Caps on credit card rates?

[WWWTT]

Gosh..I would love to believe you, I really really would....it's just that....well...

...it gets better

http://articles.latimes.com/2008/oct/22/business/fi-chinacredit22

Ya buddy I checked your site and its almost three years old.

But thanks anyways buddy

WWWTT

[WWWTT]

No it's probably because she's a good client with a good job and isn't a big credit risk.

Hi Moon.I recently talked with my associate and she said that 6% was the first month late and the following months were at an even higher rate.She could still not give me more details as to how much higher of a rate because she pays her bills off immediately to avoid extra costs.

When I find out more I will post

WWWTT

[Sailor]

Anything to put a ding in the in the amount we get gouged on practically everything these days..

[bloodyminded]

Okay but take your agreement one step further and consider that when I say the problem is systemic I mean that it's cultural and goes from the very top to the very bottom. The problem was in the corporate and financial systems, its poor regulation, the government and all the way down to the rich and poor consumers alike. They were ALL greedy and they ALL got themselves into the mess together. A very few people probably made out like bandits with their bonuses, but they were no more greedy/incompetent than the rest of the country. They were simply in the right place at the right time.

Alright. I do in fact agree with you on every point. But I cannot but help maintain a slight difference in degree: between the wealthy greedy folks who understand finance and end up doing fine, and the the non-wealthy greedy folks who don't understand finance and end up not fine.

That's not an exoneration. To underline your point, I own a house; and I have never been wealthy. I could have bought a more expensive house...and I chose not to...precisely because I could imagine financial difficulties, and I don't much care for financial difficulties.

So in a sense, it really is about as simple as you say. No one "deserves" an eight hundred thousand dollar house. You can afford it or not; "deserves" is utterly irrelevant.

[Moonbox]

Alright. I do in fact agree with you on every point. But I cannot but help maintain a slight difference in degree: between the wealthy greedy folks who understand finance and end up doing fine, and the the non-wealthy greedy folks who don't understand finance and end up not fine.

I agree with you bloodyminded. There is a difference and the real tragedy of this is that the architects of the whole fiasco made out like bandits with little no consequences. The way executives are compensated makes it so that all they're concerned with is present and short term profit. They were getting rewarded on the volume of mortgages they could sell and thus it benefited them to qualify as many people as possible. There was really nothing illegal about this, although I'm sure a lot of them knew it wasn't a great idea long term.

In my mind, CEO's and executives need to be awarded on the LONG TERM performance of their business unit. They should have to make sure that their present strategies continue to benefit the company in the long run and their bonuses should be paid out over time or in deferred stock options. Shareholders NEED to make sure their executives have the long term health of a company in their best interest otherwise things like this will continue to happen. Any educated manager/business owner knows that employees will do what they're getting measured and paid for. If a CEO is measured on short term profit, that's what he'll be gunning for and damn the consequences. It's like that for any job from CEO down to general laborer.

If you want to prevent systemic greed and recklessness, you have to have systems in place to prevent it. Regulation of mortgage underwriting, such as in Canada, ensures that people can't buy houses they can't show they can afford. Intelligently designed performance incentives for CEO's and employees will ensure that they're doing what's right for the company, rather than what will make the numbers look good today.

After all of that though bloodyminded, it seems we're pretty much in complete agreement lol.

[Bonam]

Intelligently designed performance incentives for CEO's and employees will ensure that they're doing what's right for the company, rather than what will make the numbers look good today.

We already have two other threads on intelligent design. Let's leave it out of this one!

[bloodyminded]

I agree with you bloodyminded. There is a difference and the real tragedy of this is that the architects of the whole fiasco made out like bandits with little no consequences. The way executives are compensated makes it so that all they're concerned with is present and short term profit. They were getting rewarded on the volume of mortgages they could sell and thus it benefited them to qualify as many people as possible. There was really nothing illegal about this, although I'm sure a lot of them knew it wasn't a great idea long term.

In my mind, CEO's and executives need to be awarded on the LONG TERM performance of their business unit. They should have to make sure that their present strategies continue to benefit the company in the long run and their bonuses should be paid out over time or in deferred stock options. Shareholders NEED to make sure their executives have the long term health of a company in their best interest otherwise things like this will continue to happen. Any educated manager/business owner knows that employees will do what they're getting measured and paid for. If a CEO is measured on short term profit, that's what he'll be gunning for and damn the consequences. It's like that for any job from CEO down to general laborer.

If you want to prevent systemic greed and recklessness, you have to have systems in place to prevent it. Regulation of mortgage underwriting, such as in Canada, ensures that people can't buy houses they can't show they can afford. Intelligently designed performance incentives for CEO's and employees will ensure that they're doing what's right for the company, rather than what will make the numbers look good today.

