Credit is finally available, but no one wants it

[Amputate Your Head]

Credit is finally available, but no one wants it - Aug 2010

FORTUNE -- Finally, nearly two years after they were bailed out by Congress, big banks are beginning to ease lending standards for individuals and small businesses. But it's not exactly having the reception many believed it would. Just when credit becomes more available, there's little evidence of a surge in demand for it. Banks also reported that they stopped cutting existing lines of credit for commercial and industrial firms for the first time since the Fed added the question in its survey in January 2009. And as for consumer loans, banks also reported easing standards for approving loans.

All this would typically be good news for businesses and consumers eager to borrow, but the Fed's report only highlights the depths of America's economic troubles. Credit is available, but demand remains flat.

This isn't all that surprising. The latest economic indicators paint a very exhausted consumer: In the years leading up to the financial crisis, he bought too much house and too many cars. He's in burn-out mode - more focused on either saving or paying down credit card debt than buying more appliances and gadgets. The amount consumers owed on their credit cards during the three months ending in June dropped to its lowest levels in more than eight years, indicating that cardholders continue to pay off balances in the uncertain economy, according to TransUnion's second quarter credit card statistics.

Perhaps what the Fed's quarterly report is really saying is this: There's a growing distaste for credit. The American consumer is the child who ate too much and spoiled his dinner. And even if you hand him his favorite meal on a silver platter, he's just not that hungry.

LINK


This is in line with what I've seen over the course of the last few years. Very few people even want credit of any kind any more, and the ones that do (the just-in-case people) are afraid to use it. It's an amazing by-product of great depression 2.0, but I wonder how long it will last. Perhaps this has a hand in why sales are down too. Tough to buy Internet porn with cash.

[dyna mo]

that's the best news i've read in a while, fuck the banks.

[Amputate Your Head]

Originally Posted by dyna mo

that's the best news i've read in a while, fuck the banks.

yeah, i read this as a "holy crap, this is awesome!" article myself as well.

[Amputate Your Head]

Bob: Hey Dave

Dave: Hey Bob...

Bob: Say Dave, I have some money, and you have some money, how about if you use my money instead of yours, then pay me back plus a fee

Dave: Why would I do that Bob?

Bob: Convenience.

Dave: Sounds good, where do I sign?

[BFT3K]

Good old Bob and Dave!

[Amputate Your Head]

there's some things money can't buy. for everything else, there's 29.9% interest.

[dyna mo]

are there really credit cards with that rate? 29.9%??

[Amputate Your Head]

Originally Posted by dyna mo

are there really credit cards with that rate? 29.9%??

i've seen BOA cards as high as 33%

[Vendzilla]

People are scared to buy, scared to borrow, scared to expand, they are cutting back.

[dyna mo]

Originally Posted by Amputate Your Head

i've seen BOA cards as high as 33%

fuck! the mafia has lower rates than that! and they loan cash mula!

[Juicy D. Links]

Originally Posted by Amputate Your Head

i've seen BOA cards as high as 33%

WOW.................you can get better rates from the loanshark at teh pub lololol

[PenisFace]

Originally Posted by Vendzilla

People are scared to buy, scared to borrow, scared to expand, they are cutting back.

This is good. This is very good. Living beyond their means is why all this shit happened in the first place.

[dyna mo]

Originally Posted by Vendzilla

People are scared to buy, scared to borrow, scared to expand, they are cutting back.

i think there's another group- people who say fuck that shit. if i can't pay cash for it, i'll fucking pass on it.

[Amputate Your Head]

yeah, you have people collecting stacks of credit cards, some better than others some not, but with rates even 20% on up, they miss a few payments, tack on some penalties & fees, and there ya go.... perfect money-making machine. Most will never pay that shit off, and the banks don't want you to. They want you making nice steady minimum monthly payments for life.

Now then, before someone jumps up with their hair on fire and shouts all about how "responsible users" this and "self-control" that and "you signed it" lecturing.... i understand there are people that manage their credit wisely, and some that even milk the system for their benefit. however..... as indicated by the economic septic tank we're standing in, there are vast numbers of people being victimized, manipulated, and bled dry by these banks.

[woj]

patience, give it some time, everyone is scared now so no one wants to expand now...

[kane]

Hopefully this will last.

