Friday, December 01, 2006

Hey! It's December!

I watched a re-run of Frontline’s Secret History of Credit Cards on PBS last evening, and absorbed some distressing facts on how Americans use credit cards, and much more distressingly, how banks exploit credit consumers. “Exploit” is a pretty loaded word, but it fits. I would say that, as a capitalist, I’m somewhat conflicted about this exploitation, but I’m not. The principal of Caveat Emptor should apply here, in other words, an intelligent individual would avoid the exploiters and do business with banks that are on the up and up. But they’re all in the consumer exploitation business. When it comes to credit cards, the contract language banks provide you is so opaque and so lengthy and so fraught with legalese that no one, and I mean NO one, short of a contract law attorney, can understand the damned things. And nearly no one reads ‘em, either. According to Frontline, anyway, and I tend to believe the assertion because, well, I’ve never read mine.

Some “fun facts:”

145 million Americans carry credit cards

55 million pay off their balance in full every month

90 million Americans carry a balance. These folks are known as “revolvers.”

35 million of the revolvers make only the minimum payment every month.

The average balance…average…is $8,000.00. Per card.

And worst of all, there is nearly NO limit on the interest banks can charge on credit card accounts. You may thank the Supreme Court’s Marquette Bank decision, which effectively eliminated usury laws, for that. (Details here.)

What allowed Wriston to make good on his threat to leave New York was a little-noticed December 1978 Supreme Court ruling. The Marquette Bank opinion permitted national banks to export interest rates on consumer loans from the state where credit decisions were made to borrowers nationwide.

So by early 1980, with New York refusing to go along, Citibank set out on a search for new place to base its credit card division. The pickings were slim. Usury laws were still on the books in the vast majority of the states. And federal banking rules required that before banks could set up operations outside their home state, a formal invitation had to be issued by the legislature of the state they wanted to enter. Local bankers had prevented any state legislature from ever extending such an invitation.


In an effort to stimulate the local economy, South Dakota was in the midst of eliminating its usury laws. Mr. Wriston told Mr. Janklow that if South Dakota would quickly pass a bill inviting Citibank into the state, he would bring 400 jobs. To preempt concerns from local banks about new competition, Citibank also promised to open only "a limited" bank. "We'll put the facility in an inconvenient place for customers and we'll pay different interest rates," Mr. Wriston recalled telling Mr. Janklow. "All we want to do is use it to issue cards.''

I learned my own personal credit card lesson back in the early ‘70s, before the Marquette decision. I’ll not point fingers or anything, but I cut up three or four cards at that point in time and paid off the balances, slowly but surely. It took me over five years to pay the bastards off, and that was at extremely modest interest rates, compared to today. I’ve not paid a penny in interest since. Well, not entirely true. I’ve paid interest once or twice. But it’s REALLY a rare occurrence. I know one thing, though. I’m awfully damned glad I’m not in the same credit card debt situation today as I was back in ’72.

I know another thing, too. The banks need to clean up their act when it comes to credit cards. It’s way past time. If they refuse, then it’s time for the government to step in. As I said in the beginning, as a good capitalist I should be conflicted on this issue. But I’m not. Wrong is wrong. Period.

This is The Weather Channel…and this is The Weather Channel On Drugs So, I’m standing in the kitchen around 2030 hrs last evening, finishing up the dishes and just generally cleaning up. I have the Tee Vee tuned to the WX Channel, “Your Local on the 8s” comes on, and my head just whipped around. Nothing to see but the familiar blue screen with WX data, but what’s this? Pink Floyd’s “One of These Days?” Yes, it most certainly is! I’ll be damned…

You may have heard the song before, even if you’re not a Pink Floyd fan. For instance:

"One of These Days" is the song playing over the end credits of the Sopranos episode "The Fleshy Part of the Thigh".

"One of These Days" is featured in "The Lives of the Stars" episode of Carl Sagan's television documentary Cosmos.

And now The WX Channel. On drugs. A one time good deal, perhaps, or a momentary lapse of reason? Because the next and subsequent “Local on the 8s” had the usual innocuous, unidentifiable, guitar soft jazz background muzak music. I like Floyd better.

