The TransUnion credit score people (I don’t like them either) reports that more than half of the folks who actually received mortgage modifications had fallen behind on their new and improved mortgage payments within 18 months.

TransUnion – being in the business of favoring consumer debt – laughably tried to spin this bad news in a positive way. It said that even these persistent mortgage deadbeats continued to pay on credit card and car debt they obtained after the modification. That shows – according to TransUnion – that these borrowers were able to handle new credit because of the mortgage modification.

Are you kidding me?

Why are these folks running up new debt anyway? Just because they can? Isn’t having to default on – then modify –  a mortgage sending an important signal about whether new debt for these people makes any sense at all?

Mortgage default is a financial felony. In comparison, credit card default is a misdemeanor. I am not encouraged by repeat felony offenders just because they commit fewer financial misdemeanors.

Here is a link to the article. 

According to the Fed’s data, a hypothetical family with median wealth had a net worth of $77,300 in 2010. In 2007, the median net worth was $126,400 in 2007. The bursting of the housing bubble caused 75% of this decline. There is lots of blame to go around for this. Congress and its “home ownership for all” mentality. Freddie and Fannie’s lack of reasonable underwriting standards. The big banks. And homeowners who became speculators and gamblers via the act of purchasing something that they could not afford if economic conditions changed.

There is more bad news: The percentage of families who save anything fell from 56.4% in 2007 to 52 percent in 2010. This is somewhat strange because total family savings actually increased. This can only mean that a minority of families (the smart and/or lucky few) are saving more while the “unsaving” majority is growing.

Another debt shift is a decrease in credit card debt which – sadly- has been more than offset by an increase in total student loan debt. Indeed, people now collectively owe more in education loans than for car loans. That’s a first. Can you say that many colleges and universities are run by greedy bastards? Even if you can’t, I can. GREEDY BASTARDS!

This net worth data will be meaningless to many Americans because they don’t know what their net worth is. They are probably afraid to calculate it because they are not comfortable working with negative numbers.

My advice to them is: (a) face your predicament with mindfulness; (b) save more; (c) spend less.

Duh.

Let’s get specific. Skip Starbucks. (Check – I go there only for free WiFi with an occasional small iced tea.) Cancel your cell phone data plan. (Check – I’m on Straight Talk at $30/month.) Wear the same outfits to work. (Check – My assistant can probably recite my complete wardrobe from memory.) Eat less. (Check – still Working on that.) Walk more. (Check – Lots of this.) Use cash. (Check minus – using debit card for most purchases to earn 3% checking interest.) Fire your “friends” who tempt you to live beyond your means. (Check – I’m now immune to this.)

Or not. Then you can remain one of the sad majority.

Here is a link to the Fed story.

Is there much hope for an economy that continues to be based on wanton consumption when events like this still happen?

These shoes are marketed specifically to provoke over-the-top consumer reactions. It’s like iPhone junkies on steroids.  This is the best news that Nike could ask for.

At some point (if it hasn’t happened already), the legions of low-rent lawyers will spring into action against Nike and the retailers for negligently marketing shoes in a manner likely to cause “rush the store” injuries to their pathetic clients.

Orlando police disperse rowdy sneaker seekers.

The President is a smart man. Why does he embarrass himself this way?

Colleges and universities raise their tuition much faster than the rate of inflation for two reasons. First, too many of their customers (students) don’t care enough about what it costs to go to college.  These students are receiving  gobs of loan money to pay those costs. The government makes students even less sensitive to college costs by guaranteeing the loans, thereby artificially maintaining low interest rates.

When buyers don’t much care about the cost of what they are purchasing, why should the sellers keep costs low? This econ 101 stuff.

The second reason that tuition increases are out of control is that universities continue to expand their bureaucracies. They seem more interested in cultural education than practical education. For example,  the  ”diversity and inclusion”  apparatus at many colleges is sucking huge amounts of money from the primary educational mission.

Here is one article that discusses this second point and yet a third reason why the President gets an F in tuition economics.  At the same time that the government is pushing too many students into college with cheap loans, it is requiring colleges to make sure that the costs of attending exceed the amount of money that can be borrowed.

What?

Read it for yourself:  Obama Fosters the Skyrocketing Tuition He Criticized.

First, the primary “benefit” – cash back rewards – is mythical because the cost of these rewards is passed on to the consumer through merchant fees.  This is why the credit card companies use every means (legal and illegal) possible to discourage the use of cash in retail shopping.

