Wall Street Economic Meltdown

[kydonky]

The Great Economic Meltdown of 2008 was a result of incompetent CEO's in about every super bank and insurance carriers.

They ignored one of the most basic factors in business. It's not how much you charge its how much you collect.

In 2004 (+/-) Providian Insurance (a 100+ year old company based in Louisville Kentucky) hired a new CEO. He decided to deversify the company and start offering credit cards to high risk/poor credit customers.

In the annual meeting this was piched as a super opportunity. It was pointed out that these poor credit customers could be charged extreemly high fees and interest because they would not be able to obtain credit otherwise. Projections of profits were based on all of these fees and interest that would be charged on the loans and this CEO was hailed a hero.

This extreemly educated CEO forgot that they would have to collect on these loans. If someone defaults on loans in the past with reasonable terms, why would they honor/pay loans with inflated fees?

So this bussiness plan caught on. Soon Mortgage brokers were making loans to anyone that could sign their name and some that could make their mark on a contract. To heck with collateral security and performance history. We can offer 110% loans to high risk customers and just look at the number of new loans and the fees we can charge.

Providian Insurance was one of the first to fail. After 100+/- years of business they were bankrupt in a couple of short years after the expansion into high risk credit.

The morale of this story is that it was not necessarily Republicans or Democrats that started this economic mess it was greed at the highest level of businesses.

One bright spot in this mess is that Americans are paying down/off their debt at the fastest rate in history. Credit card debt is at its lowest in over 20+ years.

The economist are trying to say how this is hurting the current economy and is holding us back. I say a slower recovery is better and more secure. As Americans shed their debt burden to sustainable levels they will start spending again (this time with prudence I hope).

Look for the Economy to soar when people start spending their money on products and services instead of fees and interest payments.

[DJD]

You caught me off guard with this post.....

So your giving a pass to any gubment regulations? Any gubment mistakes? It's the greedy rich again huh? Next thing it will be my fault for not paying enough taxes.

If we have major unemployment how can credit card debt be at it's lowest? Where are they getting the money? Did they just default on debt and that isn't counted? Has the gubment bailed them out? If the poor folks or middle class who couldn't pay back their loans caused this mess then how can they pay back now?

Really? The economy is going to soar when people start spending money on products and services instead of fees and payments? For what? Credit cards and mortgages?

I don't see it like this at all. People not gubment will turn this economy around when they are comfortable with spending their money. I seriously doubt( I have no proof, just an opinion) folks have buckled down and started paying fees and payments and not spending elsewhere. They are not spending as much because they pay more for gas, food, services and so on. When it costs you $60-$100 bucks for every tank of gas that starts to cut into your fun money. Think about weekend trips towing the boat. It could cost 2-3 times as much now because of fuel costs so people don't go as much. When food costs more because it costs more to get it to the stores it cuts into your fun money. Airlines have loaded more fees with flying with luggage, shipping rates have fees like trip charges or fuel surcharges with package carriers. Buying anything with petroleum costs more...tires, roofs, construction material all contribute to people not having money to buy other stuff...... not that they are paying down debt.

I guess I see it as old habits are hard to break. If a person loves to spend spend spend and then gets bailed out or walks away from that debt then they will find a way to do it again.

[MrSplitshot]

If we have major unemployment how can credit card debt be at it's lowest? Where are they getting the money?

A lot of folks no longer have a mortgage (foreclosure/abandoned) and are paying rent instead.

They no longer have credit card debt (bankruptcy) or can't get credit to start with.

They are receiving government assistance in record numbers.

Those that aren't in that shape are tightened down, being more fiscally responsible, and only buying what they can afford to pay for / pay off, so as not to get in that shape...which is what those that got in that shape ought to have been doing in the first place.

The housing bubble bursting got us in to a lot of this mess. Blame that on the banks over-lending, blame that on people over-spending, whatever...but when you bought a house for $250K, expecting it to be worth $270K in the next year or so because that what had always happened (90's)....you took out an equity line to pay for some other crap you wanted to buy....and now the house is worth $175K IF you can sell it at all, and you're loaded up with 2 big mortgage payments....stuff starts becoming a problem quickly. Throw in a layoff, a pay reduction, or a loss of your job altogether and it's a disaster.

