The Next Meltdown: Credit-Card Blowup Ahead

Discussion in 'Economics' started by SouthAmerica, Oct 12, 2008.

  1. He's a wanna-be reporter.
     
    #51     Oct 26, 2008
  2. .

    October 26, 2008

    SouthAmerica: Did you know that the US government froze in 1974 the amount that Americans can get as WELFARE monthly benefit payments?

    Until recently WELFARE – was an issue that not even the Republicans had the nerve to touch on that subject.

    Welfare is money paid to persons, from a government, who are in need of financial assistance but who are unable to work for pay.

    A social welfare provision refers to any program which seeks to provide a minimum level of income, service or other support for disadvantaged peoples such as the poor, elderly, disabled, students, unpaid workers such as mothers and other caregivers, and underprivileged groups.

    From January 1974 to January 2008 = 34 years

    What $ 1.00 bought in January 1974 in January of 2008 we need at least $ 5.00 to buy that same item. In another words, if you still receiving today the same amount of money that you used to receive in 1974 then you lost 80 percent of your purchasing power or you got a cut on your income of 80 percent because of inflation during that period.

    Today there is a subject that even the Republicans don’t have the nerve to talk about – and the Republicans usually don’t care which group of people they are screwing most of the time.

    Here is why:

    Do you remember all these programs on television showing to the American people how well all those people were living out of their WELFARE check? And how much fraud was going on in the early 1970’s on that government program?

    Have you seeing any candidate from either political party talking about the subject of welfare and how to cut the welfare program for the very poor in the political campaigns for president in 1996, 2000, 2004, and also in the current presidential campaign?

    The answer is NO, not even the Republicans have the nerve to touch on that subject.

    The candidates talk about reducing entitlements programs, but they are talking about Social Security, Medicare, and Medicaid. They are not talking about the WELFARE program for the very poor.

    The word WELFARE is not part of any politicians’ vocabulary for a long time here in the United States, at least since the decade of the 1980’s.

    Most Americans don’t know it, because nobody in the American mainstream media is interested on this subject today.

    You must be wondering how the US government fixed the problems regarding that program?

    The answer is very simple: the United States government froze the amount people can receive as welfare payment in the year 1974 – the amount people receive as monthly WELFARE payments has not increased in value since 1974, for example if a single person received $ 140 per month from welfare in 1974, a single person still receiving only $ 140 per month as welfare payment in 2008. Inflation cut the amount people receive from WELFARE by 80 percent. Welfare recipients have been receiving an annual cut on their welfare benefits year after year because of inflation.

    To this day most Americans still think that the US government is spending a fortune with the people on welfare, and that welfare is one of the major causes for US government yearly budget deficits.

    They created a certain perception about welfare for the American people in the 1970’s that has nothing to do with the welfare program in the United States in 2008.

    I have no idea how people are surviving on their welfare checks in 2008 – today the amount of money they get as welfare on a monthly basis are below of subsistence level in most parts of the United States, and the only place they might be able to survive on that kind of income is in Zimbabwe.

    It is ironic that the last American president to increase the amount of money that any American can receive as WELFARE payment on a monthly basis it was Richard Nixon a Republican president.


    *****.


    I wrote the above piece in January 2008, before the Republican administration had created the largest WELFARE program for the rich in American history to the tune of trillions of US dollars.

    Now the United States has one WELFARE program for the rich where some people are going to make a fortune.

    And the United States still has its old WELFARE program for the destitute and very poor where people are barely being able to survive. Today even in Zimbabwe they must have a better WELFARE program for the poor.

    Anyway, check out if you also qualify for the new US government welfare program for the rich and well connected.


    *****


    “Companies start competing for bailout money”
    Associated Press - Sunday October 26, 2008
    By Martin Crutsinger, AP Economics Writer

    Insurance firms, auto companies and foreign banks petition for part of $700 billion bailout

    WASHINGTON (AP) -- The bailout is now the hottest lobbying game in town. Insurers, automakers and American subsidiaries of foreign banks all want the Treasury Department to cut them a piece of the largest government rescue in U.S. history.

    The betting is that many with their hands out will be successful, especially with financial markets in a stomach-churning dive and predictions the economy is about to tumble into a deep recession.

    These groups argue that the credit squeeze is so severe and the risks to the economy so dire that their industries need financial support as well.

    The Treasury is considering requests from a variety of industries, but has not decided whether to expand the program, officials said Saturday.

    Lobbying efforts are intensifying.

