grading system just doesn't feel right.

1) It's a trade secret with only the generalities known to the public. Yes, being transparent usually means some smartass of a math-head will figure out how to manipulate the scores. But does anyone here remember the open source-closed source debate?

while we don't know the actual formula we do know what variable they look at.

Low balance, payments on time, a long history. it is not rocket science.

2) It encourages consumer borrowing. Yes, it also encourages paying back on time, but when one realizes that "paying back on time" apparently makes no difference between someone who pays only the minimum required from a credit card each month and someone who pays it all every time...

this is where common sense comes into play. You shouldn't need someone tell you that the more you pay in each payment, the less you paid overall. It should be damn obvious to anyone with a functioning brain who can do math.

That, and what the fuck are they trying to do when it seems that my financially responsible checking account doesn't at all count towards the all-important credit score and that I *must* borrow, at least temporarily with a credit card, to improve my score?

you don't actually need to "borrow" to improve your score. Althought it would help. you just need have a couple of open accounts. you don't need to used and credit cards these don't have fees.

4) Special circumstances are hardly acknowledged and only then with difficulty. An oops here and there that isn't about the user being a credit card whore but a financial statement mistake or some other thing can really ruin someone's life for a time. "Resolving" the issues waste a whole lot of ado on nothing. It doesn't help that the credit score is secret and even *looking* at it apparently takes off some points (What. The. Fuck.): so a consumer can be screwed without even being aware of it. Cute.

that i agree with

5) People with no history is stuck in a vicious cycle.

again, people without credit history can built it. There is no vicious cycle, you just need patiences.

The path upwards is painful and unnecessarily costly.

not sure what you mean by costly but life is painful. Only the dead feels no pain.

Class system much? The poor gets poorer woohoo? And one wonders why there are so many skeptics of capitalism today...

Like, yeah.

what class system? Anyone can grow up and be a CEO of a big company and then swindle the investor of out of billions. All they have to do is study hard, work smart and learn to make the right connections. No one said you can't grow to be the CEO of microsft or Bank of America.

As for capitalism, you really just need 2 things to make it work for you.

1. use your common sense
2. read the damn fine print

[yezhanquan]

Originally Posted by Xellos-_^

As for capitalism, you really just need 2 things to make it work for you.

1. use your common sense
2. read the damn fine print

3. As a quantifier to 1, be able to resist temptation. Temptation tends to turn common sense into nonsense.

[ClockWorkAngel]

Basically never buy something with your card if you can't afford it with cash. A good way to use your card is to buy things with it in lieu of cash, and at the end of the month pay it all off, no interest; nothing.

It's all about maturity, if you're mature you won't be in a bad situation.

[chikorita157]

Originally Posted by ClockWorkAngel

Basically never buy something with your card if you can't afford it with cash. A good way to use your card is to buy things with it in lieu of cash, and at the end of the month pay it all off, no interest; nothing.

It's all about maturity, if you're mature you won't be in a bad situation.

My family does the exact thing, and pay off the bill in full and never pay interest... and also to earn points..

It won't likely happen with most college students because most of them are irresponsible which is why I refuse to use a credit card and use only cash. Credit cards are a necessary evil and people depend on them... but it's evil mainly because credit card companies take advantage a bit too much on people who don't pay their bill on time or pay too little...

Again with mortgages... people shouldn't buy a house if they don't have the means to afford it. To be sure if they can afford a house, you should put part of their salary in a savings account and try to live with the remaining money for a few months. If they can't live with that amount, then they aren't ready to buy a house. It's responsibility people... and many people lack responsibility and maturity which is why the number of foreclosures are up and banks are taking a hit because of it... it's because people rather spend money than saving it... thus being poor... Saving money and good management of money will make people gain more wealth... Don't complain about the class system if people cannot manage their finances right.

[Astrana]

I hate this crap, igot pay 30-40% more for PVCs....

[Irenicus]

Originally Posted by Xellos-_^

while we don't know the actual formula we do know what variable they look at.

Low balance, payments on time, a long history. it is not rocket science.

Oh, of course, the basics are easy, for the most part. Be absolutely clean and they tend to view you benignly. "Common sense" aside, a few rules just leave you confused.