After all of that though bloodyminded, it seems we're pretty much in complete agreement lol.

Yeah, fancy that. When posters remain relatively patient with one another, there are sometimes real points of agreement to be found, and the disagreements are often more matters of degree than true fundamental differences.

As for executive bonuses, I agree. Your suggestion sounds more practical than does the status quo, and I've wondered about this focus on short-term benefits (to the detriment of long-term ones, I mean...not that it's always, inherently bad), and I've never heard an expansively good defense. I have heard a couple of perhaps plausible explanations, but I can't say for certain how right they are; one is that executive bonuses are in themselves a type of marketing for a company or conglomerate; that saying "look how high our executive bonuses are" provides a psychological, emotive feeling of success towards the particular brand, and in fact can help in selling shares and garnering investment.

But I don't know for sure.

[Moonbox]

Yeah, fancy that. When posters remain relatively patient with one another, there are sometimes real points of agreement to be found, and the disagreements are often more matters of degree than true fundamental differences.

LoL yes I know

I have heard a couple of perhaps plausible explanations, but I can't say for certain how right they are; one is that executive bonuses are in themselves a type of marketing for a company or conglomerate; that saying "look how high our executive bonuses are" provides a psychological, emotive feeling of success towards the particular brand, and in fact can help in selling shares and garnering investment.

But I don't know for sure.

I don't think executive bonuses really provide any sort of impetus for stock market prices. The bonuses are rewards for bumping up the share price perhaps, but P/E ratios, dividends and speculation are what really drive them. I guarantee you that big investors aren't looking at executive bonuses when trying to determine whether a stock is a good purchase.

The only defence I can think of for it is that short term or immediate bonuses attract big name executive talent, which shareholders want. My question for them, however, is whether they should be looking for big name CEO's concerned only with the short term and short term bonuses, or smaller names (though likely just as intelligent) CEO's with the company's long term interest in mind.

[bloodyminded]

LoL yes I know

I don't think executive bonuses really provide any sort of impetus for stock market prices. The bonuses are rewards for bumping up the share price perhaps, but P/E ratios, dividends and speculation are what really drive them. I guarantee you that big investors aren't looking at executive bonuses when trying to determine whether a stock is a good purchase.

Yes, well, I wondered if it didn't sound a little shaky as a premise

The only defence I can think of for it is that short term or immediate bonuses attract big name executive talent, which shareholders want. My question for them, however, is whether they should be looking for big name CEO's concerned only with the short term and short term bonuses, or smaller names (though likely just as intelligent) CEO's with the company's long term interest in mind.

Yes, and surely there are plenty of these conservative (in the nominal sense, not the political one) CEO's floating around, waiting to do a stellar job. It might mean looking at smaller, but longer term careers, and so maybe fewer young bucks and does in CEO positions...but why would I give a good goddamn about that???

And why would shareholders and Boards give a goddamn, for that matter?

[M.Dancer]

I guarantee you that big investors aren't looking at executive bonuses when trying to determine whether a stock is a good purchase.

Actually you can't.

Institutionals are focusing more and more on compensation (say on pay) and activist shareholders via the use of the proxy are making their thoughts known and have killed more than a few M&A deals because they thought management was being over compensated.

See page 19

http://www.cscs.org/resources/Documents/Newsletter/Listed_Winter_2010_2011.pdf

[cybercoma]

We already have two other threads on intelligent design. Let's leave it out of this one!

2!?

[August1991]

The problem is systemic and across the entire population. It's a shining example of why regulation is required in the financial industry. It shows us that, if not restrained, greed will eventually blow up in everyone's faces. It blows up in shareholders' faces, in blows up in employees' faces, it blows up in the government's face and it blows up in the average persons' face as well.

Moonbox, you are naive.

I think you view capitalism/markets as the Darwinian jungle - the strong, greedy eat the weak and survive. You believe that government regulators are honest referees. And referees keep the jungle honest, civilized and protect the weak.

Moonbox, you should go back and read Adam Smith. (Free markets with prices protect the weak.) You should also spend some time with government bureaucrats.

I beg to differ. The lenders were deceived by the homebuyers saying they would be able to pay their mortgage. If you were borderline for getting a loan, would you tell the banker "I don't know if I can make enough money to pay the loan?" If you did, you'd get punted out of the office.

it cuts both ways.

The lenders either were forced to lend to bozos by legislation or by the bon/shareholders in order to compete with the banks under the legislation.

If anything its an attitude of entitlement on both sides that was the foundation for this mess. (I want a house vs. I want double digit returns)

In hindsight, it is easy to blame one side, or the other. People should never have borrowed, lenders should never have approved the mortage/loan.

