How do you handle a flagging economy convulsing with the powerful seizures of acute (and badly needed) deleveraging? Why, by creating incentives to pour more debt into the system, of course. You have to make sure people are buying flat panel TVs and SUVs on credit without impediment, as is their god-given right as Americans. You have to encourage more deposit-less mortgages. You create the impression that low interest rates are an entitlement. Raising them to meet market needs is a crime.
You have to rev up the re-fi machine. People can’t afford their mortgage anymore? Give them a tax credit, a check and then kick the living shit out of the lender until she forgives a large portion of the debt. (We call that “modification” and not “nationalization” of the debt, but it’s the same thing. Want TARP money? No? Take it anyhow, unless you want to destroy the financial system in the United States you anti-American pig. And use it to lend lend lend, damnit, or there will be hell to pay).
You ignore all the market signs that there is too much debt out there (like high rates for consumer debt and large spreads) and publicly whip any bank CEO that won’t drop their credit card rates to 5% or so to within an inch of her public reputation’s life.
And you talk the talk:
You don’t say borrowing. You say lending. You don’t say debt. You say credit. Example:
Incorrect: If we want to save this country, we have to increase the debt in this economy.
Correct: If we want to save this country, we have to increase the available credit in this economy.
Incorrect: The way out of this mess is to stimulate massive borrowing.
Correct: The way out of this mess is to stimulate massive lending.
Now get back to work (buying on credit) you American hating slackers.
Dodd Says Credit Card Companies Too Often Are Gouging Customers [Bloomberg]
Is the honorbale Chris Dodd is still in BofA’s pocket?
Spot on EP…
*applause*
How to stop a flagging economy..start with Morgan Stanley
I worked there for long years in Tech. Let me list down whom to fire, Please listen.
fire in this order to saev yourselves
1. Paul Cherian (LN IT)
2. Bruce Liebenberg (NY IT)
3. Adam Williams (LN IT)
4. Forgot the name of the guy who runs STP IT in London. First name is Paul..the lean bastard
5. whole trades IT (email: TRHOT)
THE ABOVE FOLKS RECEIVED TRUCK LOADS OF KICKBACKS FROM INDIAN SOFTWARE VENDOR AND RUINED IT AND INNOVATION. THEY MADE LOT OF ASSOCIATES LOSE JOBS.
(EG:- SEE THE AMOUNT OF TCS ASSOCIATES SITTING IN TORONTO….NY..LON…cant they work from offshore locations ?)
FIRE THEM FIRST AND IT WILL BE CLEAN.
DO YOU WANT ME TO WRITE LETTERS TO SENATE ?
@4: We saw your first comment. Dealbreaker is not a forum for your personal vendetta. Take it to Yahoo.
dodd is an asshole.. if we want to get out of this problem, we should take a bit of tarp money and send dodd, maxine waters,and barney frank to siberia to rot and die.. thats the solution
I hate politics.
EP Very good points all, but don’t you know at least one person who’s basically being crushed by credit card debt? With penalties, these things can get up to +25% p/a. I know, no one asked them to do it, but now that they have, Dodd’s point is that its like indentured servitude. If you were a politician, whose vote would you court: the millions with credit card debt or the few thousand ee’s of the card issuers.
@6 FTW!! Though that list needs to include nearly every elected official in DC.
Siberia to rot & die is OK, a mass suicide on the white house lawn would be considerably more fun to watch.
Fcuking morons!
home ownership = property taxes
EP-Please remove #4! This is a disgrace. We don’t call out nameless, defenseless individuals who aren’t money rock stars!
EP@5
double homer on this one.
what would you ask for in your bailout?
http://endofesq.com/?p=993#comments
@5. EP – Sorry, I am not here for personal vendetta. I just wanted this comment to get a highlight.
Don’t get me wrong here. I am not averse to Outsourcing or getting work done cheap.
What I am not OK with is mindless firing of native workers and bringing in truckloads of dimwits just because those firms give you kickbacks.
If you want, I can share pictures of the above men having a nice luxury when they go to India. Kickbacks its.
Christopher Dodd, Llc = wholly owned subsidiary of Bank of America
Thank you, thank you, thank you. Banks are being castigated for failing to lend – yet irresponsible lending and faulty credit risk analysis is what got us into this mess to begin with. What America needs is jobs, not loans to individuals who can’t support what they’ve already got – because they don’t have jobs. Or to businesses that can’t sell more, because the people they sell to don’t have jobs. The mass media has yet to understand this. Congress doesn’t appear to understand anything at all. Leave the freaking bankers alone. They’re doing the best they can to fix past mistakes – now let’s offer some real help.
