MetaFilter posts tagged with Credit

free as in beer money

kliuless — Fri, 25 Sep 2009 03:33:40 -0800

Illustrating the cause of, and solution to, too much debt: *ahem*

In a sleepy European holiday resort town in a depressed economy and therefore no visitors, there is great excitement when a wealthy Russian guest appears in the local hotel reception, announces that he intends to stay for an extended period and places a €100 note on the counter as surety while he demands to be shown the available rooms. While he is being shown the room, the hotelier takes the €100 note round to his butcher, who is pressing for payment. The butcher in turn pays his wholesaler who, in turn, pays his farmer supplier. The farmer takes the note round to his favourite “good time girl” to whom he owes €100 for services rendered. She, in turn, rushes round to the hotel to settle her bill for rooms provided on credit. In the meantime, the Russian returns to the lobby, announces that no rooms are satisfactory, takes back his €100 note and leaves, never to be seen again. No new money has been introduced into the local economy, but everyone’s debts have been settled.

which leads us to The Future of Global Finance by liaquat ahamed:

It has long been recognized that the global financial structure — built as it is around the dollar as the world’s reserve currency — has a fundamental design flaw that makes it inherently unstable. The problem was first identified back in the early 1960s by the Belgian-American economist Robert Triffin, in “Gold and the Dollar Crisis.” Writing about Europe’s accumulation of dollars, he argued that the system carried the seeds of its own destruction. Foreigners could acquire dollars only if the United States ran current account deficits — that is, spent more than it earned. But lending money to someone who lives beyond his means has obvious dangers, and the same is true of countries. Thus, the American deficits necessary to supply dollars to the world for international transactions simultaneously undermined confidence in the currency. It was only a matter of time, Triffin predicted, before the system would be hit by a crisis...

note this isn't about the crisis just past so much as it is the perpetuation of a system -- prone to boom and bust -- requiring ever greater ~~innovation~~ swathes of the world's population going into debt (servitude). as bsetser writes: "borrowing by U.S. households cannot be the main source of global demand growth in the future." it just so happens that it was borrowed in a currency that the federal reserve can print and that the rest of the world has bought into (predicated implicitly upon future productivity...) so i've been reading God and Gold by walter russell mead [a favourite of SDB] and was struck by the passages on the legacy of the bank of england:

Britain fought a series of wars with France for a century and a quarter. France was a far larger and wealthier foe - the strongest power on the continent. The conflicts repeatedly left France financially exhausted and bankrupt. Britain's debts mounted astronomically as we have seen, but Britain went from one peak of economic and financial strength to ever higher peaks after each conflict. The secret financial weapon was public credit and the Bank of England which managed the debt. A million pounds were borrowed in 1692 to fight the French. By the time Louis XIV died, the debt was over 50£ million. The War of the Austrian Succession pushed the debt to 140£ million. It was almost 250£ million by the end of the wars that included the American Revolution, and 800£ million by the time Napoleon was safely ensconced on St. Helena. These were HUGE sums. They have been calculated as 222% of GDP after the American Revolution, and 268% of GDP at their peak in 1822. Mead explains how the Bank helped finance these wars. It sold government bonds that became assets in private hands and facilitated the development of the financial system that aided commerce. Influential people came to rely on government bonds and Bank notes and Bank shares for income and liquid wealth. The nation's civil and business leaders thus quickly had a stake in the success of the new monarch, William III, who had recently chased James II from the throne. "Government debt, historically a source of weakness, had been transformed into an instrument of strength." Alexander Hamilton copied the English financial system, and the young United States enjoyed similar financial and economic success.

now, not everyone was happy, but it's worked more or less over the centuries and, depending on how you're counting, we're apparently on version 3.0 (BW2 edition) of central bank mediated finance. yet while obama seems unable to, as schama puts it, "make – as American history yearns for him to do – money moral again," perhaps mead is on to something when he concludes that...

Lula is right: the global crisis emerged from a system built, with all its many flaws, by blue-eyed palefaces. But if countries like Brazil can stick with their own versions of Dutch finance, the future of the system will increasingly be shaped by people who look more like Lula—and the palefaces are going to have to run hard to keep up.

afterall, as lula sez, "when my presidency ends, I will go back to my home industrial city town, 800 meters from my local trade union that projected me my political life. And if I fail, when I go back to my hometown, it's going to take another century for another worker, another member of the working class to reach the presidency, because they're going to say that the workers do not have the competency to run a country."

"...for the scientific community, the most critical organ of the incentive system is the cycle of credit."

iamkimiam — Thu, 03 Sep 2009 23:11:04 -0800

Just how credible is Wikipedia? While some have tested this empirically, others have chosen more dubious methodology. For a site that gives no credit to its post authors, one wonders, why even bother?

Debt, slavery, and violence in history

languagehat — Sun, 23 Aug 2009 07:31:45 -0800

Debt: The first five thousand years. Anarchist anthropologist David Graeber (previously) writes about "debt and debt money in human history" in Eurozine. Lots of thought-provoking stuff here; I'll put a sample in the extended description. (Via wood s lot.)

