bucfan64 309 Report Share Posted October 12, 2011 I'd say he slams the door and nails it shut, but regardless it is very interesting and enlightening. Well worth the time and highly recommended. http://market-ticker.org/akcs-www?post=195434 Quote Link to comment Share on other sites More sharing options...
Hacker 82 Report Share Posted October 12, 2011 Interesting opinions. I do find it surprising that he fails to note the liberalization of lending laws that now allow interest rates by financial institutions that would make a loan shark cringe. He also fails to mention the cultural trend of consumerism that made see it, like it, charge it the national norm. None are innocent in what has happened to us and our economy. While I for years have railed against the rent-to-own racket that afflicts lower income America, the game is just as rigged for the rest of us if we are addicted to the stuff. Quote Link to comment Share on other sites More sharing options...
Deleted Account 5,203 Report Share Posted October 12, 2011 I'd say he slams the door and nails it shut, but regardless it is very interesting and enlightening. Well worth the time and highly recommended. http://market-ticker.org/akcs-www?post=195434 I believe that this guy doesn't understand what he's talking about. Hacker's points above are valid criticisms, and I would add that the proposed fixes would only exacerbate the problem. What strikes me is the author's fundamental lack of understanding regarding sales transactions. He also is completely incorrect about ownership in the "TV transaction" example. The correct answer: buyer owns TV, buyer is responsible to bank for remaining $400. He also assumes that the bank is going to come back solely to get the TV, which would be true ONLY if the TV were used as collateral. At best, it's unclear; at worst, the bank's going to attach ANYTHING it can to get its $400. He's also woefully misguided if he thinks non-dischargability of student loans is the only reason in the drastic hike. Sure, it's ONE reason, but I shouldn't have to go into the litany of others. Suffice it to say that (1) increased college attendance, (2) additional professors to accomodate incoming students, (3) the rise in new curricula, and (4) the ever-widening divide in upper/lower class had something to do with it. Regarding homes, he completely ignores inflation (not coincidentally, as he mentioned it with student loans above). Also, he mentions that home quality in the 1960s was not as solid as today (plaster v. drywall), but completely ignores the increasing quality of home-building materials as having anything to do with the price increase. Again, he ignores many market forces outside what he attributes as the cause. He's laughably misguided on cell phones. He plucks the number $500 out of thin air as the cost of a cell phone, when simple mathematics proves him foolish. He's assuming people are too ignorant to take into account how much a phone will cost over the life of the plan. In addition, he ignores the negative consequences behind a pre-paid plan: (1) the cost per minute and per text is higher, (2) the penalties for going over minutes/texts are severe, and (3) the penalty for changing the plan is often not insignificant. And I only got 1/3 of the way through this ignorant drivel. Plus, I am ever-weary of an author that bolds/italicizes every important point he/she tries to make. Almost as if he/she doesn't firmly believe it, or is doubtful about it, and must validate its own worth in his/her eyes. This author suffered a fatal hit by the "life is only in black-and-white" truck. This is all common sense stuff: he's trying to play a fancy semantics game that makes him look like a misguided pseudo-politico. Quote Link to comment Share on other sites More sharing options...
Guest The Variable Report Share Posted October 12, 2011 While I for years have railed against the rent-to-own racket that afflicts lower income America, the game is just as rigged for the rest of us if we are addicted to the stuff. Thats our fault...not Wall Street's. If there is a market, people will cash in on it. Those protesters dont realize that Wall Street is a product of our materialism. Without us buying stuff we dont need, it would be a lot smaller. Quote Link to comment Share on other sites More sharing options...
