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tangent4ronpaul
12-22-2008, 09:23 PM
Earlier tonight during a Congressional hearing called Economic Issues for a New Congress Elizabeth Warren who is a bankruptcy law professor at Harvard Law School laid out some of the root causes of this mess:

On average, there was a change in American behavior as to financial issues over the past 20 years.

20 years ago:
1 member of the household worked
10% of monthly income was put into savings
health care costs were half of what they are today
People didn't need to borrow to stay afloat
The contract on a credit card or mortgage was 1.5 pages

Today – and in particular in the past 4 years:
2 members of a household work
0% of monthly income is put into savings
health care costs have doubled from what they were 20 years ago
people have turned to borrowing in mass to keap their heads afloat.
The contract on a credit card or mortgage was 30 pages

So what caused this? A few things:

Usury caps went away. It used to be that banks had to obey usury rates set by the states, but a law was re-interpreted allowing a bank to set up shop anywhere in the US and charge the rates of that state. Now we do have a free market approach for banking in the US, but in this case it worked against the consumers and not for them. What happened is that Citibank (this example) went shopping around to different states and said “if you will raise your usury rate, we will move 7,000 jobs into your state and set up a HQ. That means tax revenue for you. They played states against each other to get the highest rate possible and rewarded the winning state. In this case the “winner” was South Dakota. Other credit card companies followed suite and moved to get the highest rates too. The free market was working – but for bank profits, not consumers.

Mortgage rates followed suite.

Then they bloated the contracts from the simple and straight forward 1.5 pages to 30 pages on average. NOTHING in those extra 28.5 pages was for the benefit of the consumer. It was there to kick in higher usury rates and impost fines – fines for going over your credit limit, fines for late payments, etc. It was these fines that a certain percentages of users landed every month that she refers to as the CC's “lottery tickets”. They were making more over these than everything else in the system.

Then they introduced the no money down mortgages that usually led to default and the bank keeping the money paid to date, as well as the house.

Anyway, between these banking practices, inflation and skyrocketing health care costs – well, that's where all the 10% put into saving, all the money from the second paycheck and the money needed to be borrowed to stay afloat went.

Great system – Eh? - and to add insult to injury Congress rewards them by taking a loan out against future tax revenue – ie: the bailout.

Anyway, C-SPAN should re-show the hearing or it may be available via streaming on their site. Her section is worth watching. Maybe someone will YouTube it.

-t

RSLudlum
12-22-2008, 09:31 PM
I just watched part of it and recognized her from one or maybe two documentaries I've seen before....I think one of the documentaries was about the Credit Card industry, and I can't quite pin down the other I've seen her featured in.

Her points very good along with the guy that spoke about the Smoot-Hawley tariff playing a major part in the Great Depression in essence protectionism can't be an option right now.

tangent4ronpaul
12-23-2008, 05:11 PM
Elizabeth Warren wants to hear from you:

COP.senate.gov

YouTube about it here:
http://www.youtube.com/watch?v=X-C4c2rGbIc

here's another about the coming collapse of the middle class from 10 months ago. It's a university lecture and runs an hour:
http://www.youtube.com/watch?v=akVL7QY0S8A


She wrote a book about this stuff back in 2003 with her daughter:
http://www.amazon.com/Two-Income-Trap-Elizabeth-Warren/dp/0465090907/ref=pd_lpo_k2_dp_k2a_2_txt/191-6894061-4071418?pf_rd_m=ATVPDKIKX0DER&pf_rd_s=lpo-top-stripe-2&pf_rd_r=062ZBYV9JTXMKK7ATS19&pf_rd_t=201&pf_rd_p=304485601&pf_rd_i=0465090826


And it looks like the FED paid attention - they just changed the rules on credit cards:

The Federal Reserve approved changes to rules covering consumer credit cards during today's Open Meeting. The changes protect consumers from unexpected interest charges and prohibit payment methods that charge unfair interest rates.