Commodity money, particularly in the form of gold and silver, is distinguished from credit money most of all by one spectacular feature: it can be stolen. Since an ingot of gold or silver is an object without a pedigree, throughout much of history bullion has served the same role as the contemporary drug dealer's suitcase full of dollar bills, as an object without a history that will be accepted in exchange for other valuables just about anywhere, with no questions asked. As a result, one can see the last 5 000 years of human history as the history of a kind of alternation. Credit systems seem to arise, and to become dominant, in periods of relative social peace, across networks of trust, whether created by states or, in most periods, transnational institutions, whilst precious metals replace them in periods characterised by widespread plunder. Predatory lending systems certainly exist at every period, but they seem to have had the most damaging effects in periods when money was most easily convertible into cash.

Protect Yourself, Your Family, Your Identity

netbros — Mon, 01 Jun 2009 11:42:49 -0800

The commercials are all over television — and they certainly are attention-grabbing. They’re the ones where the heavy, bald guy is sitting in his easy chair talking in a squeaky female voice about all the clothes he bought — including a bustier. Or the little old lady speaking with the gruff voice of a younger man about the sweet motorcycle she now owned. Identity theft is a serious crime — one that is occurring with an alarming frequency. The Identity Theft Manifesto explains how criminals get your personal info, and what you can do about it.

Should the Government Give You a Credit Card?

emjaybee — Mon, 25 May 2009 12:48:17 -0800

"In fact, while transactional credit provision is a perfectly good business, it might be reasonable for the state to offer basic transactional credit as a public good." Blogger Steve Randy Waldman has an idea that's so crazy it might work. He buried it in a nice wonky, obscure post about transactional and revolving credit, but now has been linked by Ezra Klein at his new WaPo blog. Will Metafilter heads explode?

You have to be rich to be poor

desjardins — Tue, 19 May 2009 08:38:57 -0800

The High Cost of Poverty : The Washington Post explores why the cost of living is proportionately higher in poor areas. Double Jeopardy: Why the Poor Pay More (pdf): a report on payday loans, the cost of homeownership, medical debt, and banking in poor communities.

Where did all the money go?

pharm — Fri, 20 Mar 2009 03:35:26 -0800

Where did all the money go? is just one of the enties to GOOD's financial crisis infographic competition. The winning entry (Part 1,Part 2) is excellent, but the economics geek in me liked the extra information on the nature of money in the first link.

That cost how much?

jourman2 — Wed, 28 Jan 2009 12:44:20 -0800

The True cost of credit. Via

Do They Know It's Christmastime At All?

fearfulsymmetry — Thu, 11 Dec 2008 07:22:42 -0800

Bleed The World

Tanta Vive!

mullacc — Mon, 01 Dec 2008 15:12:53 -0800

The Compleat ÜberNerd: a fascinating series of blog entries detailing the nitty-gritty behind the mortgage industry by Calculated Risk's "Tanta." If you're curious about automated underwriting systems or the ins and outs of mortgage servicing or if you just enjoy some Mortgage Pig Excel art, Tanta was the blogger for you. Tanta, otherwise known as Doris Dungey, passed away on Sunday morning (NYT obit, CR obit).

Special Bail Out Offer, No Payments Until January 20th

Xurando — Tue, 25 Nov 2008 15:21:25 -0800

Have we jumped over all the hurdles in our ongoing economic fiasco? Probably not, the next hurdle is Credit Cards. "More is coming, I’m sorry to say. Layoffs are being announced nationwide in the tens of thousands. As people begin to lose their jobs, they will not be able to pay their credit card bills either. And the banks will be back for more handouts."

Listen alla yall its an arbitrage

thandal — Tue, 04 Nov 2008 14:54:11 -0800

You know those exploitative 0% APR offers from the credit card companies? With careful work, some brave souls cash them out as interest free loans and invest it in high yield accounts -- but its not for the faint of heart, especially with the economic downturn.

Icesave closes its doors

Happy Dave — Wed, 08 Oct 2008 01:59:18 -0800

Icelandic internet bank Icesave has closed its doors. The Icelandic government has told the UK chancellor that it cannot pay back the money of UK depositors. With some 350,000 UK citizens investing over £4.5Bn, the Icelandic savings protection scheme has "no intention of honouring their obligations here," according to Chanceller Alistair Darling. There have been rumours of instability at Icesave since early this year. The British Government, on the same day as announcing a £50Bn 'partial nationalisation' of major British banks, has agreed "in these exceptional circumstances, we will stand behind those depositors so they can get their money back". Questions still abound however.

Paulson: Foreign Banks Can Use US Rescue Plan.

wallstreet1929 — Sun, 21 Sep 2008 10:30:45 -0800

Paulson: Foreign Banks Can Use US Rescue Plan. Treasury Fact Sheet, "broader eligibility" if Paulson decides. Pressure builds at Morgan, Goldman. You Decide (kinda), probably no one listens.

