Lots of cable TV shows carry “adult content” warnings in the opening credits, to prepare us for violence and adult themes. I think that “hazardous content” warnings need to used on some TV shows that feature people spending their money. Read more
After years of observation of American consumers, Mr. ToughMoneyLove some time ago arrived at the opinion that some folks just are not meant to be homeowners. This does not mean they are bad people or fundamentally undeserving. The fact is that some people lack the resources, judgement, or discipline to make good financial decisions or to fulfill all of the financial obligations associated with owning a home and paying on a mortgage. For them, it’s just not going to happen. Read more
With so much consumer and mortgage debt having been accumulated in the U.S. over the past 10-20 years, it was inevitable that those who have become addicted to credit would create a separate feel-good category that they like to call “good debt.” Student loans are often touted as being “good debt.” In this regard, Mr. ToughMoneyLove believes that our colleges and universities have not received enough of the blame for promoting student loans as “good debt’ and for making students and parents alike feel all warm and fuzzy about going off to college riding on a staggering pile of student loans. Read more
This has been a good news week for homeowners looking to re-finance their mortgage loan into a lower rate. Mortgage interest rates fell sharply this week following more rescue actions by the government. The average interest rate for a fixed 30-year mortgage loan dropped to under 6%, a seven week low. Mortgage loan re-financing activity has already picked up. Unfortunately, re-financing a mortgage loan also creates a substantial risk that the borrower will end up with a larger loan balance. Read more
Please Mr. Paulson – wake me out of this Bad Consumer Credit dream.
I almost fell out my chair this morning when I saw this headline from the Wall Street Journal: “New Facility Targets Consumer Lending.” It seems that the U.S. Treasury is starting its own clinic for consumer credit addicts. But instead of handing out Dave Ramsey books or some kind of credit methadone, this clinic will be distributing actual credit. Yep. $25-$100 billion of our tax dollars will be used to fund car loans, student loans, and credit card lending. Read more
The number of failing businesses and industries lining up for a Congressional bailout continues to grow. The newest money pigs are the home builders. Mr. ToughMoneyLove is not surprised but I am disgusted by this latest appeal for taxpayer intervention. Before I explain why, let’s review the specifics of the builders’ proposal which they call “Fix Housing First.” (Such a clever and patriotic way of saying “me first.” I wonder how much some genius PR firm was paid to think that phrase up. Weren’t we all supposed to learn in kindergarten that a “me first” attitude is impolite and selfish? The other pigs at the bailout trough have made it clear that principle and reason are not in play because we are talking about money – big money.) Read more
It’s becoming increasingly difficult to keep up with all of the “pity the broke people” stories being published in recent weeks. Almost as soon as I finished yesterday’s commentary on a deceptive sob story headline from the New York Times, I read yet another goofy piece published by CNNMoney. This article reminds us that foreclosure abatement programs are all the rage but sadly points out that unemployed homeowners with no incomes are not eligible to modify their mortgage loans. Really? Can this be true? Read more
When it comes to reporting on the U.S. economy, never let it be said that the media allows facts to get in the way of a good sob story. So it was today in yet another report in the New York Times. The Times has been running a series called “The Debt Trap” about “the surge in consumer debt and the lenders who made it possible.” Right away from the subtitle we see that the Times is blaming the “debt trap” on the lenders, not the borrowers. Read more
Barney Frank and his dysfunctional House Financial Services Committee held another hearing this week on the financial crisis. This one featured appearances by Paulson, Bernanke, and the other usual suspects who are commanding U.S.S. Bailout. In other words, many captains but still no navigator. Read more
While driving to work yesterday, I heard an interesting interview on the Fox Business Network. The discussion was focused on what the Fed would be doing in the coming months to address the multitude of economic problems that relate to monetary policies over which the Federal Reserve has some control.
Everyone in the discussion agreed that the Fed was between a rock and hard place in trying to concurrently deal with rising deficits, continued contraction of economic activity, and inflationary pressures. Read more