[kydonky]

You caught me off guard with this post.....

So your giving a pass to any gubment regulations? Any gubment mistakes? It's the greedy rich again huh? Next thing it will be my fault for not paying enough taxes.

If we have major unemployment how can credit card debt be at it's lowest? Where are they getting the money? Did they just default on debt and that isn't counted? Has the gubment bailed them out? If the poor folks or middle class who couldn't pay back their loans caused this mess then how can they pay back now?

Really? The economy is going to soar when people start spending money on products and services instead of fees and payments? For what? Credit cards and mortgages?

I don't see it like this at all. People not gubment will turn this economy around when they are comfortable with spending their money. I seriously doubt( I have no proof, just an opinion) folks have buckled down and started paying fees and payments and not spending elsewhere. They are not spending as much because they pay more for gas, food, services and so on. When it costs you $60-$100 bucks for every tank of gas that starts to cut into your fun money. Think about weekend trips towing the boat. It could cost 2-3 times as much now because of fuel costs so people don't go as much. When food costs more because it costs more to get it to the stores it cuts into your fun money. Airlines have loaded more fees with flying with luggage, shipping rates have fees like trip charges or fuel surcharges with package carriers. Buying anything with petroleum costs more...tires, roofs, construction material all contribute to people not having money to buy other stuff...... not that they are paying down debt.

I guess I see it as old habits are hard to break. If a person loves to spend spend spend and then gets bailed out or walks away from that debt then they will find a way to do it again.

You are really stretching arnt you. "all the greedy rich". You cannot understand simple diversity. There are many many many very greedy rich people just as there are many, many many ethical and benevolent rich people.

The credit card bebt reduction has been reported on about every financial news brodcast and the concern is that people are paying down debt instead of purchasing products and that this is having an effect on the economy. Although this may be true their position is that this is harmful to the economy and I do not agree with that and think this may be good for the economy in the long run.

The other factors are that credit has been tightened. Most credit cards slashed credit limits even on good customers and new cards are issued with more scrutiny. My credit limit on my card was slashed from $40,000 to $25,000 (my balance is about $360.00 this month and I will pay it in full when due).

I get it that you are anti gubment, anti regulation, anti union and pro oil, pro banking lobby, pro big bidness.

I was not talking about who did what, when or how, just made an obsevation that I thought might be a positive sign for things to come.

Your 3rd parargaph shows how you misunderstood the post.

"Really? The economy is going to soar when people start spending money on products and services instead of fees and payments? For what? Credit cards and mortgages?"

Credit cards and mortgages charge the fees and interests. They are not the products and sevices. I know that is hard to grasp and I will just leave it at that.

[kygorski]

I'mj sick and tired of this smaller government crap[not gubment]. Who's paying to fight fires in 5 western states, big business? Who's crying to uncle sugar to keep dredges running 24/7 on the mississioi, missouri, ohio rivers.Old folks! Who,s goingto bail out the crop insurance losses this year, the church? Did a private company open their cash drawers to pay for the bridge repairs on the ohio?The term " of the people, for the people, by the people" mean anything to you?

[DJD]

You are really stretching arnt you. "all the greedy rich". You cannot understand simple diversity. There are many many many very greedy rich people just as there are many, many many ethical and benevolent rich people.

The credit card bebt reduction has been reported on about every financial news brodcast and the concern is that people are paying down debt instead of purchasing products and that this is having an effect on the economy. Although this may be true their position is that this is harmful to the economy and I do not agree with that and think this may be good for the economy in the long run.

The other factors are that credit has been tightened. Most credit cards slashed credit limits even on good customers and new cards are issued with more scrutiny. My credit limit on my card was slashed from $40,000 to $25,000 (my balance is about $360.00 this month and I will pay it in full when due).

I get it that you are anti gubment, anti regulation, anti union and pro oil, pro banking lobby, pro big bidness.

I was not talking about who did what, when or how, just made an obsevation that I thought might be a positive sign for things to come.

Your 3rd parargaph shows how you misunderstood the post.

"Really? The economy is going to soar when people start spending money on products and services instead of fees and payments? For what? Credit cards and mortgages?"

Credit cards and mortgages charge the fees and interests. They are not the products and sevices. I know that is hard to grasp and I will just leave it at that.