Legally Resetting your Credit History

Fuzzy Skinner — Fri, 25 Apr 2008 20:06:29 -0800

How to Lawfully Reset Your Credit History. A fascinating true story of how Max successfully deleted thousands of dollars of debt from his credit history. The follow-up, Why Max Won, has some interesting insight into removing emotion from the credit equation. (Previous Make Your Nut appearances on MetaFilter here and here.)

Big healthcare is watching.

uaudio — Sat, 19 Jan 2008 20:50:06 -0800

A new medical bill payment reporting system called MedFICO is said to be going live this summer. This system is being developed by the health care industry in an effort to judge a patient's ability to pay. Healthcare Analytics, a healthcare actuarial company, is developing the score in conjunction with Tenet Healthcare, credit scoring company Fair Issac, and venture capitalists. On one hand, it could lead to better and affordable pricing models based on ability to pay. On the other more likely and frightening hand, hospitals may deny your care based on previous inability to pay, pay on time, or keep medical billing errors off your record. After all, the corporate, for-profit hospitals have a responsibility to their shareholders. Federal law mandates that no hospital can deny your emergency care. But if you need to have a colonoscopy and have a few late payments to your allergist, will you now have to shop around for hospitals that are 'willing to take a chance' on you paying them?

What’s Behind Those Offers to Raise Credit Scores

Argyle — Sat, 19 Jan 2008 09:01:05 -0800

What’s Behind Those Offers to Raise Credit Scores - You've all heard the ads, here's how those companies try to raise your credit scores. The credit industry hates it, because it works, at least for now.

"The range of derivatives contracts is limited only by the imagination of man (or sometimes, so it seems, madmen)." -Warren Buffet

anotherpanacea — Wed, 02 Jan 2008 13:44:56 -0800

A primer on the global derivatives market, the City of London, and the credit crunch:

"In 2003 the total size of the world economy was $49,000,000,000,000. The total size of the derivatives being traded was $85,000,000,000,000. In other words, derivatives today are worth far, far more than the total economic activity of the planet. More than $1,000,000,000,000 of derivatives are bought and sold every day. Every single thing that can be traded through derivatives, is."

You're worth it.

four panels — Tue, 14 Aug 2007 12:33:40 -0800

Debtor Nation. The rising risks of the American Dream, on a borrowed dime.

Subprime contagion

wallstreet1929 — Sat, 11 Aug 2007 22:24:34 -0800

This isn't 1998. There's no model for what's happening now in the housing and mortgage industries. 116 mortgage lenders have imploded since 2006. 11 hedge funds have imploded in just the last couple months. Time to warm up the helicopters?

The Charge Of The Plastic Brigade

amyms — Wed, 24 Jan 2007 16:37:09 -0800

50 Fun Facts About Credit Cards. Historical tidbits and interesting explanations of the technology behind that plastic in your pocket.

Too Much Blood in my stool

b_thinky — Thu, 03 Aug 2006 14:02:01 -0800

TOO MUCH BLOOD IN MY STOOL! THIS COULD BE COLOGNE CANCER! (NSFW) Eddie Reedom's site, www.choppercarsfraud.com claims Josh "Chop" Towbin and Towbin Dodge (known for their silly infomercials and the A&E series King of Cars) defrauded him of $50m to $100m. Among the evidence is photos of his stool, and video of an unruly Australian Buddhist security guard who kicks Reedom's truck. While Reedom may seem a bit nuts, there are tens of millions of Americans with bad credit. If you're one of them, seek some good advice before signing up for any loan. Credit problems are enough to drive anyone insane.

Unpimp Your Credit Score, Say Yahhhh

poppo — Wed, 15 Mar 2006 06:57:12 -0800

In the last few years, Fair Isaacs, along with the FTC have made considerable effort in educating us in how our credit scores are derived. But is the whole system about to change? In a somewhat quiet AP story, the three major credit bureaus, Equifax, Transunion, and Experian, announced they had agreed on a new common formula for generating your credit scores: VantageScore. [more inside]

For anything but privacy, there's MasterCard

trondant — Thu, 02 Mar 2006 21:52:14 -0800

DHS monitors your credit card payments. (via)

Digital Age Fraud

RKB — Thu, 13 Oct 2005 20:04:55 -0800

Seen something like this on one of your credit or debit cards recently? 09/25 DIGITAL AGE 888-529-98 CYPRUS, SE $24.99 Join the crowd. You might remember something from earlier in the summer, when CardSystems Solutions reported a security breach that had gone on for months. Or maybe you remember a bit of more recent news, when "a California judge ruled Friday that Visa USA Inc. and MasterCard International Inc. don't have to send individual warnings to thousands of consumers whose personal account information was stolen during a high-tech heist uncovered earlier this year."

My family was hit on three different cards from three different banks in less than a week. Doesn't seem to matter if you ever used the card online or not. Any guesses where "Digital Age" is getting all these valid credit and debit card numbers? Anyone? So, please, check your statements and be prepared to cancel your card immediately if you've been hit, too. Nothing good will come of these criminals being able to make additional charges against your accounts, using different shell companies to hide themselves, continuing to do this sort of thing for years