Tuesday, February 24, 2009

Legal Thriller Author Unveils Legal Banking Scam

Paulson's Law is Appropriate Here: When Anything is Used to its Full Potential it will Break. The Sub-Prime Credit Card Market is About to Follow the Sub-Prime Housing Market..Breakable...and for this Same Reason

Julius Ceaser capped interest at 12%. Our founding fathers got into the act too. Thomas Jefferson, called banks, "more dangerous than a standing army." Andrew Jackson said it to their faces. He told a delegation of bankers they were a den of vipers and thieves. Throughout history, heads of state have heaped suspicion on the money changers.

Justification? Consider today's credit card market, It's a market consisting of 2 distinct and separate tiers: Prime-Timers, the 30-day interest-free loan Users, and the Sub-Primers, the debt rollover Users who pay only the minimum each month and, by letting credit balances accumulate, slowly string a noose around their own necks. And, yes, our altruistic banking industry would have all of us believe such usurious 18%-35% interest rates are fair to all.

Their constant campaign to promote this state as acceptable logic is laugh provoking. It's like fighting, and losing, a PR battle to Daffy Duck Their strategy? Simple! Get the Haves (the Prime-Timers) allied with them, then bludgeon Congress, with these allies' aid, into every sort of credit card industry protection possible. Then you fire at the Have-Nots (the Sub-Primers), those people who slip through the cracks. Charge them through the roof, up the nose, and out the wazoo. It all comes to big profits for the credit card issuers even though in its wake it creates a whirlpool of sucking debt, with no way to get out other than through inheritance, winning the lottery, bankruptcy, or suicide.

The average American household is now carrying credit card debt of over $10,000. Not enough? Now the credit card lenders are stalking the "fringes" of their Prime -Timer market too, Average late fee has jumped from $10 to $35 in just the past 10 years.

Russian Roulette, anyone? As a Prime-Timer you are urged to take out multiple cards. The more you take out, the more confusing. Some payment cycles are missed. Borderline late payments surface. And, then, voila, you "graduate," earn your entitlement to move into the Sub-Primer classification of borrower.

If you don't pay, they won't send two thugs named Guido and Vito to your house with a baseball bat to break your knee caps. All the same, the modern credit card market is like San Francisco sourdough. It grows and kneads in all directions. How do you protect yourself? Tight-reins restraint, leery caution, and lots of common sense.

This should logically begin with limiting the number of credit cards you carry. Become a grave dancer. Bury the unneeded.

70 comments:

Earl T. Clydson said...

Sadly this shows the path toward depression

Dana said...

My son who was newly married got shoved into the sub-prime class. It started out by his missing the deadline on a first payment. Then he slowly got dragged into paying minimums. The high interest rates are now killing him. I am so sick about this that it is almost killing me.

Bern said...

Straight to hell in a hand basket.
I never would have dreamed that a bubble bigger than the housing bubble would happen. It has, I guess. And when the credit card bubble explodes it could be even worse.

Anna G said...

They don't even stop at 35%. I know a man who got suddenly upped to 38%. They said he was a bad credit risk because a note he had co-signed with his son went sour. They didn't even check with him, and this was after he'd straightened the whole thing out.
Needless to say he was more than a little upset over this.

Jack Payne said...

Your outlook is really a "Downer," Earl. Sure hope you are wrong.

That's how they do it, Dana, it's a subtle maneuvering strategy.

Dolcett said...

Ever since the 1960's when credit cards first came into wide spread use I thought their overuse would lead to trouble. Now it looks like they will be a major contributor to this recession.

Ione Hesber said...

It looks like the credit card companies are going after young people in particular. They get them young, then get them to take out all kinds of cards they don't need and offer them provocative premiums to get in deep. I know a young man who took out his first card with the strict intention of paying every month on the first billing in order to avoid the interest. He got married, ended up with all kinds of extra cards he doesn't need, and is loaded down under a mountain of debt.

JulieFarber plus Daughter said...

I agree with Dana and Ione. My husband got caught up in too many cards and didn't keep up with the payments because he couldn't keep track of them all. The charges with all the heavy interest really mounted up fast. He put his foot down, paid them all off but one, and now keeps only that one and pays off completely each month on the first billing.

Lynn said...

Who doesn't have a horror story about credit cards? They are all around me.

Paul H said...

Rags to riches and back to rags again. With all that's going on with houses, and now credit cards, is there any hope? I'm down.

Swubird said...

Con Man:

All I can say my friend is that you have nailed it right on the barrel head. Credit should be treated like electricity. It's a wonderful force for good, but it can also kill.

Happy trails

Warren M said...

I think Earl said it all, short, sweet, and to the point. Good example is Bank of America. How is their Visa going to hold up when it is hit with tons of defaults from the newly unemployed, as well as the chronic sub-primers whom they always carry?

Terry said...

After one of your posts you said something like, follow your foe onto the battle field and bayonet all the wounded...why is it this reminds me of that?

Jack Payne said...

Sure don't blame your friend from being upset, Anna.

Sad to say, Dolcett, the credit card sub=-prime mess is so bad, and so big, that it may even dwarf the sub-prime mortgage mess once it comes to a head--still a ways off into the near future. Nobody talks about it (maybe they are afraid to), but, hang onto your seats when this finally explodes. It's going to rock the core of our banking system like it's never been rocked up to now.

Ione, I personally know that one of the primary marketing strategies of at least one of the major card issuers is to go after first time home buyers (mostly young people) with the thought that they will quickly get in "over their head" and become a sub-prime, pay-through-the-nose customer.

Jack Payne said...

Smart, Julie. Best way to fly.

Good analogy,Swu. Right on.

