milkchaser

Six Trends to Profit From

The problem is not credit, per se. We should all use as much credit as we possibly can afford. The problem is using credit unwisely (e.g. to buy a house that subsequently declines in value or to buy too much of something instantly consumed, like an expensive vacation). A country or company that does not wisely exploit its ability to borrow is leaving money on the table.

That said, $1.8 Trillion in debt in a single year that largely finances political pay-offs is a frightening example or irresponsible credit.


On May 31 04:40 PM Stomarkt wrote:

>
> Total credit market debt as a percentage of GDP has risen from 130%
> of GDP in 1952 to 350% of GDP today. The various bailout
> and stimulus schemes enacted in the last year will drive this percentage
> above 400% in the near future. When a country allows
> this much debt to accumulate versus its GDP, they have done something
> seriously wrong. The country’s politicians, business
> leaders, and citizens have all contributed to this disaster.
>
> I came across this interesting site..check it out url.moosaico.com/10424
> Econ & Finance Articles Updated Daily

Six Trends to Profit From

That would be "The Gods Must Be Crazy", I think.

Cycling is great, but I don't expect it to substitute for trucking and other transportation needs. Whenever I hear someone wax rhapsodic about the virtues of cycling, I picture a horde of cyclists strugglilng to carry tons of frozen McDonald's burgers and fries from warehouse to store -- each and every store -- twice a week. And another horde for Wendy's. And another horde for each grocery store. etc... And, of course, we'll all make several trips to and from the mall to bring back all of our stuff.

The notion that our society could function without lots and lots of fossil fueled vehicles is ridiculous fantasy. One can observe carless societies throughout the world. They are not productive.

On May 30 04:06 PM Jimbo wrote:

> Several years ago I saw a film based in South
> Africa: "The Gods must be Angry" I think was the title. The biggest
> laugh was when a housewife got in her car to drive about 50 feet
> to place a letter in her mailbox. She then returned her car to the
> garage.

Six Trends to Profit From

I will believe America will adopt such virtue (saving vs credit, solar vs fossil fuel, Prius vs gas guzzler, carrots vs coke) when I observe it.

Credit Card Cancer

Unable or unwilling?

On Mar 16 12:08 AM William Cowie wrote:
> Great article. Interesting how politicians of every stripe have become
> unable to grasp simple concepts!

Credit Card Cancer

There are those who regret this. I am not wise enough to know, but there is something to the argument that commodity based money preserves its value.


On Mar 16 03:02 PM timwalsh300 wrote:
> You all need to wake up and realize that we don't have a commodity
> system of money anymore.

Credit Card Cancer

One could argue that this printed money essentially devalues existing currency. Hence, it is not cost-free.


On Mar 16 03:09 PM timwalsh300 wrote:

> And yes, Peter, credit DOES come from thin air. Banks don't need
> deposits to make loans. They simply need to borrow reserves (which
> are printed "from thin air") from the Federal Reserve through the
> discount window. That's where all money is born. That's where people
> get reserves in the first place that they later deposit at the bank.
>
>
> It's frightening that you are a financial professional and have such
> a poor understanding of the money creation process.

Credit Card Cancer

Although I cannot disagree with the thrust of the argument, Mr. Schiff slightly overstates. Not all credit is bad. It is unwise to spend cash when credit is available and cheap. The float on my credit card is free (to me anyway) and that allows me to earn interest until the payment due date. Why forgo that float?

The credit card companies do not do this to lose money. They make money on the fees they charge the vendors. The vendors do not pay these fees to lose money. They prefer a sale to a non-sale and know that a credit card payment presents a low-risk loan.

Of course, not all credit card holders are creditworthy, and banks would do well to winnow the wheat from the chaff. That need not undermine the usefulness of responsible credit.

Home equity loans and other collateral-based loans are also not worrisome, assuming the collateral is sufficient and the borrower is worthy.

However, the massive borrowing by the US gov't is atrocious and frightening. It is foolish for the US gov't to forgo moderate borrowing when the rates are low and the capital is available. But there is nothing moderate about the Obama deficits.