Thanks for helping me understand I feel more uhhh liberated?? I don't believe you have me figured out as well as you believe....but as you say I'll leave it alone since we have beat this horse for years.

[DJD]

I'mj sick and tired of this smaller government crap[not gubment]. Who's paying to fight fires in 5 western states, big business? Who's crying to uncle sugar to keep dredges running 24/7 on the mississioi, missouri, ohio rivers.Old folks! Who,s goingto bail out the crop insurance losses this year, the church? Did a private company open their cash drawers to pay for the bridge repairs on the ohio?The term " of the people, for the people, by the people" mean anything to you?

So in your book the federal gubment takes care of everything? No restrictions? Someone cries for help and boom FEMA or whoever pops up and saves the day? Gotta also ask who screwed the pooch on many failed policies that got us in this mess? The church? Old folks? Private companies? It goes both ways.

Churches do alot of good prolly dollar for dollar better than any crooked gubment. I know of many private businesses that open their drawers to help local events, people and charities.

Yep, those terms mean alot to me and that's the problem. The people have become the lied to, cheated, mislead, used, over taxed and misrepresented. I don't give a rip what politicians say they will do because it's usually a lie. For the people?? Naw for the politicians is what it should read. I just don't jump on the gubment taking care of everything idea. I think it's a mistake.

[DJD]

You are really stretching arnt you. "all the greedy rich". You cannot understand simple diversity. There are many many many very greedy rich people just as there are many, many many ethical and benevolent rich people.

The credit card bebt reduction has been reported on about every financial news brodcast and the concern is that people are paying down debt instead of purchasing products and that this is having an effect on the economy. Although this may be true their position is that this is harmful to the economy and I do not agree with that and think this may be good for the economy in the long run.

The other factors are that credit has been tightened. Most credit cards slashed credit limits even on good customers and new cards are issued with more scrutiny. My credit limit on my card was slashed from $40,000 to $25,000 (my balance is about $360.00 this month and I will pay it in full when due).

I get it that you are anti gubment, anti regulation, anti union and pro oil, pro banking lobby, pro big bidness.

I was not talking about who did what, when or how, just made an obsevation that I thought might be a positive sign for things to come.

Your 3rd parargaph shows how you misunderstood the post.

"Really? The economy is going to soar when people start spending money on products and services instead of fees and payments? For what? Credit cards and mortgages?"

Credit cards and mortgages charge the fees and interests. They are not the products and sevices. I know that is hard to grasp and I will just leave it at that.

I tried to edit my post but my 30 minute window was up. Just wanted to add that your right I made a mistake on the 3rd paragraph....I totally understand how that works but just didn't type it correctly...I mean geez come on..

But seeing as we wanna be picky......I never said "all the greedy rich". You said that not me. So maybe I understand a little bit of the diversity thing you speak of??

We just see things differently. You like total gubment control, unions to take care of you, green energy even if it cost 10 times more, healthcare provided by gubment and no business making decisions without checking with Obama first. I just don't like to live that way. I guess the great news is the last few years have been the best times of your life!!! I'm happy for you.

[kydonky]

I tried to edit my post but my 30 minute window was up. Just wanted to add that your right I made a mistake on the 3rd paragraph....I totally understand how that works but just didn't type it correctly...I mean geez come on..

But seeing as we wanna be picky......I never said "all the greedy rich". You said that not me. So maybe I understand a little bit of the diversity thing you speak of??

We just see things differently. You like total gubment control, unions to take care of you, green energy even if it cost 10 times more, healthcare provided by gubment and no business making decisions without checking with Obama first. I just don't like to live that way. I guess the great news is the last few years have been the best times of your life!!! I'm happy for you.

DJD I really just don't see all of this all or nothing mind set. No government vs complete government control. Yes there is a lot of waste in government and not all programs work as they should but there are also lots and I may say a majority of government functions that make life in the USA safe, secure and prosperous. I just don't see that government involvement means oppression.

I am trying to keep Dems vs Repubs, Gov vs busis out of this. Business makes mistakes every day, so does govenment. Government is scrutinized over misteps to protect taxpayers. So when business makes bad decisons why not scrutinize them for the protection of shareholds, employees, customers and others?

