great way to boost economy: cancel all credit card debt . . .

[OneBlueSky]

another half-baked scheme from a thoroughly revolutionary perspective . . .

how about a massive, one-time-only cancellation of all credit card debt? . . . and a fresh start for everyone who's been suckered into a system with rates that can now rise to 30% or more? . . .

sure, a few banks would go under, but so what? . . . all that extra disposable income would give the economy one hell of a boost . . . and that boost could be channeled to instigate a REAL Manhattan Project for getting the country off the oil tit over the next decade (or two or three -- whatever it takes) . . . everyone wins except MBNA, Providian, and a few other assorted criminal enterprises masquerading as financial institutions . . .

this would be followed by new credit card rules that would, for example, limit each individual to two cards, only one of which could carry a balance . . . the second, for convenience use, must be paid off each month . . . if it's not, it can't be used again until it is . . . the credit limits would depend on each individual's financial situation . . . and rates would be pegged to the prime and strictly capped . . .

lose a few banks . . . gain a seriously goosed economy, elimination of usurious credit card practices and the resulting tyrany, and inauguration of a real energy policy with defined goals that don't revolve around fossil fuels . . .

like I said, just another half-baked scheme concocted in a moment of temporary insanity . . . but I, for one, happen like it . . . :)

[ewagner]

1. Or maybe

reinstate the tax deduction for CC interest paid.....like it used to be....

[Blue_In_AK]

49. I was just thinking about those "good old days" yesterday...

...when people were discussing the imminent demise of the home mortgage interest deduction. <<sigh>>

[bryant69]

2. Why don't we just seize the assets of the 250 richest people in America

Divide the money between the bottom 50% of wage earners in the united states. That would probably spur the economy. Why not?

Bryant
Check it out --> http://politicalcomment.blogspot.com

[tx_dem41]

7. You better slap the "sarcasm" tag on that post...

or you're going to get 50 posts agreeing with you. :)

[bryant69]

9. I guess you are right - it was intended as sarcasm, people.

[pisle]

45. Sarcasm - yes - but ...

As a concept, how could you rename it to sound just like "trickle down economics"?

Whatever ... For some strange reason your asset seizure sarcasm made trickle down come to mind --- "mandatory trickle-down economics"?

[Terry in Austin]

33. I agree! I agree! n/t

[eglide]

3. So

you know better than me how to manage my personal financial matters?
I don't think so.

[MadHound]

4. Sorry friend, but as much as I hate CCs and CC companies,

Your plan would be absolute disaster to this country and throw us into one hell of a recession, if not a depression. Right now there is aprox 3 trillion dollars in outstanding CC debt, and if we wiped this debt off the books, it would not only put many many banks, big and small, out of business, but many large and small businesses also. The disposable income that it generated would in no way shape or form make up for these staggering losses.

If you want to punish the CC companies, rather than forgive the debt, have every single card holder pay off their debt, and then cut up their cards and never, ever use a CC again. It would be gradual enough that it wouldn't wreck our economy, and targeted enough that it wouldn't take down everybody else with it.

[question everything]

41. And million of workers - who work in these banks - will lose

their jobs.

Plus, individuals will start piling on the debt, again, immediately.

[sweepster]

5. By doing so you would crash the stock market ...

and pensions plans would be destroyed.Millions of pension plans held by rich, poor and middle class, union, non union, white and blue collar people would go poof in the night.

[tx_dem41]

6. Short of unexpected hospital bills where you are not covered by..

insurance, how can you be suckered by a system where:

You know how much you make.
You know how much you are spending.
You SHOULD know how much you can afford (including planning for bad things such as unemployment).
And, you know how much interest rates can change.

How?

[bigscott]

12. this would piss me off

some of us have NO ( or little) credit card debt. I KNOW I am fortunate to be in the position to have very little credit card debt. I learned the hard way though - I got myself into a lot of debt and it took me a long time to get out and clean up my credit. Now that I own a home, car and some nice stuff - I feel like I actually EARNED it - why should others who run up 25,000 of credit card debt on a 15K salary be allowed to wipe that slate clean??? Last year one of my coworkers ran up 30,000 on his credit cards going on vacations and buying new floors, paying for his daughters wedding - and then declared bankruptcy!!! I was insane!!! If you get so far into debt because of circumstances you CANNOT CONTROL (medical bills come to mind) then I am all for Chapter 7. If you just want to have fun and not pay for it - I have a problem with that - sounds too much like this administration!:rant:

[tx_dem41]

17. Congrats for getting yourself back on even keel.

And I love your last line.

