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Old 07-22-2008, 01:28 PM   #61
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Many are quick to blame this woman's personal habits.
Ms. McLeod, who is 47, readily admits her money problems are largely of her own making.

I wouldn't argue with her.
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Old 07-22-2008, 01:33 PM   #62
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I am not stating that credit is the backbone of free trade (although it could be argued that it is in the post-industrial American economy). What I am saying is that the backbone of free trade is offering one service in exchange for another (or in the absence of a service, money). The credit card company IS doing her a favor, and they ARE doing them a favor. If she doesn't need the help from the credit given by the credit card company, she can either a.) find a different CC company, b.) cut back her spending c.) declare bankruptcy. In other words, the big bad CC companies are, in essence, keeping her alive through her spending ways.

And, to the point about her still receiving CC offers, yet again she can deny them. Maybe the alternatives are not very good if she doesn't use them (starvation, bankrupty, foreclosure), but these banks are willing to take on the risk, perhaps with poor foresight. But, if things fall through, they bear the costs of their decision. All I am asking is that she does the same. Yet again, it is not as if I do not understand how she got into this situation or that it is absolutely sacrilege for anyone to carry CC debt. It is just that when looking at this situation, in free trade, BOTH the CC companies and the consumer are benefitted by their transaction (otherwise they wouldn't do it). And, if the deal falls through, BOTH eventually feel the effects of the decision. In this sense, they are NOT adversarial in nature.
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Old 07-22-2008, 01:44 PM   #63
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I don't know if the industry needs more regulation or not... it could be self-correcting, at least to some degree.

I did ponder this, though... and not directly related to the story, but it does play a role. Let's say that there is always someone that needs money and there is always someone willing to loan money (at a price!). Would we rather that person get their money from a sanctioned, regulated industry with oversight. Or, would we rather that person get money from the loan shark thug down the street?
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Old 07-22-2008, 01:46 PM   #64
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I don't know if the industry needs more regulation or not... it could be self-correcting, at least to some degree.

I did ponder this, though... and not directly related to the story, but it does play a role. Let's say that there is always someone that needs money and there is always someone willing to loan money (at a price!). Would we rather that person get their money from a sanctioned, regulated industry with oversight. Or, would we rather that person get money from the loan shark thug down the street?
Or the less-regulated industry which offers far better rates and safety than the loan shark.
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Old 07-22-2008, 01:47 PM   #65
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I am not stating that credit is the backbone of free trade (although it could be argued that it is in the post-industrial American economy). What I am saying is that the backbone of free trade is offering one service in exchange for another (or in the absence of a service, money). The credit card company IS doing her a favor, and they ARE doing them a favor. If she doesn't need the help from the credit given by the credit card company, she can either a.) find a different CC company, b.) cut back her spending c.) declare bankruptcy. In other words, the big bad CC companies are, in essence, keeping her alive through her spending ways.

I'll go one further. The availability of credit allows the borrower to have more freedom to make choices. They might be good choices, bad ones, or a mix of both, but they are still choices that could not otherwise be made without the availability of credit. Last I checked, most Merkins (and other people around the globe) generally like having freedom and more choices. So you take away some of our freedom when you regulate away the availability of credit.
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Old 07-22-2008, 01:58 PM   #66
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Early retirement is hard to achieve. I just hope, here, we don't judge or look down on people who are in difficult circumstances. I didn't envision that kinda attitude when I joined this board shortly sometime ago. Little more respect on other people's circumstances should be expected
Agree 100%. I have seen folks that make 10X what this lady does or more fall into the same predicament with just more zeroes involved.............
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Old 07-22-2008, 02:03 PM   #67
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I'll go one further. The availability of credit allows the borrower to have more freedom to make choices. They might be good choices, bad ones, or a mix of both, but they are still choices that could not otherwise be made without the availability of credit. Last I checked, most Merkins (and other people around the globe) generally like having freedom and more choices. So you take away some of our freedom when you regulate away the availability of credit.
And, regulating in restrictions of credit ignores the fact that credit is never forced upon somebody. It may be marketed differently, or have high rates, but that is part of the product being sold. Taking all the risks involved with the product being offered in this case ultimtely falls on everyone, except, I hope, the taxpayers.
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Old 07-22-2008, 02:04 PM   #68
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And, regulating in restrictions of credit ignores the fact that credit is never forced upon somebody. It may be marketed differently, or have high rates, but that is part of the product being sold. Taking all the risks involved with the product being offered in this case ultimtely falls on everyone, except, I hope, the taxpayers.
Hmmm, I'll agree it is never forced, but there are situations where credit is abusively marketed. That's what I would like to see regulated.
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Old 07-22-2008, 02:07 PM   #69
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Hmmm, I'll agree it is never forced, but there are situations where credit is abusively marketed. That's what I would like to see regulated.
This is possible, however I don't really have an opinion on it. I could definitely see it being regulated somehow and not have too big a problem of it, but would not want to pass the onus of the situation from the crux of the point, both the creditor and the debtor making poor decisions, as opposed to passing it off as just tricky marketing.
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Old 07-22-2008, 03:09 PM   #70
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A person's life is defined by the choices you make- whether these choices are proactive or reactive isn't always your choice. A lot of people make choices based on short-term gain instead of long-term goals. I suspect most of us on this board have made a few bad financial choices, especially when we were younger- I know I have.