Wallstreet made some very bad mistakes leading up to 2008. Wreckless stupid risks were taken with the motivation of greed. Providian insurance began as Capitol Holding and was a company that prospered for 100 years and survived the great depression. A financially sound company that was taken to bankruptcy in two short years over risky decisons. They were profitable in 2000,2001,2002. But someone thought that solid profits were not enough, so they took giant risks with stockholders money and lost about all.

So my advise in these posts is to pay off your creditcards and your debt as much as you can. Buy what you can afford and reserve credit for those purchases that require financing. House, car, new boat may require a loan not running credt card debt up on takeout Pizza. Heck even McDonalds takes mastercard these days.

I think a lot of people are seeing this and this is one of the reasons credit card debt is declining. The are buying the new TV,Ipad when they can afford them and not putting everything on the ole plastic.

[Mean Morone]

Obviously our constitution means nothing anymore. It doesn't do any good to argue this stuff. If you want the government to tax you, provide free education, free health care, force you to buy products that you may or may not want, free housing, free food, free money(welfare), free citizenship(just walk across the border), and want a government that continues to create laws, mandates(thousands more IRS agents to make you conform), and regulations to control the people(Rep Dingle said that about health care), then you should vote for the party that will do this to you. If you think it's good for our government to buy businesses and give part ownership to unions, then you should vote for the party that will do this to you(I think I'm buying Ford next time). If you think forced charity through taxation and redistribution of wealth is what our government should be doing, then you should vote for the party that will do these things to you. If you think oil and natural gas are evil, you should vote for the party that will keep us from getting at it. If you think windmills and inflating your tires is the way to go, then vote for the party that will push you in that direction. If you think it's ok for our government to spend billions on solar panels and then have the company go bankrupt, vote for the party that thinks this is a "good bet". Is it still charity if your government forces you to comply? If you think it is bad for our country to let people keep more of their own money, then you should vote for the party that will take more of your money. If you think that keeping info from the people on Fast and Furious where people actually died after talking about transparency is a good idea, then you should vote for the party that is currently doing that. If you think that taking 716 billion dollars out of Medicare to help get the health care mandate(tax, whats the difference it's still punishment) going and calling it a cut then saying it isn't a cut, then you should vote for the party that did that. If you think that taxing the providers will have no impact on cost to seniors, then vote for the party that has it in their current health care plan. If you think Government can spend your money better than you can(Bill Clinton in a speech in Michigan), then you should vote for the party that has no problem taking more. If you think the President was right when he said you can't raise taxes on anyone when the economy is so bad and then agree with him when he said we need to raise taxes on the wealthy even though the economy is just as bad if not worse, then you need to vote for him. If you think all our problems are because wealthy people don't pay enough, then vote for the party that thinks spending deeper in debt(I know, there are progressives in both parties) and taking from the wealthy is the way to go. If you think it's a good idea for the president to not go to Israel one time in his first term and then spend millions if not billions to help out the Palestinians, then you need to vote for our president. If you think that it doesn't matter if we have a budget or not, even though it is required, then please vote for the party that wont even bring one to be voted on. If you think that the only thing that needs to be cut is the military, then vote for the party that would love to see us have a diminished militarily. If you believe that "you didn't build that" then you need to vote for the party that believes that socialism is the way to go. If you believe that a president can just use executive order to get things done even though our congress has not passed laws, then you need to vote for Bush, or I mean BO. If you believe that the government can ignore congress and just control the people through regulation and mandates, then you need to vote for the party that excels at it. If you believe that it's ok to put communists in the White House in the form of advisers and Czars(can you believe that our country actually has Czars?), then vote for the current residents. If you still believe that our president doesn't have any socialist tendencies, then vote for him. If you think there is nothing wrong with socialism as long as we are the ones doing it, then vote for BO. If you think Government is the answer instead of the problem, then please vote for the party that excels in big government. If you think the constitution and the bill of rights are a collection of negative liberties that tell of what the government can't do to you instead of what the government can do for you, then please vote for the guy who believes that. If you believe that it says we should have freedom from religion instead of freedom of religion, please vote for the politicians that believes this to be true.

I'm sure there were plenty who were shaking you're heads in agreement as you were reading. You shouldn't be upset with any of this or have any problems with me. You are going to vote for the current administration and you should if you believe all of that(0r just part).