Second, the use of credit cards is accompanied with an unplanned spending premium.  Several studies have shown that consumers are willing to spend more for a product or service when using a credit card compared to a cash purchaser. The relative indifference to higher cost when using a credit card can easily trump any cash rewards.

More recent research casts further light on the issue. The Journal of Consumer Research has published a study entitled “Do Payment Mechanisms Change the Way Consumers View Products?”.  The authors conclude that paying with a credit card increases the desire to spend compared to the use of cash in an identical purchase situation.  This conclusion is supported by some interesting data from consumers themselves.  Consumers who pay with a credit card make a purchase decision based on their perception of superior product benefits rather than focusing on the product cost.  Conversely, a consumer who pays with cash is more likely to choose a product based on cost, even if that product offers inferior benefits.  Stated more succinctly, credit card spenders are more indifferent to cost compared to cash buyers.  (Here is a link to the study article.)

Some of you so-called “responsible” credit card users are now crying foul, thinking that this is just a research study that does not reflect the real world use of credit cards.

You would be wrong – again.

The Javelin Strategy & Research’s Online Retail Payments Forecast tells us what happened on Cyber Monday:

Frenzied purchasing periods such as Cyber Monday can cause consumers to throw cautionary spending patterns to the wind and take advantage of the “deal” phenomenon. Javelin’s study shows that consumers spend more money on a single online transaction using credit cards than when using other payment options, spending an average $82.10 with a major credit card versus $58.29 using a major debit card.

Credit card users spend more. It’s that clear and simple.

Credit card cheerleaders also like to argue that credit cards provide more protection against fraud.  Really? I was intrigued by this statement, also from the Javelin report:  ”As credit card fraud rates are higher than debit card fraud rates, consumers should set alerts and monitor their accounts carefully during this holiday period.”

‘Nuf said about that argument.

I like using my debit card, knowing that such use supports the 3% interest we receive from our rewards checking account.

Debit cards > credit cards. It’s science.

Twice in my life I made a deliberate effort to grab a Black Friday deal. The experiences were more tiring than rewarding.  The “deals” on televisions and other electronics are mostly on the low-end models. The best deals on the better products can be found closer to Christmas, not on Black Friday.

Nevertheless, people show up in droves.  I saw people camped out in tents in a Best Buy parking lot.  For the spenders among us, it is their Super Bowl. What does that say about them? Is this considered a sensible frugal activity? Or are these folks simply caught up in the marketing hype? I think the latter. They have been told that shopping at 4:00 AM is “fun.” So to them, it must be, whether they like it or not.

I’m not the only one who is disappointed in the increasing scope of the Black Friday National Holiday. Target is receiving push-back on its “open at midnight” plan, including from at least one employee.

This is Target’s lame response:

By opening at midnight, we are making it easier than ever to deliver on our guests’ wants and needs.

Really? Then why doesn’t Target have killer deals and open at midnight every Friday?   Was a petition filed by thousands of “guests” demanding – needing – midnight shopping privileges ON THANKSGIVING?

Sad.

The federal government has never accepted that all of its attempts to “rescue” the housing market are fruitless. Bad loans and unqualified homeowners are a sad fact of the real estate bubble. Nothing that Congress or the White House says or does can change that.

Actually, the White House probably does understand that. However, Obama and his team have been accurately labeled by most voters as economically incompetent. This is bad for them because election season is now upon us. It is time to buy some more votes, this time from “underwater” homeowners. According to the White House, these poor souls must be allowed to refinance their mortgages. The banks won’t do it and Congress won’t do it. So out come the “executive orders.”  Source: President Obama To Announce Major Revamp Of Home Lending Program, HARP.

This is so transparent. Don’t you agree?

Being underwater on your mortgage does not mean that you can’t afford your mortgage payments. It just means you aren’t highly motivated to make those payments. So this is really an effort by the Obama team to make the underwater homeowners feel less buyer’s remorse. They bought the wrong property at the wrong time and in the wrong place. It happens.

The Obama team should instead spend its time and resources prosecuting all of the bank fraud associated with stated income loans a/k/a “liars” loans that played a major role in the real estate bubble. Not even one lender or investment banker has been charged for their participation in this. To this extent, I agree with the Occupy Wall Street protesters.

After the much smaller savings and loan failures and scandals of the ’80′s, numerous criminal charges were brought, with great success. Why not now?

If you want a very clear explanation of how our government has failed to bring the Wall Street criminals to justice, listen to this report from NPR.  You will become angry. I did.