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Timothy Watson - body
- I'm guessing that you don't care too much for payday loans, either?
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Monday, December 24, 2007Old and Busted: Mortgage Crisis. New Hotness? Credit Card Crisis!This article from the Associated Press outlines the new credit crisis, this time of credit card debt. Nevermind the fearmongering from an industry smelling blood in the water after Bush's bailout of the mortgage lenders, this is one that just perplexes the hell out of me, because there are two immediate solutions. First, most people "defaulting" on credit cards and such get caught up in the 19.9% (or higher) cards. Rather than having over $900 million in defaults, why not just ratchet the rate down to something more affordable -- and cut off the credit lines. Second, completely recognizing there are irresponsible people out there, why dangle these 0% for a time interest rates that turn into 9.9% rates after one or two years? When I first went to college, there were specialty cards from MasterCard outlining some minuscule line of credit with a horrendous late fee of 24.9% if you paid late (on a 9.9% interest card). It struck me then as predatory. It strikes me now as predatory. Of course, let's keep in mind that the overall problem is not the credit industry per se. Credit has it's uses, as I used it to fix up the home I'm living in today. But the abuse of credit is something that exists beyond the ability of the credit industry to control. While the temptation of overextending credit exists for some firms, recognizing that it will always be those who either can't be trusted or overextend themselves that will overtax the system is key... ...when that occurs, blame the lender for jeopardizing the other 90% of borrowers who pay on time, borrow modestly, and stay ahead of the curve. In days past, government simply annulled what was owed, and did so at a rate of once every seven years -- at least during the medieval period. Other civilizations such as the Byzantine Empire managed from 1075 to 1204 to impale themselves on credit, monetary debasement, and vacillating leadership, going from the unrivaled power in the East to the humiliating Sack of Constantinople -- from which the Empire never recovered. Any comparision is hyperbole, of course. But it's important to recognize that some principles are indeed timeless. Reckless lending and reckless spending translate into reckless results. Let's hope the industry is wise enough to fix the problem, without the hand of government.
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JEFFERSONIAD POLL: Whom do you support for Virginia Attorney General?1) John Brownlee2) Ken Cuccinelli AboutShaunKenney.com is one of Virginia's oldest political blogs, focusing on the role of religion and politics in public life. Shaun Kenney, 30, lives in Fluvanna County, Virginia.ContactThe Jeffersoniad
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