Speaking of weather…The storm that cut its teeth over the High Plains night before last through yesterday morning is kicking butt and taking names as it moves east and north. We only got a burst of bone-chilling cold and a dusting of snow, but the intersection of that cold front and moisture from the Gulf has dropped anywhere from eight to ten inches of snow on northern Oklahoma and southern Kansas. The St. Louis area was suffering from a pretty good ice storm, with the usual mass power outages ice storms bring. And it ain’t done yet. Not by a long shot. Look out, East Coast…here she comes!

It definitely could have been worse here on the High Plains.

When Terror Strikes… My propane tank went to “empty” overnight, as I strongly suspected it would. After all, our high yesterday was only 35 degrees and the low last night was in the mid-teens. In other words, maximum furnace run-time. The interior gauge LEDs indicate empty, but there’s probably a gallon or so left in the tank. So, at 0800 this morning I make the call to the propane company in order to get in at the front of today’s queue. The nice lady on the other end of the phone sez: “OK, I’ll tell Albert to stop by, but it’ll probably be late this afternoon or early tomorrow morning. He had to go to Roswell this morning to get the truck inspected.”


After I told her I was “on empty” she assured me Albert would be by this afternoon. Good thing we’re warming up today. My brand new little ceramic heater should be able to hold the heating front until the heavy artillery arrives.

Speaking of ceramic heaters... I bought a new one yesterday, the fourth such in six years time. The danged things seem to get less and less efficient as time goes on, until they reach the point where you generate more heat by passing gas than the heater does running on full-stroke. In other words, they wear out. Faster than I think is acceptable, but that’s just me. I switched brands this time, moving from a Holmes heater to one made by Honeywell. In China, of course. Don’t get me started on that subject.

Today’s Pic: The interior of one of our local watering holes: The bar in The Roosevelt Restaurant. This bar is a great example of those old mahogany bars one found throughout the US in the 19th century. This particular example was found in an old abandoned bar near Roswell, disassembled and trucked to Portales, where it was lovingly and beautifully restored. The Roosevelt is the one place in P-town where you can get a good single-malt or small-batch (read: boutique) bourbon. January, 2003.


  1. There used to be a great old bar in Logan, NM, called "Whiskey River Road to Ruin" with a beautiful bar similar to your picture. It was one of the few potty stops between Clovis and Springer. The Motherlode in RR has a pretty nice bar left over from their gambling days.

  2. Yep, my oldest brother got hammered with snow. He lives in Zion IL., just north of Chicago, 3 miles south of the WI. border. I plan on calling him tonight to see if he managed to shovel his way out.

    The picture of the bar reminds me of some of the London Pubs I managed to visit while I was in the UK.

  3. Credit cards.... guilty as charged (pun intended).... Well I stopped carrying 2 of my 4. I carry a balance on 3 of the 4. I usually manage to make more than the minimum payment every month. But yeah, I'm in the hole. Oh, I have other store revolving credit cards as well, but I rarely use those because.... like.... I hardly ever shop ;)

    It's been raining cats and dogs here for 24 hours. Cold front moving in today. High wind advisory until 5 a.m.

  4. Most of the time, the only card I use is my Navy Federal Card. It has a lower interest rate than most bank cards. Right now I have a higher balance than I like to carry because I bought stuff for the new house. The wiring and stuff to hook up my electricity was nearly $1000 by itself. I'm still below average, though.

    The worst of the weather missed us, too. It got down into the upper 20's, which for us is cold.

  5. Mr. Pennington,

    The best way to get rid of shady credit card schemes is to have the gummit stay out of it, IMHO.

    I rarely have disagreed with you, including your drug war post. Your "the government should step in on this one thing" (paraphrase)attitude is a drag. Let's look at an extreme but real example:

    Albuquerque in the last ten years or so has seen a boom in these businesses that will give you "payday loans." Float your paycheck now, for early cash. Interest rates if annualized in most cases are astronomical.

    This is a version of the (what did we call it in the Navy?) slush-fund(?) system where a guy who needs cash says to you, "lend me forty and I'll give you sixty back on payday." Sometimes he'd offer collateral, like a stereo system (boom box). This was illegal on the ship. I never partook but saw it all the time. Usually it was booze- or some other addiction-related.