BigBlueAlum 12 Report Share Posted October 12, 2011 I believe that this guy doesn't understand what he's talking about. Hacker's points above are valid criticisms, and I would add that the proposed fixes would only exacerbate the problem. What strikes me is the author's fundamental lack of understanding regarding sales transactions. He also is completely incorrect about ownership in the "TV transaction" example. The correct answer: buyer owns TV, buyer is responsible to bank for remaining $400. He also assumes that the bank is going to come back solely to get the TV, which would be true ONLY if the TV were used as collateral. At best, it's unclear; at worst, the bank's going to attach ANYTHING it can to get its $400. He's also woefully misguided if he thinks non-dischargability of student loans is the only reason in the drastic hike. Sure, it's ONE reason, but I shouldn't have to go into the litany of others. Suffice it to say that (1) increased college attendance, (2) additional professors to accomodate incoming students, (3) the rise in new curricula, and (4) the ever-widening divide in upper/lower class had something to do with it. Regarding homes, he completely ignores inflation (not coincidentally, as he mentioned it with student loans above). Also, he mentions that home quality in the 1960s was not as solid as today (plaster v. drywall), but completely ignores the increasing quality of home-building materials as having anything to do with the price increase. Again, he ignores many market forces outside what he attributes as the cause. He's laughably misguided on cell phones. He plucks the number $500 out of thin air as the cost of a cell phone, when simple mathematics proves him foolish. He's assuming people are too ignorant to take into account how much a phone will cost over the life of the plan. In addition, he ignores the negative consequences behind a pre-paid plan: (1) the cost per minute and per text is higher, (2) the penalties for going over minutes/texts are severe, and (3) the penalty for changing the plan is often not insignificant. And I only got 1/3 of the way through this ignorant drivel. Plus, I am ever-weary of an author that bolds/italicizes every important point he/she tries to make. Almost as if he/she doesn't firmly believe it, or is doubtful about it, and must validate its own worth in his/her eyes. This author suffered a fatal hit by the "life is only in black-and-white" truck. This is all common sense stuff: he's trying to play a fancy semantics game that makes him look like a misguided pseudo-politico. ^ This guy seems to get it... Quote Link to comment Share on other sites More sharing options...
Hacker 82 Report Share Posted October 12, 2011 (edited) Thats our fault...not Wall Street's. If there is a market, people will cash in on it.Those protesters dont realize that Wall Street is a product of our materialism. Without us buying stuff we dont need, it would be a lot smaller. First, I never put Wall Street into the discussion. Our materialism is exactly the issue. Once upon a time, there were laws that prohibited legitimate businesses from charging excessive interest on the money lent. Usually that rate would not be more than 10=12%. When the economy tanked in the 1980s you saw that change because the Fed jacked the Prime Interest rate to 15-20% to encourage saving. This was followed by the loosening of both federal and state lending regulations. Now it is not uncommon for folks to pay interest rates on credit cards as high as 30%. Where the author was correct was that this inflates the cost of products for the buyer, but not of the product. (Hence the similarity to the rent-to-own trap.) A major part of the current economic downturn are the checks coming due on the ready access to credit card debt. All those folks with tens of thousands in credit card debt are now in a position where they are not able to pay what they owe. One of the advantages of being older is that I learned the lesson about credit in the 1980s and early 1990s when the economy went south. Edited October 13, 2011 by Hacker Quote Link to comment Share on other sites More sharing options...
Guest The Variable Report Share Posted October 12, 2011 First, I never put Wall Street into the discussion. Our materialism is exactly the issue. Once upon a time, there were laws that prohibited legitimate businesses from charging excessive interest on the money lent. Usually that rate would not be more than 10=12%. When the economy tanked in the 1980s you saw that change because the Fed jacked the Prime Interest rate to 15-20% to encourage saving. This was followed by the loosening of both federal and state lending regulations. Now it is not uncommon for folks to pay interest rates on credit cards as high as 30%. Where the author was correct was that this inflates the cost of products for the buyer, but not of the product. (Hence the similarity to the rent-to-own trap.) A major part of the current economic downturn are the checks coming do on the ready access to credit card debt. All those folks with tens of thousands in credit card debt are now in a position where they are not able to pay what they owe. One of the advantages of being older is that I learned the lesson about credit in the 1980s and early 1990s when the economy went south. I was agreeing with you. One of the positives to listening to folks who are older than me is that I know about the 80's. Quote Link to comment Share on other sites More sharing options...
bucfan64 309 Author Report Share Posted October 13, 2011 When I say the guy "gets it," I am referring to his suggestion that the use of credit has increased demand for goods, this increase in demand therefore leads to an increase in the price of the good. Which explains the exhorbant cost of many products today. I understand that this alone is not the sole factor in the cost of goods, I hope that anyone could come to this conclusion. In regards to his cell phone example, the simple truth is that the cell phone industry is rapidly moving toward a prepaid product model, this is the current trend and companies are finding ways to be competitive. I admit that his example could have been better. In my opinion the purpose of the article is to point out the fact that financialization has led to drastic price increases because it has led to an increase in demand for goods. I didn't take time to critique each word and dissect the entire article as some of you have, I was only referring to the overall message of financialization. Quote Link to comment Share on other sites More sharing options...
bucfan64 309 Author Report Share Posted October 13, 2011 Our materialism is exactly the issue. Where the author was correct was that this inflates the cost of products for the buyer, but not of the product. (Hence the similarity to the rent-to-own trap.) A major part of the current economic downturn are the checks coming do on the ready access to credit card debt. All those folks with tens of thousands in credit card debt are now in a position where they are not able to pay what they owe. Agreed! Quote Link to comment Share on other sites More sharing options...
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