As for me, I'm voting for freedom and hope the progressives(both Dem and Rep), Marxists, socialists and communists don't have any power. I wont convince some of you that freedom is important and you can't convince me that socialism is important. Can't wait to vote in November!

[kydonky]

Obviously our constitution means nothing anymore. It doesn't do any good to argue this stuff. If you want the government to tax you, provide free education, free health care, force you to buy products that you may or may not want, free housing, free food, free money(welfare), free citizenship(just walk across the border), and want a government that continues to create laws, mandates(thousands more IRS agents to make you conform), and regulations to control the people(Rep Dingle said that about health care), then you should vote for the party that will do this to you. If you think it's good for our government to buy businesses and give part ownership to unions, then you should vote for the party that will do this to you(I think I'm buying Ford next time). If you think forced charity through taxation and redistribution of wealth is what our government should be doing, then you should vote for the party that will do these things to you. If you think oil and natural gas are evil, you should vote for the party that will keep us from getting at it. If you think windmills and inflating your tires is the way to go, then vote for the party that will push you in that direction. If you think it's ok for our government to spend billions on solar panels and then have the company go bankrupt, vote for the party that thinks this is a "good bet". Is it still charity if your government forces you to comply? If you think it is bad for our country to let people keep more of their own money, then you should vote for the party that will take more of your money. If you think that keeping info from the people on Fast and Furious where people actually died after talking about transparency is a good idea, then you should vote for the party that is currently doing that. If you think that taking 716 billion dollars out of Medicare to help get the health care mandate(tax, whats the difference it's still punishment) going and calling it a cut then saying it isn't a cut, then you should vote for the party that did that. If you think that taxing the providers will have no impact on cost to seniors, then vote for the party that has it in their current health care plan. If you think Government can spend your money better than you can(Bill Clinton in a speech in Michigan), then you should vote for the party that has no problem taking more. If you think the President was right when he said you can't raise taxes on anyone when the economy is so bad and then agree with him when he said we need to raise taxes on the wealthy even though the economy is just as bad if not worse, then you need to vote for him. If you think all our problems are because wealthy people don't pay enough, then vote for the party that thinks spending deeper in debt(I know, there are progressives in both parties) and taking from the wealthy is the way to go. If you think it's a good idea for the president to not go to Israel one time in his first term and then spend millions if not billions to help out the Palestinians, then you need to vote for our president. If you think that it doesn't matter if we have a budget or not, even though it is required, then please vote for the party that wont even bring one to be voted on. If you think that the only thing that needs to be cut is the military, then vote for the party that would love to see us have a diminished militarily. If you believe that "you didn't build that" then you need to vote for the party that believes that socialism is the way to go. If you believe that a president can just use executive order to get things done even though our congress has not passed laws, then you need to vote for Bush, or I mean BO. If you believe that the government can ignore congress and just control the people through regulation and mandates, then you need to vote for the party that excels at it. If you believe that it's ok to put communists in the White House in the form of advisers and Czars(can you believe that our country actually has Czars?), then vote for the current residents. If you still believe that our president doesn't have any socialist tendencies, then vote for him. If you think there is nothing wrong with socialism as long as we are the ones doing it, then vote for BO. If you think Government is the answer instead of the problem, then please vote for the party that excels in big government. If you think the constitution and the bill of rights are a collection of negative liberties that tell of what the government can't do to you instead of what the government can do for you, then please vote for the guy who believes that. If you believe that it says we should have freedom from religion instead of freedom of religion, please vote for the politicians that believes this to be true.



I'm sure there were plenty who were shaking you're heads in agreement as you were reading. You shouldn't be upset with any of this or have any problems with me. You are going to vote for the current administration and you should if you believe all of that(0r just part).

As for me, I'm voting for freedom and hope the progressives(both Dem and Rep), Marxists, socialists and communists don't have any power. I wont convince some of you that freedom is important and you can't convince me that socialism is important. Can't wait to vote in November!

I read the first two sentances of this post and gave up. Your fingers must be tiered.

[Mean Morone]

LOL, you are right. I had that in there too(fingers being tired)but deleted it. The sad thing is I could have gone on and on and on.