I have a feeling though that right now people are just scared about their jobs and are worried to spend any kind of money. We will really see how people feel when the economy finally returns to normal and people are less worried. I have a feeling the will go right back to buying big ticket items that they can't afford so they will use credit to get them.

[Sid70]

Welcome to Ukraine.

[dyna mo]

Originally Posted by Amputate Your Head

yeah, you have people collecting stacks of credit cards, some better than others some not, but with rates even 20% on up, they miss a few payments, tack on some penalties & fees, and there ya go.... perfect money-making machine. Most will never pay that shit off, and the banks don't want you to. They want you making nice steady minimum monthly payments for life.

Now then, before someone jumps up with their hair on fire and shouts all about how "responsible users" this and "self-control" that and "you signed it" lecturing.... i understand there are people that manage their credit wisely, and some that even milk the system for their benefit. however..... as indicated by the economic septic tank we're standing in, there are vast numbers of people being victimized, manipulated, and bled dry by these banks.

you ever watch that frontline episode on the cc companies? it's an eyeopener.

http://www.pbs.org/wgbh/pages/frontline/shows/credit/

[woj]

Originally Posted by Amputate Your Head

there are vast numbers of people being victimized, manipulated, and bled dry by these banks.

it's only their own fault... the whole "banks are evil" bitching is no different than blaming fast food industry for obesity in the US... or calling "drugs are evil" because some idiot overdosed, or got behind the wheel and killed someone...people need to accept consequences of their own actions, instead of trying to find someone to blame for their misfortunes...

[IllTestYourGirls]

I hate credit, I hate credit cards but you can not be a victim when you voluntarily do things.

[Amputate Your Head]

Originally Posted by woj

it's only their own fault... the whole "banks are evil" bitching is no different than blaming fast food industry for obesity in the US... or calling "drugs are evil" because some idiot overdosed, or got behind the wheel and killed someone...people need to accept consequences of their own actions, instead of trying to find someone to blame for their misfortunes...

even cocaine doesn't carry the profits the banks see.

but I do agree about the responsible part to a degree. the important part is people are beginning to wake up and realize that endless credit maybe isn't such a good idea. (as evidenced by the article).

[dyna mo]

Originally Posted by woj

it's only their own fault... the whole "banks are evil" bitching is no different than blaming fast food industry for obesity in the US... or calling "drugs are evil" because some idiot overdosed, or got behind the wheel and killed someone...people need to accept consequences of their own actions, instead of trying to find someone to blame for their misfortunes...

that's not accurate at all. for instance, the fine print on the cc agreement, in that frontline episode i referenced earlier, there are cc co's attorneys who participated in writing it admitting they do not know what it all means. that's just one example.

both sides are responsible.

[PornMD]

I'm not sure it's all that people are scared to borrow. Keep in mind many people have likely out of necessity tried to get more credit in the past 2-3 years only to get declined and watch their credit score drop. It's not like everyone got a memo saying "Hey, banks and CC companies might not turn you down now if you apply for more credit." In fact just today I got the first CC preapproval junk in the mail in the past couple years.

[Amputate Your Head]

Originally Posted by PornMD

I'm not sure it's all that people are scared to borrow. Keep in mind many people have likely out of necessity tried to get more credit in the past 2-3 years only to get declined and watch their credit score drop. It's not like everyone got a memo saying "Hey, banks and CC companies might not turn you down now if you apply for more credit."

true dat, and lots of businesses went down in flames because of it. now they are dangling the carrot again.

[2012]

* no credit only cash accepted
* we also use an abacus to calculate totals
* you been here befaw ?

[IllTestYourGirls]

Originally Posted by dyna mo

that's not accurate at all. for instance, the fine print on the cc agreement, in that frontline episode i referenced earlier, there are cc co's attorneys who participated in writing it admitting they do not know what it all means. that's just one example.

both sides are responsible.

You mean like this?



Oh but thats right, we are FORCED to do the things these people want, where as I DO NOT NEED a credit card...

[dyna mo]

Originally Posted by Amputate Your Head

true dat, and lots of businesses went down in flames because of it. now they are dangling the carrot again.

that's one big reason why i am bootstrapping my new product myself. cash only. go slowly.

[Amputate Your Head]

Originally Posted by 2012

* no credit only cash accepted
* we also use an abacus to calculate totals
* you been here befaw ?