I don't think she can blame the financial institutions for her predicament- so what if she is still receiving credit card offers?- that is what shredders are for- (If she can't afford a shredder, she can always burn them in her ashtray. )

Her financial meltdown was based on a lack of financial self discipline, and not having a cushion for emergencies. The former caused the latter.

I feel bad for her, but I don't feel responsible. And I am pissed off that millions of others just like her are dumping their financial problems on the rest of us in the form of higher consumer interest rates, tighter mortgage credit, diminished RE values, and a volatile Dow that is tanking my 401K account- which I worked hard to accumulate by doing without a Wii, I-phone, jet-skis, QVC, HSN, or new cars every year, unlike a lot of these folks who are just walking away from their self-directed financial crashes.

Stupid? She might be a very smart woman who just makes stupid choices- but we all know that the meat does slide out in the shape of the can...
Unlucky? Who knows? Her financial problems run a lot deeper than an unforeseen appendectomy and hysterectomy- although those expenses probably pushed her over the edge. This is the only element of her plight that elicits any sympathy from me- "there but for the grace of god, go I"
Irresponsible? Absolutely.

I am really glad I am not in her shoes, but she made a lot of the choices that got her where she is today- and you and I are going to help bail her out whether we like it or not.
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Old 07-22-2008, 03:16 PM   #71
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One must stand in awe at the creators of financial instruments like credit cards. They were masters at understanding the darkest recesses of human nature. They knew how to accumulate vast wealth by playing on human foibles like master violinists are able to draw out the limits of sound from their instruments.

These guys sure know how to play suckers. They are the true artists of our modern society, yet they are destined to remain anonymous and unfeted(except by me).

I would like to see one dragged out into the noonday sun though, so I could have a good look. Their prey like "Dumpy" here in the article are all too apparent, surrounding us in everyday life, but they themselves remain hidden away in might buildings in great cities, unseen.
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Old 07-22-2008, 03:16 PM   #72
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I don't know if the industry needs more regulation or not... it could be self-correcting, at least to some degree
It won't ever self correct if everyone else has to keep paying to bail out all the ones who get their bad decisions "self-corrected" into crisis.