[ProfessorGAC]

21. You & Me! Spending Spree

Let's hurry and max out everything and take advantage of this windfall! Gee, that'd help the economy greatly too, right!

(Sarcasm over)
The Professor

[Wcross]

8. So reward those that live beyond their means?

What about those of us that sacrifice instant gratification and pay cash for things we want? Whats in it for us?
Also, I doubt any company would ever issue any type of credit again.

[maximovich]

23. A Pat on the Back for Self-Righteousness

You falsely assume those in debt are living beyond their means for? Self-Gratification? I'm sure there are plenty.

I know a few... guess how they voted? Republican. Interesting isn't it?

[tx_dem41]

24. Short of catastrophic hospital bills...I would call it a pat on the back..

for responsibility.

[maximovich]

25. sureeee... whatever

while Republicans steal billions for corporations. Responsible my ass.

[tx_dem41]

26. Spending beyond your means and then blaming someone else for it...

is wrong no matter how much money is involved. Why should I excuse someone for something because someone is doing it better than they are???

[Name removed]

31. Deleted message

Message removed by moderator. Click here to review the message board rules.

[tx_dem41]

36. Wow....quick with the assumptions yourself there.

I guess personal responsibility is only a Republican trait in your mind...sad that you cede that to the Republicans.

I took into account that catastrophic health bills were an exception and I will add long-term unemployment.

[Wcross]

39. "I guess personal responsibility is only a Republican trait " LOL

There is NO evidence of that. Look at our "President"! I guess when one runs out of logic they start the accusations? I agree with you Tx_dem41.

[tx_dem41]

40. Obviously so...

you ran out before your first post.

[Ladyhawk]

44. How about long term disability?

I've finally learned to live within my means, but I had to adjust my standard of living way down.

[maximovich]

52. These People Never Had to

Can't you tell? See how quick they are to judge those who have. They can't even imagine a scenario when folks have no other choice. Ivory towers laden with flowers.... It must be pretty where they are from.

[Ladyhawk]

54. Yeah. It wasn't easy to accept that I can't have certain things

like new shoes, new clothes, an occasional computer upgrade, etc. Try living on $812 a month, folks, and see if you accrue credit card debt while trying to learn to live within your means.

[Wcross]

27. If you have to borrow to meet current expenses......

...what would you call it? It is pretty simple really, if you spend more than you earn you are living beyond your means. You falsely assume these people are being financially responsible.
I can be self righteous as I want to be on this issue because I pay cash or do without. I have done without a lot of things I wanted due to this lifestyle. Now that you mention it, I do deserve a pat on the back for taking personal responsibility regarding my finances!

[Name removed]

34. Deleted message

Message removed by moderator. Click here to review the message board rules.

[tx_dem41]

37. I know you aren't responding to my post, but you made the same..

spurious accusation towards me in a similar post. Please check out my response #24, that you initially responded to, which started...

"Short of catastrophic hospital bills...."

I guess you just like to argue though.

[maximovich]

51. You Are Right

I wasn't responding to your post. "I guess you just like to argue though."

[Wcross]

38. We are discussing credit card debt, not medical debt.

Just what area do you live in where an ambulance will demand up-front payment by credit card?
I stand by my statement- if you have to borrow to meet your day to day living expenses you are living beyond your means. It isn't a matter of political leanings, it is a simple fact.

Who said anything about poor people being bad? I am sure there are plenty of people making a great living that are not being financially responsible.

[maximovich]

50. Imagine Not Having Money for a Medical Bill

You are aware that there are poor folks with no insurance, but seem to have plenty of access to credit cards? Stop acting stupid..."what area do you live in where an ambulance will demand up-front payment by credit card".

Poor people BAD... bad poor people.

[Wcross]

53. You are a very offensive person Maximovich.

Do you get off on abusing people who have an opinion that differs from your own?
The facts speak for themselves. Regardless of your economic status or what you purchase with your card, if you spend more than you can possibly pay back you are living beyond your means.