8-
How do you reconsile the idea that (in huffy voice) “we need to keep banks alive,” and the idea that banks shouldn’t be allowed to charge interest rates that cover their defaults?
@8 I say for those who have screwed up with credit cards there is such a thing as personal responsibility. If you’re being hounded by credit card companies and can’t pay, file bankruptcy, take your lumps and learn from the experience. I was raised to believe that nobody is entitled to anything – you work for it.
IT loser @5/19:
You’re at the wrong site and your comments/gripes completely irrelevant to everyone else here. So unless you are prepared to discuss the wideclops, sham-wow, mayo, or egrets please refrain from posting.
@4 I’m glad someone has finally figured out how to fix Morgan Stanley! This never would have happened, if they had American IT guys to keep their laptops working!
It says in the Bloomber article that consumers are borrowing less:
“U.S. consumer credit fell by $6.6 billion to $2.56 trillion in December, according to a Feb. 6 Federal Reserve report. In November, the measure dropped the most since reporting began in 1943.”
So if you are in the business of lending money to consumers, how do you increase your revenues facing those decreasing volumes? The easiest way is to charge more in fees, apply them as you wish, and increase the interest rates. But those are exactly the same measures that you were applying when the demand for borrowing was at its peak. Hmmmm! No wonder consumers are complaining to their Congresscritters.
Note: I pay my balance in full every month and collect a nice rebate every year. My credit card company calls me (in private) a deadbeat, even with my 800+ FICO. Everybody should do the same, but not everybody can.
Banks, take it like a man.
Stop with the self-pity. This was a ridiculous post.
The bankers caused this mess. Do you really think someone put a gun to the bankers’ heads and made them lend to people at 22% interest on their credit cards (while Fed Funds was at 1% under Greenspan)?
Did someone make the hedge fund managers pick up quarters in front of steamrollers?
Did someone make the rating agencies give AAA ratings to toxic garbage which was then sold to pension funds?
Did someone make the designers of CDO’s and CDO’s squared assume that housing prices in one state were completely uncorrelated with housing prices in another state?
Did someone make the banking industry lobby Congress/Bush to tighten the bankruptcy rules in 2005?
Instead you’re worried about the injustice of allowing desperate people to stay in their homes.
People, people…..we have to stay focused on the big picture here and the end game.
Unless we force the banks to continue making bad loans, we will not be able to eventually justify taking every last dime away from “rich” people in taxes.
And by rich people I, of course, mean people that continue to work for a living, not the ones that have all ready looted their prior firms and gotten away with their golden parachute or god forbid rich politicians that have their own winery (Nancy) or have all that gay brothel money.
i forgot to pay on a $6 balance on Target Credit Card. I was charged 84% APR.
Hyperinflation — Zimbabwe-style, baby.
@20
There is also a thing such as bad luck.
By the way, the banks pre-empted your suggestion about bankruptcy by changing the law in 2005. Consult your friendly bankruptcy attorney before jumping to that trap.
Isn’t the UK right behind / ahead the US in the consumer credit overleverage?
Sure Americans overconsume but the Euros don’t seem far behind…
24 knows the score.
WAHHHHHHHHHHHHHHH THE POOR BANKERS WAAAAAAHHHHHHHHHHHHHH BLAME CONSUMERS/POLITICIANS WAAAAHHHHHHHHH
@4 – take it up with Moore.
We had to destroy this village to save it.
The Vikings had it right in their time.
24/30 – A little perspective would be good for you. It’s everyone’s fault. The truth is that there are loads of people out there that have taken on way more than they can chew. My mother is a bankruptcy counselor and you wouldn’t believe the stories she gets. Someone will call her, preparing to file for bankruptcy, bringing in $5000 a month in income with a $4000/month mortgage, an Escalade, a BMW, and $20k in existing credit card debt. That’s not even the exception; that’s the rule. Yes, it was irresponsible of mortgage companies to extend loans to people who they knew might not be able to pay them. But you know what, it’s just as irresponsible to take a loan without fully knowing how you will pay it back. There is no personal accountability in this country for anyone.
There were irresponsible lending practices on the behalf of many banks, and there were just as many irresponsible spending habits on the parts of consumers. Even for those not buying luxury cars and McMansions, nobody has the right to blame anyone but themselves for overextending.
And not for nothing, it also must be taken into account that the real estate market has been massively over-valued for some time. What goes up must come down. Ask the people that lost their shirts when the real estate market plummeted in the ’80s. I bet you they didn’t blame everyone but themselves.
The Iraq war is going to pay for itself, promise.