But you said it yourself: fine prints. Fine prints change everything. Mathematical formulas are funny things: a changed symbol here, a new variable there, an exception at this and that, and the world gets turned upside down thrice over. And nobody even gets to see the fine print. For something as crucial to modern day American life as a credit score, this is frankly an utter travesty.

But "common sense" relies much on precedent. Credit score is well-used nowadays, useful and less inconvenient than before there was one. Who'd ever think of the alternatives? Or the changes? Or oversight?

Right?

this is where common sense comes into play. You shouldn't need someone tell you that the more you pay in each payment, the less you paid overall. It should be damn obvious to anyone with a functioning brain who can do math.

You'd be surprised how much "financial common sense" requires levels of trained thinking not necessarily present in the uneducated...even the educated, actually.

So one has a choice, watch the system tear apart a very sizable segment of the population who lacks "common sense," or watch it and complain once in a while, like I do.

you don't actually need to "borrow" to improve your score. Althought it would help. you just need have a couple of open accounts. you don't need to used and credit cards these don't have fees.

"Although it would help." There.

Why?

again, people without credit history can built it. There is no vicious cycle, you just need patiences.

And a steady income. And lower expenditures. And a good economy. And some leeway for the bad times like today.

The last part in particular is lacking. So when one falls -- and boy are a lot of people falling! -- the system abandons you. And if one is born into the "underprivileged," what do you do? (American rhetoric that fearfully avoid all class references are incredibly rich and varied, a worthy topic for any sociological ventures, hmm).

Me, I'm lucky. Even though I'm a first-generation immigrant, I'm young. I have a credit card. I barely use it. I don't even need it: I have it because apparently it's good for my credit score (again, whuh?). My parents can shoulder what little expenses I incur. I will cruise through this damn system, if not spectacularly, then decently enough in my little corner of the world.

What of others? What of those who live a day-to-day struggle? Who will eventually want a decent house (which they will pay more than me for, because their credit score is worse, now isn't that the very definition of a vicious cycle?), a bigger purchase that might be necessary, a medical expenditure (prohibitively expensive in good old America for god knows why) that they can't shoulder by what they have?

One stumble and that's it. Oh, except for a decade or so of "recovery," perhaps, while people like me go through the rat race unmolested and leave them far behind.

not sure what you mean by costly but life is painful. Only the dead feels no pain.

And the rich.

God I feel like a socialist for saying it. And I haven't been a socialist since fifteen.

what class system? Anyone can grow up and be a CEO of a big company and then swindle the investor of out of billions. All they have to do is study hard, work smart and learn to make the right connections. No one said you can't grow to be the CEO of microsft or Bank of America.

Class systems don't need to be completely rigid to exist. Inequalities don't need to be absolute to be there.

A lot of work has been done studying this. Quite frankly I don't have the expertise to declare facts and figures on it, but if you read between the lines on concepts like "income range" and other nice words, what is there but a system where the rich -- the "capitalist" in the sense of owning "capital:" wealth -- only gets richer while the poor shoulders the burden? When despite protestations and efforts to the contrary a disproportionately large number of Ivy League graduates still prove to be children of the rich, and those graduates get to access better things earlier? When bailouts reach the CEO's while the common people struggle to survive?

Life is unfair. The silent question is: why must it be so?

The credit score is just an example of an esoteric method of control. It might have been created in good faith, for convenience and standardization, but just look at it another way and it's a horror show.

Try this: someone doesn't look "respectable," doesn't wear the decent clothes, the peddler charges more for the apple, if not throw you out in the first place. Injustice. Switch the clothes with credit scores, and there you are.

As for capitalism, you really just need 2 things to make it work for you.

1. use your common sense
2. read the damn fine print

That's like saying you just need common sense to make socialism work, which it will, by the way.

[LynnieS]

Originally Posted by Xellos-_^

you don't actually have to borrow, just get a credit card and not use it. The recommanded number of CC a person should have is 3 or 4. Having too many credit card will also pull down the credit score. Also credit scorers are beginning to included things like ultility bills in credit score calculations.

What i done with my credit card is to charge my purchase to my card but pay it off at the end of the month so there would no balance. I get the convenience of a card card without having to pay any fees or interest. Also raise my credit score as someone who pay his bills on time. Do that for a couple of years and you can have a score near 800.