That's key, Warren. 2,000,000 forclosures in 2008, with 6,000,000 more expected by the end of this year. And, that's based on the ORIGINAL sub-primes. You ask how about the NEWLY unemployed, added to these rolls. Go figure. It is only going to exacerbate the problem many fold.

Robin Easton said...

Wow!! This post should be in every magazine, newspaper, written on every wall, buidling and tree. Dang, I'd have to say this is your best EVER! Man, it is SO good to have someone speak this so bluntly, honestly and insightfully. Double WOW! These things can be baaaad news. I see so many people drowning in credit card debt of hundres of thousands.

I LOVE these lines:

"...Charge them through the roof, up the nose, and out the wazoo." LOLOL!!! :) Love it Jack.

AND

"It all comes to big profits for the credit card issuers even though in its wake it creates a whirlpool of sucking debt, with no way to get out other than through inheritance, winning the lottery, bankruptcy, or suicide."

This is not only SO well written but it is REALY true. People commit suicide over credit card debt...or else robbery! The first may bring an end for the suicidee, but only the beginning of hell and grieving for fmaily and friends. And the second, robbery, unless you are a really good con artist, just gets you into deeper and deeper doo doo. (Not that I've had firsthand experience in this. LOL!!) :)

Our banking system really is a fraudulent system, beyond words.

Boy Jack, I applaud you for such shrewd insight and blunt talk. It's good to see it here.

Robin Easton said...

PS: I forgot to add that I am so glad you are blogging! You are THE best writer I've ever read. Tis true. Hugs, Robin

Gene Kranik said...

One down and two to go. Now that home mortgages are sinking us, added weight is the credit card dizziness, then there will be the extensions of unemploynent compensation. Who is going to pay for this?

McAlee said...

The way you explain it, as a two-tiered market, it makes perfect sense. I guess I will become a grave dancer, and do away with my surplus credit cards.

Thanks for the tip. Great post, again I must say this.

Warmer said...

Helpful pointers indeed. And good, revealing stuff to read, chew on, and absorb. Don't leave home without it.

Laura W said...

The credit card squeeze has to be one of the most vicious of them all.

Terry said...

Hey Jack, where have you been? You've never gone this long between posts before.

Ariel J said...

Are you sick, Jack? It's been a long time.

Lynn said...

Hey, Jack, where are you? We're starting to panic.

Ione Hesber said...

Are you giving up blogging? Please let us know. Your novel Six Hours Past Thursday is the best novel I have ever read. I learned more from it about how American business really operates than I ever did in all of college, and I was a business administration major. This is why I have been following your blog so closely. It has become highly addictive. I hope you are not sick.

Robin Easton said...

Hi dear Jack,

I know I already commented here but I just popped in to say "hi" for no other reason than I've been thinking about you. You don't need to visit me or do anything; this is just a "from the heart gesture" to say hi and letting you know you are thought of.

I am SO glad it is warming up here in NM, except the wind is stirring up all the desert-sand and juniper pollen. Horrible allergies this year for the first time.

You can delete this comment if you want as it doesn't obviously go with the post. :) :)

Sending you hugs from NM - your old stomping ground.

Robin

Magali said...

I'm finding this statement to be true in the case of Verizon and their unlimited Internet offer. Not only is it not unlimited, if you try to use it that way, they cut you off.

Mad Jack said...

I just tripped over a case of bourbon and discovered you blog. It is excellent!

Many years back I managed to accumulate $4000 in credit card debt. I paid it off, slowly, painfully. I've never gone down that alley again, but I almost got forced once. Here's what happened.

A major credit card company issued me a Visa, and in the fine print I discovered some confusion in the way the interest and fees were calculated. Brilliant me, instead of calling the company and canceling the card, I used the card and paid the balance off at the end of the month. So now there would be no interest and no charge, right? Wrong.

You see, the interest is calculated on the previous month's balance, but doesn't appear on an invoice until the following month. So, if the balance is $1000, interest might be $100 - but then next month you have a balance of $100, so interest is $10, which isn't billed until the following month... and you can never get out of debt. And yes, they bill you for ten cents of debt - but then they include a mandatory service fee of $25.

I lost my temper on the second invoice and threatened them with my lawyer and US Congress Critter. They relented, and I canceled the card. What can I say? I'm older and wiser.

So when my friends at Discover altered their agreement, I canceled Discover. I had some difficulty canceling the card, but finally managed to convince them that I really and truly did not want their excellent money pit.

Thanks for writing you blog. Please keep up the good work.

Dee said...

Jack I'm worried. Where the heck are you?

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omarmodesto said...

Mr. Payne. Still with us?

Vivienna said...

Be careful if dealing with these people as stated in my blog, i think they are the business scam

http://business-scam.blogspot.com/

Nardeeisms said...

Asking...Like everyone else...where is ya Jack? ~Nards

MEIFACTUM said...

I was asked to do due diligence about a guy called Andrew Steele-Smith also known as Andie. I spent 9 months checking this guy out and found out he was a major con man. he lied on his CV, claimed he was a professional triathlete, which was a lie, also he said he had a degree in economics ans an MBA, again all lies. Check out the web site someone has put up as a warning about this guy, www.andrewsteelesmith.com

John said...

It's sad that so many Americans these days have gotten into so much debt. It seems like American society is all about the appearance of wealth, rather than actually spending what you have. The government, in its free-wheeling spending and debt increasing budgets is not setting a good example either!

I've enjoyed reading your blog. Your posts are an interesting read! I'm a 3L at Barry Law in Orlando, and am a research assistant for Professor Leonard Birdsong. I would appreciate if you could visit his website: http://birdsongslaw.com

Thanks!

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