@1 RE: Dodd
NOT JUST BOFA’S THE WHOLE FIN COMMUNITY’S POCKETS… 300 K FROM S/A/C STAFF IN 07. SOURCE: LOCAL PRESS
@32 the greatest Vietnam quote of all time!
@35
it is all bush’s fault. we know, we know you phucking parrot.
@34
I detest conspicuous consumption though I find it more prevalent in people who make a good amount of money to begin with. But I haven’t seen the data that prove that this is the rule rather than the exception in consumer behavior.
What was really irresponsible was to:
1. Tell people that there wasn’t a price bubble in housing.
2. Tell people that house prices always go up.
3. Tell people that ARMs were a good idea even when interest rates were going up.
Who were guilty of those things?
Now that the crisis is accelerating you see people cutting the fat of their consumption habits (cheap imports). Pretty soon you are going to see a lot more people cutting the muscle (housing, food and health care).
this is like the senator who wants to get rid of all steroids in baseball.. and then complains to MLB because his ‘constituents’ want more homeruns
@32 the greatest Vietnam quote of all time!
I’m looking for a great Vietnam War quote, does anybody have any ideas?
@38
Speaking of bushie, he’s heading out to Calgary for his first paid speaking gig. Closed doors only, undisclosed fee. Rumor has it he is going to be reading “My Pet Goat” to some oil guys and get $150K for those 5 minutes. He will not be using his passport so there’s no risk that it will be confiscated.
@42, something about saving a village in order to destroy it. Can’t really remember, but the quote was TIGHT.
34 Re overextending: Maybe its just something in our DNA (not mine though, I’m relatively well off and drive a car with 140,000 miles on it – maybe thats the answer, I don’t feel the need to be gratified by consumption). And the industry then falls over itself to find ways to profitably meet that need: from revolving credit in the 50′s to HELOCs in the 00′s. Bet your mother has been a busy lady lately.
@39, irresponsible to tell people those things? yes
mindnumbingly,dumbf*ck stupid of them to believe it? yes
people believed it because of their greed, pure and simple. greed got us here.
Ladies and Gents,
While I understand that a bit of reflection on who the main culprits are in this pandemic financial debacle is somewhat useful and cathartic, it is misguided at it relates to the OP’s (EP) post.
We should be focusing more on trying to right the ship, which implies thoughtfully contemplating, critiquing, berating, supporting, etc attempts by the private and public sectors now engaged in a great financial war testing whether our nation can long endure.
You cant drive a car for long by looking in the rearview mirror.
@30 – You dumbass, @24 doesn’t even know the sport, let alone the score.
Hey douche @47,
TLDR, douchebag…!
@39 – Yes I agree but as #46 points out, some onus must fall on the people that fell for it hook, line, and sinker.
@45 – I think it’s very cultural. With the rise of celebrity and things like Cribs and Lifestyles of the Rich and Famous, etc, people are bombarded by all of the luxury goods that are out there. Many have convinced themselves that unless they have these things, they aren’t worth anything, they’re not cool, and they won’t be happy. I would be lying if I said I don’t care what kind of purse I carry around and that I would be okay shopping for clothes at Walmart. But there is a middle ground for everything. I would love to go shopping at Saks every week and wear only $160 jeans and $3000 purses. And I could if I wanted to…until the bill came.
Personally I like being a cheap ass. Means I don’t have to worry about debts and how I am going to afford an emergency. From what I can tell, that is the minority. We wouldn’t be in this mess if the consumer wasn’t overleveraged. How you could put a HELOC on a mortgage (double leverage) and yet still be just able to pay BOTH with dual incomes? At some point, common sense must come into play and people need to stop pointing fingers (unless it’s squarely at themselves).
What pisses me off is that me being a cheap ass lived responsibly (ie within my household budget) but will not get a piece of the bailout (that I will have paid for with my tax dollars) and foresee greater taxes in the future for both me and my kids. Shafted for being responsible. That’s what American society has become.
The bailout of the large banks and the American consumer is but a symptom of our culture’s inability to take pain, even when we deserve it.
Brillant as usual from Dodd. We’ll prevent the card companies from charging appropriately for risk – maybe even force them to lend to bad credits knowingly (as they are urging with all this Tarp/FEd money) and then a) bitch at the banks when they report high losses/low to no profits and b) give the banks more free money to make up for the govt mandated losses. Hmmmm- smells like FNMA/Freddie again. The govt will continue to throw cash at every problem to reinflate the bubble – and we will watch our dollar erode and our qualify of life/world status drop significantly. The answer isn’t more debt – you need to restructure our economy to rely less on leverage to purchase imports. Rebuilding leverage will cause larger problems ahead. Volker understands this but seems somewhat compliant nonetheless.