I deal regularly with at least a half dozen businesses around here that operate on cash-only basis. It might take you by surprise the first time you run into one, but if you adjust, adapt, overcome and are prepared and willing to operate in a cash environment, there really aren't any problems. I've been doing it for years. Vacations, airplanes, rental cars and all of the usual counter-arguments. Not using credit does not slow me down in the least.

[dyna mo]

Originally Posted by IllTestYourGirls

You mean like this?



Oh but thats right, we are FORCED to do the things these people want, where as I DO NOT NEED a credit card...

exfuckingactly, except for your final comment. we are all sheep to some degree, we generally do what the television tells us, and we all desire to keep up with the joneses.

[IllTestYourGirls]

The government should just make a law saying everyone needs to take out a loan or be fined. Problem solved.

[Amputate Your Head]

Originally Posted by IllTestYourGirls

The government should just make a law saying everyone needs to take out a loan or be fined. Problem solved.

the fine will be tacked on to your penalty loan principle, also with interest. sign here.

[Amputate Your Head]

Originally Posted by dyna mo

you ever watch that frontline episode on the cc companies? it's an eyeopener.

http://www.pbs.org/wgbh/pages/frontline/shows/credit/

nice link there

[dyna mo]

Originally Posted by Amputate Your Head

nice link there

i've found that frontline does a consistently good job of unbiased, investigative journalism.

[Amputate Your Head]

I know the banks are probably getting desperate for new victi, er.... customers because just last week I got a fresh pre-declined credit card offer in the snailbox. I've been off those lists for years.... this is the first one I've gotten since '07.

so it was back to the old standard reply..... take everything they sent, including the external envelope, shove it all inside the return prepaid envelope, fill up the rest with trash & rocks, and mail it back with a sticky note: "no thank you."

[IllTestYourGirls]

Originally Posted by Amputate Your Head

the fine will be tacked on to your penalty loan principle, also with interest. sign here.

sounds about right

[jimmy-3-way]

Originally Posted by Amputate Your Head

yeah, you have people collecting stacks of credit cards, some better than others some not, but with rates even 20% on up, they miss a few payments, tack on some penalties & fees, and there ya go.... perfect money-making machine. Most will never pay that shit off, and the banks don't want you to. They want you making nice steady minimum monthly payments for life.

Now then, before someone jumps up with their hair on fire and shouts all about how "responsible users" this and "self-control" that and "you signed it" lecturing.... i understand there are people that manage their credit wisely, and some that even milk the system for their benefit. however..... as indicated by the economic septic tank we're standing in, there are vast numbers of people being victimized, manipulated, and bled dry by these banks.

What are you talking about, everyone on GFY pays cash for everything.

Welcome to baller city.

[dyna mo]

i don't see how paying cash, living within one's means = baller status.

[woj]

Originally Posted by dyna mo

that's not accurate at all. for instance, the fine print on the cc agreement, in that frontline episode i referenced earlier, there are cc co's attorneys who participated in writing it admitting they do not know what it all means. that's just one example.

both sides are responsible.

If you don't understand something you should seek help of someone that does... if the rules are not clear, or you just don't understand how it works, I guess you shouldn't get involved? if you CHOOSE to proceed anyway and get burned, how can you blame the bank?

You go to a casino for example, and proceed to play craps without being familiar with all the rules and lose, the casino is to blame?

[dyna mo]

Originally Posted by woj

If you don't understand something you should seek help of someone that does... if the rules are not clear, or you just don't understand how it works, I guess you shouldn't get involved? if you CHOOSE to proceed anyway and get burned, how can you blame the bank?

You go to a casino for example, and proceed to play craps without being familiar with all the rules and lose, the casino is to blame?

that's a ridiculous statement. i don't need to understand how an internal combustion engine works to own/drive a car, but with your view, if the engine breaks down, i should.

[Amputate Your Head]

Originally Posted by dyna mo

that's a ridiculous statement. i don't need to understand how an internal combustion engine works to own/drive a car, but with your view, if the engine breaks down, i should.

there are manuals available at the library for every year, make & model, didn't you read them all and commit them to memory?

[Amputate Your Head]

Originally Posted by woj

If you don't understand something you should seek help of someone that does... if the rules are not clear, or you just don't understand how it works, I guess you shouldn't get involved? if you CHOOSE to proceed anyway and get burned, how can you blame the bank?