http://www.federalreserve.gov/newsevents/press/bcreg/20081218a.htm

http://c-span.org/Watch/watch.aspx?MediaId=Economy-R-13531

-t

mediahasyou
12-23-2008, 05:16 PM
see: http://www.amazon.com/Crash-Proof-Economic-Collapse-Sonberg/dp/0470043601

penguin
12-23-2008, 08:39 PM
Not sold yet, She is from Taxachusetts :mad: don't spend enough on school ?! She makes a great argument for more spending :eek:

surf
12-23-2008, 10:26 PM
it's all about interest rates. plain and simple, the Fed lowered interest rates to a point where savings is no longer rewarded or encouraged.

i ask anyone here why would you put your money in a savings account (at near zero) when your savings lose value relative to prices?

for a rainy day, of course, but it seems almost illogical to put away savings when everything you would use your savings for increases in price relative to when the savings were initiated.

WRellim
12-24-2008, 12:38 AM
Earlier tonight during a Congressional hearing called Economic Issues for a New Congress Elizabeth Warren who is a bankruptcy law professor at Harvard Law School laid out some of the root causes of this mess:

On average, there was a change in American behavior as to financial issues over the past 20 years.

20 years ago:
1 member of the household worked
10% of monthly income was put into savings
health care costs were half of what they are today
People didn't need to borrow to stay afloat
The contract on a credit card or mortgage was 1.5 pages

Today – and in particular in the past 4 years:
2 members of a household work
0% of monthly income is put into savings
health care costs have doubled from what they were 20 years ago
people have turned to borrowing in mass to keap their heads afloat.
The contract on a credit card or mortgage was 30 pages

So what caused this? A few things:

Usury caps went away. It used to be that banks had to obey usury rates set by the states, but a law was re-interpreted allowing a bank to set up shop anywhere in the US and charge the rates of that state. Now we do have a free market approach for banking in the US, but in this case it worked against the consumers and not for them. What happened is that Citibank (this example) went shopping around to different states and said “if you will raise your usury rate, we will move 7,000 jobs into your state and set up a HQ. That means tax revenue for you. They played states against each other to get the highest rate possible and rewarded the winning state. In this case the “winner” was South Dakota. Other credit card companies followed suite and moved to get the highest rates too. The free market was working – but for bank profits, not consumers.

Mortgage rates followed suite.

Then they bloated the contracts from the simple and straight forward 1.5 pages to 30 pages on average. NOTHING in those extra 28.5 pages was for the benefit of the consumer. It was there to kick in higher usury rates and impost fines – fines for going over your credit limit, fines for late payments, etc. It was these fines that a certain percentages of users landed every month that she refers to as the CC's “lottery tickets”. They were making more over these than everything else in the system.

Then they introduced the no money down mortgages that usually led to default and the bank keeping the money paid to date, as well as the house.

Anyway, between these banking practices, inflation and skyrocketing health care costs – well, that's where all the 10% put into saving, all the money from the second paycheck and the money needed to be borrowed to stay afloat went.

Great system – Eh? - and to add insult to injury Congress rewards them by taking a loan out against future tax revenue – ie: the bailout.

Anyway, C-SPAN should re-show the hearing or it may be available via streaming on their site. Her section is worth watching. Maybe someone will YouTube it.

-t

EW is pretty interesting, but as you noted, it was the changes in the banking laws (removal of usury and other restrictions) that fed the cycle.

But the ROOT of that, what was used as the reasoning behind the "driving need" to remove the usury laws (and change the other banking laws as well) was the massive inflation that followed Nixon's creation of the "Fiat" money system with the ending of the Gold Standard in fall of 1971 (i.e. the abrogation of the Bretton Woods system). The usury laws got overturned and/or rescinded in the late 1970's and early 1980's -- when the Fed policy was set to (what we would see now as) unbelievably high interest rates -- double digit inflation that went on for a couple of years.

Thus it all comes down once again, to the monetary system, and it's manipulation by the Federal Reserve to cover War Debts and Deficit Spending. (Nixon abandoned the Gold standard because of problems caused by the Vietnam War and LBJ's "Great Society" expansion of the Welfare state. Ergo the "safety net" that Elizabeth Warren thinks is so important is actually the ROOT of the problem rather than the solution... a damn shame she doesn't have a proper understanding of economics and monetary systems!)