[newyawker99]

47. Hi maximovich!!

Welcome to DU!! :toast:

[HamdenRice]

10. You'd be surprised who holds that debt --maybe even YOU!

When I was in my Wall St phase, I worked on something called credit card backed receivable certificates.

Basically, credit card companies do not, at the end of the day, lend you the money you borrow through your credit card. They find it much more lucrative to be originators and packagers of that debt.

Periodically, the credit card companies take the debt that is owed them by card holders, package these debts in huge (many hundred million or billion) packages, and then sell those packages in bite sized pieced called asset backed securities.

You know who buys those securities? Pension funds, non-profits, mutual funds, and other institutional investors.

If you wiped out credit card debt, you would also wipe out a huge chunk of most peoples' pensions.

Not a good idea.

[ProfessorGAC]

28. I Think Insurance Firms Buy Most Of It, Hamden

There are limitations on how much of such debt pension funds and mutual funds can buy.

I don't believe there is any limit on how much of this debt insurance companies can buy, however. I think it's based solely on their estimates of gain and loss and how much tolerance they have for that sort of debt.

But, your point is well taken. The banks themselves only hold a fraction of that "note". So, the losses absorbed by such an amnesty would cover virtually the whole of the economy.

The Professor

[HamdenRice]

46. It's amazing how the risk can be sliced and diced ...

so that there are different classes of certificates with different amounts of risk, so that the least risky certificates can be classed as "investment grade" for various kinds of regulated institutional investors. The originators often kept the most risky certificates because the payoff could be staggering.

Insurance companies certainly take a big bite of this stuff. It's kind of funny that they almost always came in at the end, after the thing had been structured and other institutional investors lined up.

The originators treated the insurance companies like that little boy in the old breakfast cereal commercial: let's feed it to Mikey (State Farm, John Hancock, insert your insurance company name here___), he'll eat (buy) anything.

I think someone should do a study of just how much the outrageous premium escalation, eg for doctors' malpractice insurance, is driven by "frivolous lawsuits" and how much is driven by frivolous (ie idiotic) investing by insurance companies.

[TreasonousBastard]

55. Having worked for insurance companies...

for half my life, I can safely say that not much of your premium increases come from that.

State regulations often limit how much junk debt a company can buy, and well-managed companies generally stay away from it.

[SoCalDem]

48. "...asset backed securities..."... credit card debt is UNsecured credit

mortgages and car payments are asset-backed securities.. or what am I missing here?

[HamdenRice]

56. The asset is the debt not some tangible property ...

In other words, the word "asset" in asset backed security refers to the credit card debt or the car loan -- ie an intangible asset.

This is distinguished from junk bonds, which may not be secured by any specific asset, whether tangible or intangible.

[sweepster]

11. The same people who had the debt erased...

would go back to charging sad to say and have the same debts again in the future. (For the most part not all-I realise some people have unexpected catasphophes.)

When I see see people charging(not debit carding) their McDonalds happy meals and paying 18-25% it does not make sense. Just think a meal that keeps on giving.

[abluelady]

13. Wait a Minute, here

I charge almost everything, pay it off at the end of the month and get frequent flyer miles. Not everyone who uses their credit cards abuse them.

[sweepster]

16. I was refering to the people...

who only pay the minimum amount each month and go deeper and deeper into debt. I also try to pay off my cards each month. Sometimes I don't(unexpected big ticket auto/house repair etc) But i make sure I do after 2-3 months at most.

Good for you by paying off your cards each month. You are to be congratulated

[abluelady]

22. I hope you're getting frequent flyer miles too. :-)

[LynneSin]

14. Credit card users fall under 2 main groups

There are those who don't use their credit cards except emergencies and keep the balance paid off at all times so the CC companies aren't making much money off of them

Then there are those who have their credit cards maxed out to the debt and even if they cancel their credit card the CC Companies still make money because of interest rates.

So I'm not sure how this will affect the Credit Card companies

:shrug:

[ProfessorGAC]

19. I'm Group One, Sort Of

I use them, but not merely for emergencies, but as convenience cash. Not extremely often, but i will get something (like the new make-up valve for my hot water heat) on credit card, and then do e-banking to transfer funds from savings to the credit card and keep the balance at zero. Not so much an emergency purchase, but since i've never bought anything at this supply house, it was way more reliable than expecting them to take my check.

