Tuesday, July 03, 2007

Democratization of Credit... and some Skinemax Talk

After the shitstorm of a recession this country has in '08 (I predict a recession like the one in the early '80s), there are going to be many changes in the credit industry. Rationale might enter the banking world once more. At Cornell, one of my economics professors talked about the democratization of credit that happened in the 1980's. This affected how loans were awarded, interest rates set, and everyone's favorite, how credit cards became ubiquitous. Here's a bunch of links: read here, a bit delusional here, enjoyed this here, good read here. This breaking down of barriers made a lot of loans available to people who previously would have been denied based on race, gender, etc etc. Yes, everyone should have been given a fair shake at opportunities at credit, but like one of these articles, I think the financial industry took it one step too far. Let's open the door to everyone and drown them in offers. No way would a bank want to push a line of credit with APR wildly higher than the overnight lending rate?!?!?! No, that's just hogwash.

Read this wonderful article in the NY Times and let me know if you think people have been properly educated about credit, debt, risk, etc. This is how we have gotten into this housing mess, too much debt on too little income (add to that free money with negative real interest rates, America's obsession with size, and fraud at all levels of the real estate industry). The money quote/item is this one:

"According to Mr. Morris, Mr. McKinnon said those troubles could vanish. Equitable would arrange for someone else to buy the house — temporarily, as it was explained to him. In return, Mr. Morris would receive $20,000 in cash and someone else would make monthly payments while he and his grandfather lived there for a year."

This guy then acted surprised that the company stripped away his equity and his house is now in danger again. He'd be a fool to pass on it he thought. Uhhh, if you see a $100 bill lying on the ground, don't bother picking it up, if it were real, it would be gone by the time you saw it. My question is "how do you fall behind in payments or not make ends meet when you get $20K in cash and don't have to pay any rent/mortgage? Stories like this are trickling out of the forest, and soon enough the MSM will have to pick up on it or they will be stampeded by the fools who did not read papers they signed and the jerkwads who chased them. I've got a solution for this though that will scare the bejeezus out of anyone afraid they can't take on a debt.

Let's bring back Debtor's Prisons. I'm serious. Is Suzy Spend-a-lot going to max her 3rd credit card out if she knows she has to do time in a prison if she does not pay? Not all bankruptcies are alike, so we'd set some guidelines up like bankruptcies due to medical bills/job loss are excluded (a decent chunk of BK). Maybe mix in some soft labor cleaning up beaches, parks, public grounds, working in schools, or working sanitation. Now maybe we could allow governments: local, state, Fed to bid on the debt to get use of the person while in jail. I am libertarian and dislike the idea of public funds going to a company that made a bad loan, but if we directly turn this govt money (tax) into a project for the good of all, it is a direct use of tax money. Like a reverse user fee. I'm grasping for straws here.

Let me get to Skinemax. I was checking some new Skinemax stuff out there, and it just wasn't that great. The girls were not spectacular, production quality was awful even if it was digital, and the acting was ten notches below Shannon Tweed in Scorned. The movies also use the same 4 girls. As a youth, I remember staying up til 1am to maybe see some '80s classics on late or catch a Tweed film. The problem might be the Internet making porn so easy to access, that those companies producing cheese movies just aren't trying anymore. Shame on you soft core producers.

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