Archive for March, 2008
Quickie: Get your MTV on, shopaholics
A casting agent contacted me about interviewing to appear on a MTV True Life: I’m addicted to shopping show. I don’t really fit the bill, but I know some of you out there are dealing with a lot of debt and trying to overcome your spendy shopping habits. So here is the contact info and casting call, if anyone would like to apply.
PS. This does not mean I’m advocating becoming a shopaholic to get on MTV. Nor do I endorse shopahol-ism in any form. We’re all about recovery from shopahol-ism at The Budgeting Babe. For real, yo.
True Life: I’m Addicted to Shopping
Studies estimate that as many as 17 million Americans are addicted to shopping. Is your closet packed with never-worn clothing, the price tags still in tact? Do you always have to run out and get the latest jeans or the newest accessories featured in Vogue? Are you maxing out your credit cards and drowning in bills? Are your friends and family concerned about your shopping addiction?
If you can’t control the urge to shop, even at the expense of your job, your relationships or your finances, MTV and Gigantic! Productions want to hear about it.
MTV’s True Life is a long-running, award-winning documentary series where young people share their stories in their own words. We hope that, by allowing people to tell their stories and communicate directly with their peers, we can impact the way people interact and engage with the world they live in.
If you appear to be between the ages of 16-25, and would like to share your story, please email us at casting@gigantic.tv and be sure to include your name, location, phone number and a photo.
Since 2001, Gigantic! Productions, a New York City-based production company, has been producing hard-hitting, award-winning documentary programming for networks such as MTV and CMT. Please visit our website: http://www.gigantic.tv/ to find out more.
Loving it…
Hello from Houston! This plane ticket was seriously the best $250 I ever spent. It’s 85 degrees, sunny and I’m hanging by the saltwater pool. My cousins introduce me to gorgeous Houston spring weather and poolside margaritas, I introduce them to homemade Irish car bombs (Guiness + Baily’s - the most politically incorrect shot you can buy) in honor of St. Patty’s day.
Though I miss my annual pub crawl in coordinated kelly green, I’m loving my little Houston getaway. I should definitely do this more often…
Trade Deficit and Mortgage Equity Withdrawal
The following graph shows an interesting relationship (Caution: correlation doesn’t imply causation!). As Mortgage Equity Withdrawal (MEW) rose, so did the trade deficit. Note: both are shown as a percent of GDP.
Now that MEW is falling, the trade deficit is also falling - especially if we exclude petroleum imports.
Click on graph for larger image.
The dashed green line is the Kennedy-Greenspan MEW estimates as a percent of GDP.
Clearly the housing bust led to less MEW, and less MEW might have contributed to the declining trade deficit. (Something I predicted in 2005).
Looking forward, it appears MEW will decline sharply in 2008, as housing prices decline further, lending standards are tightened, especially for HELOCs, and since homeowner percent equity is already at record lows. In other words, the Home ATM is closing.
This suggests that the trade deficit (especially ex-petroleum) might decline sharply too. Part of the decline in the trade deficit is related to the falling dollar and higher U.S. exports (See Krugman’s Good news on the dollar)
However, to complete the global rebalancing, two things must happen: both petroleum imports (in dollars) and the deficit with China must decline. The good news is the January trade deficit with China - although still huge at $20.3 billion - was actually less than the $21.3 billion in January 2007. The bad news is oil imports (in dollars) were at record levels.
Unless we see these key components of the trade deficit start to decline (oil and China), other exporters to the U.S. will have to bear the burden of the possibly sharp rebalancing of global trade.
Added: On oil, here is a KAL’s cartoon from the Economist:
Click on image to see cartoon at The Economist.
Bear Stearns Saturday Update
Charlie Gasparino at CNBC reports: Bear Stearns Weekend Talks Reveal 2 Key Contenders (hat tip risk capital)
… potential bidders for Bear have been narrowed to … J.C. Flowers and JPMorgan Chase
… bankers have now come to the conclusion that a deal must be done by Monday …
If there’s no deal Bear Stearns will have to file for bankruptcy, executives said.
WSJ on Bear Stearns
The WSJ has several followup articles on Bear Stearns. The first provides an excellent summary of the events leading up to the bailout. See WSJ: Fed Races to Rescue Bear Stearns In Bid to Steady Financial System
The story discusses how Bear Stearns, JPMorgan and the Fed regulators worked around the clock Thursday night to put together the bailout.
At about 5 a.m. Friday, regulators including New York Fed Chief Timothy Geithner, Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and the Treasury under secretary domestic finance, Robert Steel, convened by conference call. At the end of the call at 7 a.m., the Fed had decided it would offer the loan.