As long as we keep privatizing gains and socializing losses, what incentive is there to not make reckless decisions about your money?
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Old 07-22-2008, 03:26 PM   #73
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Though there's some "bailing out" going on, both large and small, when someone is paying north of 20% interest on borrowed money, it's hard to have sympathy for the creditor's "losses". The interest rate should have more than covered the risk of loss.
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Old 07-22-2008, 03:49 PM   #74
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And no one seems interested that the profit of one must needs come at the expense of the other.
Why is one group deemed "smart" and the other "stupid"?
I just don't get it!
Let me try to explain this from my point of view. Any business dealing in America requires two willing parties. In this case the bank, and the home owner. If the bank holds a homeowner at gun-point to take a loan, it is called extortion. If the homeowner holds the banker at gun point for money, it is called robbery. In none of these cases were either of those things true.
You seem to be implying, that these people (homeowners) were not intelligent enough to know they were getting a bad deal, and because of that lack of intelligence, it is not their fault that they willingly agreed to such a contract. So now you want to introduce legislation so that no one can enter a bad deal ever again? How would such a system work? What group of people could possibly decide what is a "fair deal" for everyone? What is a good deal for me, may not be a good deal for my neighbor. That is why in the US we have the right to choose for ourselves, and suffer the consequences, good or bad, of our own decisions.
You seem to want very badly to create a utopian-like place where no one is even allowed the possibility of making a bad deal. The only way to do that, is to limit choice. Do you really believe that the US would be a better place if people are no longer allowed to make their own decisions, because they are just not smart enough? Who gets to make the call as to what is too risky for some, but not others? Do you see the point of where I am going with this? Part of the learning process is making bad decisions, and hopefully you learn from them, and do not make the same ones again. For most that I know, including myself, this is how we learn and become smarter. Some people will have to touch the metaphoric "stove" and get hurt to understand that it is hot and can burn them. It might sound creul, but in the long run, I think it is actually far more mercifull then allowing folks to continue on in ignorance.
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Old 07-22-2008, 03:51 PM   #75
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T The interest rate should have more than covered the risk of loss.
1. Bear Sterns
2. Indymac
3~ etc.

Never underestimate the power of stupid people in large groups.
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Old 07-22-2008, 03:53 PM   #76
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I read the article by Morgenson, watched the videos, read David Brooks' opinion on the article, and finally read through the posts on this thread. I spared myself the slog of reading through the article's comments section.

I feel compassion for Diane McLeod, and for the millions of other people just like her. It must be frightening to lose everything because of one's own foolishness. We cannot see the weight of that reality through a video or sense it through the reporter's words.

While I feel compassion for this woman, she alone bears responsibility for her situation. I honestly don't blame the credit card companies; they do what they do to increase profits for their shareholders. Without shareholders, the company collapses. If the company collapes, shareholders lose their money. Without credit companies, people who need money for unforeseen situations (emergency car repair, emergency dental work, etc.) can't get a legal loan. Credit card companies are supplying a product people demand.

Buyers of products are responsible for understanding what they are purchasing, and in accepting the terms of payment. Did Diane McLeod understand the type of handbags she was purchasing? It seems so; but it also seems that she gave less consideration and thought to the credit product she was purchasing than the handbags.

When the reporter, Morgenson, comments that people need credit cards to "make ends meet," I wonder why those "ends" are so far apart. People who need credit cards to "make ends meet" are different from people who use credit cards to cover a temporary cash shortage due to an emergency situation. The former are those for whom credit card debt is a way of life.

DH and I have financial independence. We are completely debt-free; no mortage, no car payments, no credit card debt. And while I feel good about that, I also remember what it was like to be ass-deep in debt. I never want to be in that place again. So I can't bring myself to sneer at Diane McLeod. She is a foolish woman, and she's likely very frightened.
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Old 07-22-2008, 03:55 PM   #77
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cut her at least that slack. That is "all I ask".
I'm getting too old ...

When I executed my first mortgage/note, I had to have 20% down (no exceptions). This was in the early '70's.

There was no such thing as PMI (I had to laugh when I first read about it).

Had no credit cards until the mid '70's, after being married, owning my own home, and being on my own. I'll admit that I ran into "trouble" early on. Did not understand that CC's actually represented money (duh) and had to be repaid.

While I can easily "condem" the women in the article, I won't. I'll admit that the "temptation" in the financial markets compared to many years ago are quite different. It's very easy to get into trouble, very quickly, in today's "mindset".

Sometimes "progress" is not necessarily good.

Oh BTW, my last mortgage/note on the home we built (our current home in retirement) had a "down payment" of over 50%. 30 year mortgage/note at 6.875%. We paid it off in 5.5 years (I know, that's another thread ). And yes, we are completly debt-free.

- Ron
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Old 07-22-2008, 04:01 PM   #78
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Old 07-22-2008, 04:06 PM   #79
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Old 07-22-2008, 04:13 PM   #80
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But the man with the gun gets hung.....
The man with the briefcase gets "bailed out!"
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