You go to a casino for example, and proceed to play craps without being familiar with all the rules and lose, the casino is to blame?

you do have a valid point, but it assumes the banks are on your side. they aren't.
the banks engineer their shit to maximize profit, which is never in the consumers best interest. add to that the fact that they are virtually unrestricted, can change the terms at will, and you get no say in the matter.... your point breaks down somewhat.

[woj]

Originally Posted by dyna mo

that's a ridiculous statement. i don't need to understand how an internal combustion engine works to own/drive a car, but with your view, if the engine breaks down, i should.

you still need to have some basic understanding of how it works, need to know how to drive it, need to to know how to maintain it, etc...

after 10k miles your engine fails because you failed to change the oil, then the car company is to blame because you bought a car and failed to familiarize yourself with the maintenance requirements?

[dyna mo]

Originally Posted by Amputate Your Head

you do have a valid point, but it assumes the banks are on your side. they aren't.
the banks engineer their shit to maximize profit, which is never in the consumers best interest. add to that the fact that they are virtually unrestricted, can change the terms at will, and you get no say in the matter.... your point breaks down somewhat.

the point erodes entirely when viewed from a sociological perspective as well. the simple fact is as i mentioned earlier, we all are sheep to some degree, if not a large degree. we are told to have a kitchen with all the appliances, 2 nice cars, 2.3 kids and keep up with the joneses. that lifestyle has typically been built on credit. the average price of a car/home refridgerator, television, etc., et al, on & on, is beyond the amount the typical person can pay cash for.

the system is predicated on those factors.

[SykkBoy]

Quite a few people I know got their limits cut when all of this was going down...the general consensus is "fuck you, you just cut down my limit, why would I go back to you?"

They're also seeing offers for credit increases, but also interest rate increases going along with them...so they're saying "no thanks"

[woj]

Originally Posted by Amputate Your Head

you do have a valid point, but it assumes the banks are on your side. they aren't.
the banks engineer their shit to maximize profit, which is never in the consumers best interest. add to that the fact that they are virtually unrestricted, can change the terms at will, and you get no say in the matter.... your point breaks down somewhat.

of course they are not on your side, it's a business, their goal is to make money...
they probably do push the legal limits, and milk their consumer's as much as they can get away with...
(not much different than what many porn paysites do with crossales, etc)

all along I'm just pointing out that if you choose to do business with them, you have to play by their rules... if you don't understand the rules and choose to do business with them anyway, it's only your own fault...

[Amputate Your Head]

Originally Posted by woj

of course they are not on your side, it's a business, their goal is to make money...
they probably do push the legal limits, and milk their consumer's as much as they can get away with...
(not much different than what many porn paysites do with crossales, etc)

all along I'm just pointing out that if you choose to do business with them, you have to play by their rules... if you don't understand the rules and choose to do business with them anyway, it's only your own fault...

that's the problem. often times, we have no idea what their rules are going to be from one week to the next. should you have to hire a lawyer before signing a credit agreement for a $500 limit gas card?

[dyna mo]

if that was the case, there would be no need for regulatory acts such as the dodd-frank banking regulation passed in july

http://www.journalofaccountancy.com/...p/20103108.htm

[The Heron]

People don't have basic financial skills so they have problems. You guys saying 'cash only' are about as stupid as the people that used credit without understanding it.
Using credit to get assets rather than liabilities is the reason it exists. Abusing credit to purchase liabilities without adequate cashflows to cover the costs are where people get into trouble it's not rocket science just common sense most people lack.

[Amputate Your Head]

the other problem woj, is that they advertise everywhere, tv for example, with images of baseball games and children and all that crap, but never warn of consequences, never recommend using credit responsibly... even beer commercials tell you to drink in moderation. the cc's only focus is to try to get you spend, spend, spend.

when was the last time you saw a CC commercial talking about financial responsibility?

the odds are stacked against you no matter how much you try to understand their fine print or their risks. there is so little to be gained, and so much to lose, when all that has to be done is simply don't accept their offers.

[woj]

Originally Posted by dyna mo

if that was the case, there would be no need for regulatory acts such as the dodd-frank banking regulation passed in july

http://www.journalofaccountancy.com/...p/20103108.htm

that won't change anything anyway, people will still live beyond their means, so they will still get fucked on fees/interest, and banks will still be evil...