You might want to recheck this once again just in case for your cards. Some banks and credit card companies are now removing people who pay their bills fully and on time; there were some articles about this a few weeks ago. These companies don't want people who are at high risk for delinquency, but at the same time, they make their money mainly by charging interest. Some cards also have annual membership fees, but they were, when I was looking at them, pretty small and don't really cover the costs of running the program.

[qwertyuiopz]

a global currency would be so convenient though...so would a war with north korea

[Xellos-_^]

Originally Posted by Irenicus

Oh, of course, the basics are easy, for the most part. Be absolutely clean and they tend to view you benignly. "Common sense" aside, a few rules just leave you confused.

But you said it yourself: fine prints. Fine prints change everything. Mathematical formulas are funny things: a changed symbol here, a new variable there, an exception at this and that, and the world gets turned upside down thrice over. And nobody even gets to see the fine print. For something as crucial to modern day American life as a credit score, this is frankly an utter travesty.

But "common sense" relies much on precedent. Credit score is well-used nowadays, useful and less inconvenient than before there was one. Who'd ever think of the alternatives? Or the changes? Or oversight?

Right?

Credit Score rating companies are also beginning to mix in utility bills. So paying your power and water bill on time will also help. As for a alternative to scores, what do you propose? Banks need a way to assess the risk of lending to a potiential customer. If banks don't use credit score what do you propose they use?

You'd be surprised how much "financial common sense" requires levels of trained thinking not necessarily present in the uneducated...even the educated, actually.

So one has a choice, watch the system tear apart a very sizable segment of the population who lacks "common sense," or watch it and complain once in a while, like I do.

that is a education problem and not a financial system problem. i would support high school and college having a mandatory class on everyday finance on balancing checkbooks, dealing with credit cards, improving credit scores and auto and home loans. But if someone refuse to learn that information i got no sympathy for him.

"Although it would help." There.

Why?

history, one of the major variable in your credit score is the length of your credit history.


And a steady income. And lower expenditures. And a good economy. And some leeway for the bad times like today.

The last part in particular is lacking. So when one falls -- and boy are a lot of people falling! -- the system abandons you. [/quote]

you file for bankruptcy and rebuilt your credit score which many have done.

And if one is born into the "underprivileged," what do you do? (American rhetoric that fearfully avoid all class references are incredibly rich and varied, a worthy topic for any sociological ventures, hmm).

being born poor is no excuse in the US for failing. Just being born in the US already put you ahead in the game of life compare to most people born in 3rd world counties. The "underprivileged" instead of complaining about what they don't have and what others have need just shut up and work thier way up. Lots of immgrants who come to the US starts off at rock bottom and work their way up. you will never hear any of them complain about how some people too rich or that their children can't success becuase they are poor.

What of others? What of those who live a day-to-day struggle? Who will eventually want a decent house (which they will pay more than me for, because their credit score is worse, now isn't that the very definition of a vicious cycle?),

that is not a vicious cycle, what it means is that osmetime in the past they mess thier credit score. What will happen is that if over time that can be repair and they can refinance to a lower rate when thier score recover.

it is consequence of action not a vicious cycle.

a medical expenditure (prohibitively expensive in good old America for god knows why) that they can't shoulder by what they have?

this belongs in another discussion regarding health insurance.

One stumble and that's it. Oh, except for a decade or so of "recovery," perhaps, while people like me go through the rat race unmolested and leave them far behind.

you stumble you get up and climb up again.

Life is unfair. The silent question is: why must it be so?

because that is life, if life was fair we would all look the same and be the same.

That's like saying you just need common sense to make socialism work, which it will, by the way.

this goes back to a commment i made on another thread regarding political system. Any system will work it is The People that isn't working.

Originally Posted by LynnieS

You might want to recheck this once again just in case for your cards. Some banks and credit card companies are now removing people who pay their bills fully and on time; there were some articles about this a few weeks ago. These companies don't want people who are at high risk for delinquency, but at the same time, they make their money mainly by charging interest. Some cards also have annual membership fees, but they were, when I was looking at them, pretty small and don't really cover the costs of running the program.

only credit i know that still have a annual charge to it are form Amex and form airline mile cards. If you have a simple card there is no fees.

As for banks and people who pay in full every month. The banks have grumbling about us for a long time. But there isn't much they can do about people like us. We use the credit card for convenience, if the banks cancel our card it is not the end of the world. We can always just use the debit card instead.