Also, i buy cigars by mail order. So, those go on the card each month. When the bill comes in, we pay it off.

But, we do keep our balances at zero, so i'd guess we fit into your first group.
The Professor

[dusty64]

15. I just took out a loan

from my credit union to consolidate my credit card debts. Most people have NO idea what is just around the corner and are in for a VERY rude awakening. The doubling of credit card payments and 30-70% increase in winter fuel bills is going to get extremely ugly. Those evil greedy banks can eat shit and die as far as I'm concerned.

[tx_dem41]

18. How about another scenario....

Don't run up big credit card debts. Short of something catastrophic, charge what you can afford.

The doubling of credit card payments is actually a bad deal for the credit card companies and good for consumers. In the long run, you'll pay less money.

[dusty64]

20. Yeah this

is true in the long run, but a payment of say $100 suddenly $200 is going to be a shocker. I'm convinced this "booming economy" and constant rises in consumer spending is majorly being funded by plastic. It sure is hell is NOT coming from increases in wages and salaries.

[Fescue4u]

29. Proably wouldnt do much for the economy of

"""sure, a few banks would go under, ""

The people who worked for those banks.

Hey Id love to screw the banks over as much as the next guy, but its proably not fair to put a couple million people in the banking industry out of work.

Not to mention the pensions, 401ks that go broke because they invest in "blue chip" banking stocks.

[Balbus]

30. Give me about a month's notice before this goes into effect...

And I'd be all for it!! :bounce:

[ComerPerro]

32. Fight Club, eh?

[newportdadde]

35. Lets reward people who make poor choices!

Barying medical expenses I do NOT feel sorry for people who have credit card debt. There are just so many people who buy things on credit that they 'need' and can't afford. Watch Suzie Orman and you will see some of these dumbasses. If you can't afford to pay it off at the end of the month with cash then DO NOT BUY IT! Wow what a concept!

I could tap 50k+ in credit card money right now if I wanted it but seeing as how we are raising 3 kids on one wage that means I have to do a very adult thing called practicing restraint. It means my wife can't walk into a store and drop 200 bucks on a name brand outfit. It means I can't get a new computer to replace my dinosaur. It means that new TV I want is going to have to wait awhile.

[stevietheman]

42. I might go along with cancelling accumulated interest above a reasonable..

percentage.... as this doesn't come from people living beyond their means, but rather banks taking advantage of their customers just to hike up their profit margins.

[pitohui]

43. that's a really stupid idea, but you know that right?

i assume this is just in the spirit of brain-storming but why such a giveaway to the rich, who can afford bigger credit lines & bigger credit balances, so that they'll get kicked back tens or maybe a hundred thousand dollars

you & i will get kicked a few hundred or a few thousand

the poor will get nothing as usual

yet the resulting collapse in the economy, because the promises of usa citizens to repay our bills can no longer be trusted, will fall hardest on the poor as usual

there is nothing wrong w. brain-storming many wild ideas but now that you've opened this one up to criticism, yeah, it stinks

i prefer a one-time emergency tax on all assets say on net worths above $2 million or even $200 million

that, and a return to a truly PROGRESSIVE tax plan, not the sneak death-by-cuts approach to flat tax we've seen as rich pay less & less & poor pay more

[Greyhound]

57. Here's a radical idea. How about we just re-institute the original

U.S. Constitution as it applies to the duties, restrictions, and intent of the founders regarding economics in these United States?
Imagine, usury would once again, be illegal. Privately owned banks would be dissolved and their assets freed. Interest would be outlawed and citizens could get loans to start businesses and create employment. The very concept of unearned income would be a bogey man we'd threaten bad children with. Corporations would be chartered for a specific purpose that, once achieved, would be dissolved. The insurance industry, along with their 25% vig, would cease to exist. Capitalism would, once again, be controlled by markets and supply and demand.
What was I thinking? :banghead:

[OneBlueSky]

58. as I said in the original post, it's a half-baked idea . . .

and not at all do-able . . . but the point I hoped would be raised has to do with finding some way to redistribute wealth downward after decades of watching it being redistributed upward (i.e. stolen) . . . alternative suggestions are certainly welcome . . .