A fascinating story.
The second key story suggests Bear Stearns will probably be sold within days. See the WSJ: It Is Tough to Value Bear, But It Had Better Sell Fast
Fed: “Will continue to provide liquidity as necessary”
From the Federal Reserve:
The Federal Reserve is monitoring market developments closely and will continue to provide liquidity as necessary to promote the orderly functioning of the financial system. The Board voted unanimously to approve the arrangement announced by JPMorgan Chase and Bear Stearns this morning.
Another day, another Fed statement.
CFO Survey: No Economic Recovery Until Late 2009
From the Duke Global CFO Survey: Recession in 2008, no relief until 2009
•54 percent of CFOs say the U.S. is now in recession, and 24 percent of the remaining CFOs say there is a high likelihood of a recession this year. CFOs do not expect the economy to recover until late 2009.
•Optimism reached its lowest point since the optimism index launched six years ago. Pessimists outnumber optimists by a nine-to-one margin, with 72 percent of CFOs more pessimistic and only 8 percent more optimistic about the U.S. economy than they were last quarter.
•Weak consumer demand and turmoil in the credit and housing markets are the top macro-concerns of CFOs. The high cost of labor ranked as the top internal concern.
•Credit conditions have directly hurt 35 percent of companies, through decreased availability of credit and higher interest rates (up 118 basis points on average). Sixty percent of firms have postponed expansion plans in response to credit market unrest.
•Capital spending is expected to increase only 3.3 percent. Price inflation is expected to rise 3 percent over the next 12 months.
NO ECONOMIC RECOVERY UNTIL 2009
The outlook for the U.S. economy is dismal. Only 13 percent of CFOs think the U.S. economy will turn the corner and begin to rebound in 2008. Another 40 percent say the rebound will occur in the first half of 2009, while 47 percent say recovery will occur more than 15 months from now.
“Our survey started showing evidence of an economic slowdown a year ago,” said John R. Graham, director of the survey and a finance professor at Duke’s Fuqua School of Business. “Today, not only do the CFOs say we are already in recession, they predict a prolonged economic downturn. The news from CFOs is pretty grim.”
CFOs sure are bearish!
Citibank and Chase Adopt More Consumer Friendly Credit Card Policies
By Heshan Demel, CardRatings.com Consumer Credit Researcher
Citibank recently announced that they would be eliminating the controversial universal default clause from all of their accounts. At the same time, Citi announced that is also eliminating “any time for any reason” increases to the rates and fees of its customers’ accounts.
Traditionally, credit card issuers have taken the position that they can increase rates and fees at any time for any reason. As a result of the new policy, Citi will not voluntarily increase the rates and fees of any cardholder accounts until the card expires and a new card is issued (typically 2 years).
Chase also announced recently that they would eliminate the equally controversial double or two cycle billing method of calculating finance charges. This method of computing finance charges results in significantly higher finance or interest charges for cardholders who carry a balance on occasion. Chase also said it will ease up on some fees it charges customers who go over their credit limit (aka credit line). The company will stop over-limit fees at 90 days.
If you are unhappy with your current card for any reason (fees, rates, etc.), then you should definitely call your card company to complain. The card issuers are more receptive to cardholder requests now than they have been in many years due to the intense political and media pressure they are feeling. Use this pressure to your advantage! Many times a simple 5 minute phone call will lower your rate by several percentage points resulting in hundreds of dollars in savings. At the same time, most issuers are willing to reverse a $39 late fee at least once a year or so.
If you don’t get the results that you want from your current issuer, then start comparison shopping! The average credit card interest rate is currently around 15%. If your credit score is 700 or better, you should qualify for a rate around 10%. Shop CardRatings.com for the best low rate and low introductory rate card offers, as well as info. on how to obtain your credit score for free.
Heshan Demel- Heshan joined the CardRatings.com family in January 07 but has supported them for many years due to his close friendship with its founder. He has a bachelor’s degree in finance from Ouachita Baptist University in Arkadelphia, Arkansas and a Master’s Degree in Business Administration (MBA) from the University of Arkansas at Little Rock, Arkansas. He has over 9 years of banking experience with Regions Bank where he was a loan analyst. He is a member of the Arkansas Young Professionals Network and enjoys ballroom dancing, travel, and entertaining.
We welcome your comments about credit card issues in our popular credit forum!
CardRatings.com is the most comprehensive source for comparing credit card offers. CardRatings.com is pleased to offer consumers free credit card ratings.
Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thanks for your interest!