    Albuquerque government's answer to this? They want to limit the number of "payday loan" establishments, especially near the Air Force base.

    WRONG! Outlawing the loan sharks' competition removes the competing loan structures. More legitimate lenders should step in, right next door to the payday loaners, selling cheaper money.

    Credit cards are similar. Bad lenders should be drummed out of business by competitors, not by government constraints.

    I don't know what to say to all those honest hard workers who get in over their heads. I've done it myself, but fought back. It's easy to say, but hey, "Don't spend money you don't have." Or at least, "Don't spend money you're not SURE you'll have shortly."

    I'm sure the government stepping in like Albuquerque's has will only make it worse, or at best keep the status quo.

  6. Ah, I have read the rest of the post. Keep warm, sir and let's feel for those poor folks in MO and points east. Dang, it's cold.

    In three weeks, the days start getting longer!

  7. Lou: "Old bars" are a hobby of mine, LOL! I luv 'em!

    Dale: You're right about the Brit pubs. Since we were in the UK at the same time, do you remember the wide-spread closing of small pubs throughout the country as the industry consolidated? TSMP and I thought, oh so briefly, about buying the furnishings, including the bar, in one of those small pubs and shipping them back to the US. Object being, of course, to open a real Brit pub somewhere. Another missed opportunity. :-)

    Laurie: Nice pun! And I see you missed the worst bits of that storm. Rain's better than ice, any day.

    Becky: Count your blessings, too (re: the WX)!

    Reese: I'm afraid we're gonna have to agree to disagree on this subject. Albuquerque isn't alone in taking action against predatory loan businesses, the Feds are acting too. Here's an interesting lil article on payday loans. I'll give you a brief snippet:

    The DOD study cited the experience of an Air Force E-4 who got a $500 payday loan that she agreed to pay back in two weeks—plus an interest payment of $100. Unfortunately, the senior airman took out another payday loan to cover the first and then took out multiple rollovers on each.

    Finally, to pay off the loans, she sought help from an installment loan company. That company loaned her $10,000, at a 50 percent annual interest rate. Her total cost finally to pay off the pair of payday loans was $12,750, and the total obligation on the installment loan was $15,000—all from borrowing an initial $500.

    This Senior Airman is guilty of stupidity, first and foremost. But it's immoral, and soon to be illegal, to prey upon the stupid. As it should be.

    When it comes to credit cards, my original point, admittedly not very well stated, was that banks should state their terms and conditions clearly and simply in their contracts. There's also a proposal being floated for a simple one-line sentence to be added to credit card statements: "It will take you XX years to pay off this balance if you choose to make only minimum monthly payments." That one sentence might be enough to make people think, but I doubt it.

    I still believe in Caveat Emptor, and I'm still closer to "laissez-faire" capitalism than I am to socialism. But I also believe in the barest of bare minimum standards.

  8. Mr. Pennington,

    The anecdote cited is tragic. Sad for the stupid person. Nevertheless an anecdotal example of stupidity. My argument is that the government shouldn't prevent a competitor from openning next door with a better deal.

    From the article:

    "The legislation would... require lenders to present service members with a clear explanation of loan rates and terms."

    Like you, in saying statements should be "clear and simple," that's all I'm fine with-- mandating clear communications.

    Again, the example given was one sad case. If the payday loan sharks weren't there, she'd have done the same thing with some slusher in her barracks. Macro-wise:
    I agree to disagree, but I'm clearly right!

    Ooh. Touchdown Navy.

    Yours, sir.


  9. Reese said: Ooh. Touchdown Navy.

    Well, at least we're on the same side where the football game is concerned!


    I don't really have a dog in this fight, but out of deference to SN2, Lex, and present company (of course!), I'm rooting for the Squid side. Start of the fourth, Navy's still up by seven.

  10. Risky call: Congrats to Navy! (2:10 to go, 26-7 Navy)

  11. Risky call: Congrats to Navy! (2:10 to go, 26-7 Navy)

  12. And Navy wins it for the 5th year in a row!


Just be polite... that's all I ask.