    The Financial Services Roundtable wrote Treasury officials on Friday requesting that the initiative to buy $250 billion in bank stock grow to cover insurers, auto companies, securities dealers and U.S. subsidiaries of foreign companies, including banks. The Treasury's plan is intended to bolster banks' tattered balance sheets and get them to resume making loans.

    As the Treasury now interprets it, these additional groups would not participate in the bank stock program. They could receive help from a separate part of the $700 billion rescue that will buy bad assets from financial institutions.

    Steve Bartlett, the president of the Roundtable, urged the Treasury to broaden the definition of those eligible for the stock purchase program.

    "The institutions that are excluded play a vital role in the U.S. economy by providing liquidity to the market," Bartlett wrote Neel Kashkari, the Treasury Department official running the bailout program.

    Referring to U.S. subsidiaries of foreign companies, Bartlett said, "This is a global crisis and to not recognize the U.S. firms controlled by foreign banks or companies would create further impediment to the market's recovery."

    A financial industry official said Treasury Secretary Henry Paulson met over the past week with various groups, including hedge fund managers, that were petitioning for assistance. The official spoke on condition of anonymity because the Treasury has not made a decision.

    This official said the discussions with insurance industry executives were being held in advance of what are expected to be disappointing earnings reports by some insurance companies in the coming week.

    The official said the insurance industry would like to get government purchases of their stock on a mandatory basis, duplicating the agreement Paulson struck two weeks ago with nine major banks.

    Some insurers technically would be eligible for stock purchases now if they own subsidiaries that are savings and loan institutions regulated by the Office of Thrift Supervision.

    Last month, American International Group, the country's largest insurance company, received an $85 billion loan from the Federal Reserve. Since then, it has gotten further support in an effort to withstand the biggest upheavals on Wall Street since the Great Depression.

    Democrat Barack Obama's presidential campaign said Friday it supported the effort by the auto industry to get money from the $250 billion made available for stock purchases. That would be in addition to $25 billion recently approved by Congress for low-interest loans to help the struggling industry retool and build fuel efficient vehicles.

    The debate over expanding the bailout comes as the Treasury is rushing to get money out the door to the primary recipients: banks that sharply curtailed lending after suffering billions of dollars of losses on mortgage-related assets as home foreclosures soared in the housing slump.

    Lawmakers are pressuring the Treasury to do more in the foreclosure area, as well.

    Sheila Bair, head of the Federal Deposit Insurance Corp., told Congress about efforts to provide government-backed loan guarantees for mortgages that are reworked to help homeowners in danger of default. That would give banks an incentive to speed up refinancing efforts because the government would back part of the reworked loan.

    The Treasury also is moving ahead to get bank stock purchases approved. It announced on Oct. 14 that it was spending $125 billion to buy stock in nine of the largest financial institutions. An announcement was expected Friday about a second round involving 20 to 22 other banks.

    But it was decided each bank would announce its own agreements with the Treasury, out of concern that excluded banks could suffer a stock sell-off from disappointed investors.

    PNC Financial Services Group Inc. announced Friday it was acquiring National City Corp. for $5.58 billion, in what was the first instance of a bank using fresh investments from the bailout program to make an acquisition. PNC said it had received $7.7 billion in cash through selling stock to the government under the program.

    Source: http://biz.yahoo.com/ap/081026/bailout_bonanza.html

    .
     
    #52     Oct 26, 2008
  3. DR4MA

    DR4MA

    In order for a credit card meltdown to occur, the Depression must have already occurred or coming to fruitation. As long as people have jobs, they will be able to pay off credit card debt.

    I don't see the Credit Card default happen before any kind of Depression symptoms. I think the media is creating panic, as usual.
     
    #53     Oct 26, 2008
  4. plugger

    plugger


    Are you for real?

    Credit card debt is a HUGE problem. If people are reneging on their mortgages, they are not going to think twice about screwing the credit card company. The card companies WAY OVEREXTENDED credit to people who can never afford to repay it.

    I know of people who have never made more than $24 000 in one year and have credit card limits exceeding $60 000 with an average rate of 16%. Do the math.
     
    #54     Oct 26, 2008
  5. DR4MA

    DR4MA

    That's just ridiculous. Credit card limits exceeding 60,000 who makes $24,000/yr. Who in the right mind would over-extend themselves like that. You deserve to get screwed under those conditions.
     
    #55     Oct 27, 2008
  6. Moreagr

    Moreagr

    most are under 10k IMHO
     
    #56     Oct 27, 2008
  7. plugger

    plugger


    Gee, have you noticed that there is a debt bubble collapsing. Do ya' think irresponsible BORROWING and lending has something to do with it?

    Yes, who in their right mind? (only 1 in 6 homeowners).
     
    #57     Oct 27, 2008