In hindsight. I think that you guys don't realize what happened.

In 2006 and 2007, the US was involved in a housing bubble. People put $100,000 down on a $300,000 house and then, three months later, saw the same house down the street sell for $360,000. A year later, another neighbour sold a similar house for $450,000.

Everyone was getting rich. (Owning a home makes sense! It's better than renting!)

I put $100,000 down on a $300,000 house that is now worth $450,000. IOW, I have a $200,000 debt on a house worth $450,000 - and it looks that I'll be richer. I negotiate a loan based on my wealth.

----

At present, no State regulation can protect against such folly.

If Canadians have avoided financial bubbles, it is because of our basic conservatism.

Edited April 8, 2011 by August1991

[cybercoma]

Adam Smith would be absolutely ashamed of the monstrosity we call capitalism. Oligopolies, limitations on information, etc.... he would not approve.

[Tilter]

Yes, well, I wondered if it didn't sound a little shaky as a premise

Yes, and surely there are plenty of these conservative (in the nominal sense, not the political one) CEO's floating around, waiting to do a stellar job. It might mean looking at smaller, but longer term careers, and so maybe fewer young bucks and does in CEO positions...but why would I give a good goddamn about that???

And why would shareholders and Boards give a goddamn, for that matter?

They are waiting around for a stellar job that, as the past proves, does not even have to be done poorly, just at maintainance level or poorer so they can get fired, a golden parachute for failing and on to the next failure for riches unearned.

[Moonbox]

Moonbox, you are naive.

I think you view capitalism/markets as the Darwinian jungle - the strong, greedy eat the weak and survive. You believe that government regulators are honest referees. And referees keep the jungle honest, civilized and protect the weak.

August, I'm not sure you read anything else I mentioned in this thread. As for capitalism being a Darwinian jungle, it really really is, and I don't understand why you can say otherwise. As for the government being honest refereesm, give me a freaking break. I'm not that naive.

Moonbox, you should go back and read Adam Smith. (Free markets with prices protect the weak.) You should also spend some time with government bureaucrats.

A 1st year BBA student knows more about free markets and the invisible hand than most of the people on this board and I can assure you I'm a fair bit beyond that thanks. As for free markets protecting the weak, that's BS. Unrestrained and unregulated free markets are just as harmful to the average person as an over regulated centralized economy.

Unrestrained, we have Bill Gates, Rockefeller, price fixing and straight out cheating. Regulating is good when it seeks to prevent deceitful, unfair and blatantly stupid market practises, because those things do not help the economy grow.

In hindsight, it is easy to blame one side, or the other. People should never have borrowed, lenders should never have approved the mortage/loan.

and if you read my other posts you would have seen I blamed the borrowers just as heavily.

In hindsight. I think that you guys don't realize what happened.

I know exactly what happened, being in the industry myself. Your nice simplified explanation failed to explain the role that the Fed had in propping the housing prices up and how negligent the lenders were in approving mortgage loans. People were applying for refinances and new mortgages without having to prove their income. Borrowers and lenders basically ignored the most important principle of lending -- affordability. It really doesn't matter what your house is worth if you can't afford the payments on the mortgage.

Zero down mortgages with 40 year amortizations and without income confirmation, based on the brilliant assumption that housing prices would continue to skyrocket forever -- that's what the Free Market came up with in the US.

At present, no State regulation can protect against such folly.

If Canadians have avoided financial bubbles, it is because of our basic conservatism.

That's such naive BS I don't even know what to say. To say that Canadians are somehow just naturally more risk averse than the rest of the modernized world is balogna. We avoided the meltdown because our financial industries are heavily regulated.

Our mortgage regulations required clients to either put 20% down on housing purchases (making the mortgage less risky and at the same time showing the clients have the background that enabled them to save that much in the first place), or they were required, by law, to purchase default insurance through a third party which has fairly strict approval guidelines. Interestingly enough, one of those guidelines is proven affordability, and CMHC DOES NOT typically approve mortgages above their affordability ratios.

To say that the US and the rest of the world couldn't implement something similar is just not true.

[bloodyminded]

Moonbox, you should go back and read Adam Smith. (Free markets with prices protect the weak.) You should also spend some time with government bureaucrats.

Adam Smith warned about rapacious "incorporations" taking on de facto political power on account of their financial and economic clout, and then indulging in, and I quote, "the vile Maxim of the Masters of Mankind: All for Ourselves, and Nothing for Other People."

He also said: "Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.

He was a smart cat, I agree with you that much.

Edited April 8, 2011 by bloodyminded