Avoiding Student Credit Card Debt
By Curtis Arnold, CardRatings.com Founder
Summer 2006 is winding down and the new school year is rapidly approaching! The endless days of basking in the summer sun are fading and, at the same time, credit card issuers are starting to ramp up their marketing efforts for the new school year. To help college students deal with the barrage of card offers, we are pleased to offer the following tips. While this list is not exhaustive, it is hoped that following these tips will help students manage their credit wisely.
Be cognizant of the fact that credit card issuers are very anxious to get your business. So anxious, in fact, that issuers spend millions and millions of dollars each year aggressively marketing their cards on college campuses across the country. This marketing takes many forms…giving away T-shirts, full page ads in college papers, pre-approved credit card applications, etc., etc. Credit card issuers are seeking to develop long term relationships with college students and, according to critics, are willing to do almost anything to accomplish this goal.
Credit cards geared toward students often come with high interest rates and other unfavorable terms. This is largely because students usually have limited credit histories and also due to the fact that students have a higher default rate than other age groups. In spite of these facts, however, students should not settle for the “first offer that comes their way”. Remember, there is keen competition among student card issuers and use this to your advantage. Compare offers by reading terms and conditions carefully and choose the best offer!
Don’t use your credit card as a source of income. While many college students have full intentions of “paying off” their cards in a timely manner after they enter the workforce, such good intentions are often never realized. I know firsthand the potentially devastating effect of relying on credit cards as a source of income while attending college. I amassed in excess of $40,000 in credit card debt during my undergraduate and graduate studies! As you might expect, this debt created an extreme amount of anxiety and stress for me after school (and, incidentally, was the primary reason I founded this site). If you do find yourself “buried in credit card debt”, consider utilizing the debt resources found on our site.
Utilize the resources on the Internet to help educate yourself about credit cards and credit in general. Credit is a complex subject and, in order to master the subject, you have to be willing to educate yourself. There are many superb web sites that are geared toward educating students about credit. Consider taking a personal finance class as well!
Finally, remember that credit cards are not evil! In fact, credit cards are an excellent way for students to establish credit. Establishing credit is exciting and is a sign of true independence. Just remember that credit cards require financial discipline and prudence. We hope these tips help will help you become a credit savvy consumer during the ‘06-’07 school year!
You can find a comprehensive list of student credit cards, including reviews, by visiting the Card Reports section of our website.
We welcome your comments about credit card and other money issues in our popular credit forum!
Curtis Arnold, a nationally recognized consumer educator and advocate, has been educating consumers about credit cards since 1998. He is regularly interviewed and quoted by respected members of the national press regarding consumer credit issues. Curtis is currently working on publishing a book about credit card usage- more details forthcoming!
CardRatings.com is the most comprehensive source for comparing credit card offers. CardRatings.com is pleased to offer consumers free credit card ratings.
Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thanks for your interest!
Weekend Trip Planner Inspiration
Aside from the ski trip to Michigan, I haven’t been on a real vacation in quite a while - since Ireland in March, if you can believe that. I’m TOTALLY jonesing to travel… I need to get the hell out of the frozen tundra that is Chicago and FAST.
So to tide me over until the next big vacation - likely late this summer though I’m not sure where, exactly - I’ve lined up a couple small trips to help me break from the ordinary:
- I’m headed to Houston in March with my mom to visit my cousin and her kids. I’ve been researching things to do in Houston, and aside from eating some BBQ, turns out there’s not that much to do. No matter. She has a new pool and I just bought a new swimsuit. Count me in.
- Insert trumpet blasts here … cuz in May I’m headed to the Kentucky Derby. I f’ing LOVE Louisville. I don’t know why, but I always managed to party with some crazy fun people when I traveled there for work. I hope to continue the streak in a funky hat while I’m there this time.
- In June I’m going to my dad’s man lodge in UP Michigan on a fishing trip. You might think an urban shopping/spending diva like myself isn’t much in tune with her granola side. You’d be wrong. I’m awful crunchy at heart. But my crunchy side is still slightly diva-ish… I refuse to actually touch the fish or worse, worms (”Um, dad, I got one here…can you take it off and throw it back in? Then re-worm my hook? Thanks.”). I tried handling the fish/worm once, and about jumped out of the boat. Not for me. So I mainly go along for the ride. Still, you could spend your days worse than riding in a boat with your dad and your boyfriend, drinking some beers.
So there you have it. Most of these Spring/early Summer trips are pretty cheap. Two are car trips and only one involves a hotel stay. None were terribly well thought out; they’re all spur of the moment ideas. Well, maybe spurred more by this awful winter weather than much else. But hopefully it’s inspiration for you to throw caution to the wind, take an affordable weekend trip with your honey or your besties, and let it all hang out for the weekend, budget style. You could do worse!