Bankrupting America

[Dinner]

Originally posted by Aeson
When I was 15 or 16 yo I was playing a game of horse with my brothers. I hit a shot from out on the street, over the telephone wires... the younger of my brothers bet me $100 billion that I couldn't make the shot again. I shot again... nothing but net.

I think this constitutes a "level 3" asset. What I was thinking is I can incorporate, go to the Fed, get $30 billion using my brother's bet as collateral, loan out $29 billion to anyone with a pulse, offer an IPO of 49% of the company, pay myself $100 million bonus for increasing revenue, then fire myself, with a generous severance package of course...

Take all my money and buy PUTs on my company.

What do you think?

Now there is a budding capitalist if I ever saw one.

[LordShiva]

Have you ever seen one?

[Rufus T. Firefly]

Originally posted by Spiffor
I mean, if you have no money and must choose between borrowing and stealing for survival, I understand the use of a credit card. But if you're middle class, I fail to see any benefit of going in debt to buy consumer goods...

Actually, it's being middle class that justifies this; certainly I've done it. Sometimes, you want the good now, for whatever reason -- the old one died, it's Christmas, you're having houseguests, whatever. Yes, my grandparents and even my parents would have chosen to do without until they had saved up the money for it; but if I have a stable financial situation and can see how I'm going to pay off the debt -- which is more likely if I'm middle class -- then why not? Used that way, credit card debt is no different from a car loan or home mortgage.

[The Mad Monk]

Credit cards also provide theft and fraud protection (ironic, hmm?), and are the most convenient form of "currency" available when ordering online -- or anywhere else, for that matter.

I have three cards, and carry a zero balance at all times because I always pay off at the end of the month. I never put anything on a card I can't cover, I'll do without if I can't.

I haven't had hard cash in my wallet at any time in the past month.

[Spiffor]

Originally posted by Rufus T. Firefly
Used that way, credit card debt is no different from a car loan or home mortgage.

I disagree with it.

Home mortgage is an investment (at least if you're buying the home you're gonna live in), because you'll end up spending less money than if you rented all your life (it's especially good for old people, who can't increase their labour-based income, and are very vulnerable to rent hikes).

A car loan can also be an investment, if you need one to work and bring the bread home.

I wouldn't say the same of a reception with houseguests...

Credit cards also provide theft and fraud protection (ironic, hmm?), and are the most convenient form of "currency" available when ordering online -- or anywhere else, for that matter.

I have three cards, and carry a zero balance at all times because I always pay off at the end of the month. I never put anything on a card I can't cover, I'll do without if I can't.

I haven't had hard cash in my wallet at any time in the past month.

I don't see how it is different from debit cards, at least over here, they're just as convenient, but you get to spend what you do have, not what you should earn

[Patroklos]

Did you know that in the US the leading cause of bankruptcy is sickness?

Ohhhhh, fun with numbers!!!

Well Oerdin, it may be the #1 cause, but what percetage of the whole does it make? A majority? And how many of those poeple who get broadsided by medical bills are vulnerable to exactly that because of shoddy and frivolous financial practices in the first place? Exactly. Exceptions, the best case for internet arguements

Can we go ahead and say tough luck to people like the democratic poster boys owning two houses but no health insurance?

In any case, you know as well as me that the economic problems of the vast majoirty of Americans stems from them owning cars they can't afford and houses they can't afford, both filled with toys they can't aford. It is a cultural problem, and I think it has been proven quite clearly that only forced economic downturn will curb our addicition.

But please give me a good reason why a person who knowingly and willfully lives beyond their means should be able to walk away from their obligations? And furthermore, why others should have to pay for it?

[Wezil]

You apply the same standards to companies and shareholders Pat? ie. No gov bailouts for bad business (big or small)?

[Rufus T. Firefly]

Originally posted by Spiffor

I disagree with it.

Home mortgage is an investment (at least if you're buying the home you're gonna live in), because you'll end up spending less money than if you rented all your life (it's especially good for old people, who can't increase their labour-based income, and are very vulnerable to rent hikes).

A car loan can also be an investment, if you need one to work and bring the bread home.

I wouldn't say the same of a reception with houseguests...

That's only true if you define everything in strictly monetary terms. Let's say my mom decides to come for a last-minute visit, and our guestroom bed is crap. Time to buy a new bed! Is it an investment? Not in the sense that it will result in financial gain, no; but it will make Mom comfortable, keep peace in the family, and result in overall psychic and emotional well-being. So, sure, it's an investment.

[Patroklos]

You apply the same standards to companies and shareholders Pat? ie. No gov bailouts for bad business (big or small)?

In general, yes, I am against government bailout.

And while I have little sympathy for those who live beyond their means, I also have little sympathy for companies who give credit when they shouldn't. But in the end, the aribiter of what credit cards are used and how they used rests is the individual. You are responsible for your actions.

[Wezil]

Originally posted by Patroklos


In general, yes, I am against government bailout.

And while I have little sympathy for those who live beyond their means, I also have little sympathy for companies who give credit when they shouldn't. But in the end, the aribiter of what credit cards are used and how they used rests is the individual. You are responsible for your actions.

I wasn't challenging you so much as inquiring.

I'm a libertarian so I have some sympathy for the personal responsibility argument however it is common for people to oppose individual bailouts while simultaneously favouring corporate welfare.

Just checking your consistency.

[Arrian]

I have zero sympathy for the companies who have spent the last several months crying to Uncle Sammy about how they need handouts.

I have some, but limited sympathy for individuals who have lived beyond their means. Yes, there are those who get sick, and I feel for them, though one still must wonder why they had the credit card debt in the first place (pre-sickness... if it credit was used for medical expenses, that's another matter. Full sympathy from me there). But for every one of them, there are tons of perfectly healthy idiots who rack up credit card debt for no good reason. OMG I need that TV! I know some of them. It's their own ****ing fault.

-Arrian

[Arrian]

In the end, America is being bankrupted by a culture of spending beyond our means. This is pervasive. The government does it (ooooh, shiny fighter jets! :drool: ), corporations do it and individuals do it. We are financially dysfunctional.

Cue economists to tell me how the national and/or individual debt isn't a big deal and is actually a good thing. Fooey, I say! FOOEY!

-Arrian

[Patroklos]

In the end, America is being bankrupted by a culture of spending beyond our means. This is pervasive. The government does it (ooooh, shiny fighter jets! :drool: ), corporations do it and individuals do it. We are financially dysfunctional.

QFMFT!

[Aeson]

Only difference is the corporations get bailouts, little guys get rate hikes (from said corporations).

When I say bankrupting America, I don't mean bankrupting the little guys with too much debt. That was going to happen one way or another. This cycle of Fed rate cuts (and other handouts) to institutions, institutions that raise rates on debtors forcing defaults (and cut tens of thousands of jobs while still giving bonuses to their upper management), means our entire system is tanking with them.

The $ you have... It's worth ~80% what it was a year ago on the exchanges, and in many cases ~1/3rd what it was a decade ago when in comparison to commodities (oil, gold, food). That's ****ing insane. And they're trying to make it worse.

[Spiffor]

Originally posted by Aeson
And they're trying to make it worse.

More accurately, each one is trying to make the best of the situation for his own little ass, without thinking one moment about society in general. Invisible hand at work