WRellim
12-24-2008, 12:42 AM
Not sold yet, She is from Taxachusetts :mad: don't spend enough on school ?! She makes a great argument for more spending :eek:

She's a typical academic... and in a lot of ways no different than EVERY OTHER special interest group out there... they ALL want to believe their own little corner of the world is THE most important.

One should simply ask her if she is willing to take a pay cut (back to say a more appropriate wage that was present for academics in the 1950's or 1960's) in order to facilitate better access to college for kids... I'm certain she would balk at that.


Also, while her book on personal financial responsibility is good (IIRC it's entitled "All Your Worth") -- she has virtually no knowledge of economics (other than the typical "proto-keynsian-nonsense" that is supportive of "New Deal" type baloney.)

WRellim
12-24-2008, 12:48 AM
Elizabeth Warren wants to hear from you:

COP.senate.gov

YouTube about it here:
http://www.youtube.com/watch?v=X-C4c2rGbIc

here's another about the coming collapse of the middle class from 10 months ago. It's a university lecture and runs an hour:
http://www.youtube.com/watch?v=akVL7QY0S8A


She wrote a book about this stuff back in 2003 with her daughter:
http://www.amazon.com/Two-Income-Trap-Elizabeth-Warren/dp/0465090907/ref=pd_lpo_k2_dp_k2a_2_txt/191-6894061-4071418?pf_rd_m=ATVPDKIKX0DER&pf_rd_s=lpo-top-stripe-2&pf_rd_r=062ZBYV9JTXMKK7ATS19&pf_rd_t=201&pf_rd_p=304485601&pf_rd_i=0465090826


And it looks like the FED paid attention - they just changed the rules on credit cards:

The Federal Reserve approved changes to rules covering consumer credit cards during today's Open Meeting. The changes protect consumers from unexpected interest charges and prohibit payment methods that charge unfair interest rates.

http://www.federalreserve.gov/newsevents/press/bcreg/20081218a.htm

http://c-span.org/Watch/watch.aspx?MediaId=Economy-R-13531

-t

Actually those Credit Card rules changes were VERY minimal and have no "teeth" -- penalties are essential "a slap on the wrist" if they are broken -- and worse they don't even go into effect for another 18 months.

So essentially the Fed has told the CC industry they can/should continue to abuse their customers ...and get "all the blood they can" over the next 18 months (that's like telling a Dracula he has your permission to suck peoples' blood, as long as he STOPS at some point in the distant future.)

tangent4ronpaul
12-24-2008, 04:16 AM
Actually those Credit Card rules changes were VERY minimal and have no "teeth" -- penalties are essential "a slap on the wrist" if they are broken -- and worse they don't even go into effect for another 18 months.

So essentially the Fed has told the CC industry they can/should continue to abuse their customers ...and get "all the blood they can" over the next 18 months (that's like telling a Dracula he has your permission to suck peoples' blood, as long as he STOPS at some point in the distant future.)

hmmm... wonder if that means we actually have a date for when TSHTF is planned...

-t

liberteebell
12-24-2008, 06:53 AM
EW is pretty interesting, but as you noted, it was the changes in the banking laws (removal of usury and other restrictions) that fed the cycle.

But the ROOT of that, what was used as the reasoning behind the "driving need" to remove the usury laws (and change the other banking laws as well) was the massive inflation that followed Nixon's creation of the "Fiat" money system with the ending of the Gold Standard in fall of 1971 (i.e. the abrogation of the Bretton Woods system). The usury laws got overturned and/or rescinded in the late 1970's and early 1980's -- when the Fed policy was set to (what we would see now as) unbelievably high interest rates -- double digit inflation that went on for a couple of years.

Thus it all comes down once again, to the monetary system, and it's manipulation by the Federal Reserve to cover War Debts and Deficit Spending. (Nixon abandoned the Gold standard because of problems caused by the Vietnam War and LBJ's "Great Society" expansion of the Welfare state. Ergo the "safety net" that Elizabeth Warren thinks is so important is actually the ROOT of the problem rather than the solution... a damn shame she doesn't have a proper understanding of economics and monetary systems!)


All roads lead to the monetary system. :mad: