Excuse Me?

ATC Wednesday featured an "expert" weighing in on credit card issues - which have been in the news of late. The expert fields a question from a listener who called in to note that in spite of never missing or being late on a payment his credit card rates were DOUBLED!

Michele Norris asks the expert, Joan Goldwasser, "He's never been delinquent so why would the credit card company make this adjustment?"

Hmmm....that's a real stumper. Why would credit card companies be gouging customers? Could they be trying to cover their profitable little asses for all the predatory lending they've been doing now that that bubble's starting to burst? Oh no, not according to Goldwasser - her answer:

"It's hard to know for a specific individual, but it could be because he is having trouble in some other area of his life. You know credit card companies will look at your payment record on everything - whether it's your home mortgage, your insurance, your utility bill whatever. If you happen to be delinquent on one of those, that's a red flag. They also are looking at people who live in your neighborhood..."

No comment needed on that one...

The Royal We

I'm always suspicious when some talking head on the news is talking about some disastrous situation such as the Iraq War, the credit crisis or - as was the case today - the banking crisis, and lays the blame on "us" saying, "We all got it wrong," or "We've all been lulled." Usually these statements are just not true, and serve to ignore the critics and dissidents who actually "got it right" or "weren't lulled" at all.

Talking about the burgeoning banking crisis, NPR's Sunday Weekend Edition talked to financial analyst Karen Shaw Petrou, managing partner at Federal Financial Analytics. Petrou had the following to say:

"We'll have more bank failures....we've all been lulled into complacency. We've had a lot of good years - a boom brings that out in the banking system, and it makes us all lazy; it means that uninsured depositors get too relaxed and they don't take care. It means that regulators get lazy. We've been through a period of time in which we all sort of thought that 'Gee, regulation is always wrong and the market is always right' and I think we got a little too careless."

If only there were someone there to say, "Speak for yourself, Karen." Not everybody was having good years and a lot of people saw banking deregulation for the swindle it was.

Back in 1999 Russell Mokhiber and Robert Weissman denounced Sec of the Treasury Robert Rubin for his work spearheading banking deregulation, and pointed out the problems with such a policy. Weissman is still writing on the issue. There have been others warning about deregulation such as this article from The Boston Globe in 2000 and this from The Seattle Post Intelligencer in 2002. I wonder when NPR will be consulting some of the folks who got it right? If the Iraq War experience is any indication, it won't be anytime soon.

Six Figure Fools Meet Five Figure Problems

Steve Inskeep and Renee Montagne wonder why people don't save anymore, but instead get into debt. To answer this vexing problem they turn to Tim Hartford of the Financial Times. Just so you'll think $337,499-a-year Renee and $331,701-a-year Steve [see the IRS 990s here] are one of us, Renee introduces this segment with: "We owe it to ourselves to consider all the debt we piled on ourselves." Then Steve and Renee do a little back and forth yucking it up:
Inskeep: "...back in the early 1980s Americans saved more than 11% of their income; last year on average Americans saved one half of one percent."
Montange (chuckling): "Steve, uh, that's no savings..."
Inskeep: "Well, basically; although perhaps some people are wondering how'd they manage to save half percent..."

Hartford comes on to make the case that what is fueling high debt among Americans is the availability of loans - which hints at, though never names the deregulation and rise of predatory lending from credit card companies. But Inskeep is more interested in putting the problem on the people in debt. He asks, "Is there something about the availability of credit itself that causes people to go off the rails and make bad decisions?"

Of course it never even occurs to buckrakers like Inskeep and Montagne that a lot of folks turn to credit because their real incomes are shrinking. Let's see what leftist propaganda I can find to support this wild idea? I've got it, how about the Marine Corp Times!

Here's a little information for you two clowns from the five figure crowd like myself. In 1993 I was making about $23,000 a year as a social worker and my second son had just been born. Employer based family health insurance was costing our little fambly about $3000 a year in premiums and rent was running about $500 a month. Let's just say things were kind of tight. Now that the kids are growing up our family income is closer to $60,000, but health insurance is over $7000 a year, gas costs have tripled, public school fees and clothing are more expensive, and the price of food is shooting up (and we just can't wait to spend, spend, spend on college).

Do you 1/3 of a million dollar dimwits at NPR get it? Yes, some people make bad decisions in this crass consumer culture that you worship on NPR, but many of us go into serious debt to fix the broken car, get braces for the kids, repair the leaking roof, buy decent food, pay for heat, etc. Yeah, we just go off the rails for all these luxuries; crazy ain't it?

Conned

In the Open Thread below a reader kindly posted his letter to NPR complaining about Andrea Seabrook's typically insipid report on the current credit/banking crisis. In his letter he noted that

"Sole expert commentator Marvin Goodfriend is correctly identified as a Carnegie Mellon economics professor, but NPR omits the fact that he directs the market-oriented Gailliot Center for Public Policy. According to the Carnegie Mellon website 'the center's goal is to develop original and pragmatic solutions to public policy problems that limit government intervention and allow markets and the private sector to evolve and adapt.'"

I've not posted much on NPR's coverage of the subprime/ credit/ investment/ banking mess because - in spite of my suspicions that I'm being snookered by NPR's coverage - my basic knowledge of the economics involved is pretty limited. But the reader's letter to NPR got me wondering who does NPR turn to for "explanations" of the mess? A brief glance at the stories of late reveals that for the most part, the experts are people involved in the banking industry on both the private and government sides (and often both!):
(Weekend Edition Saturday 3-22-08) "Over the past week, the Federal Reserve has made a serious of unprecedented moves to shore up confidence in the shaken investment community. Former Fed Vice Chairman Alan Blinder explains what the moves mean for taxpayers and the rest of the economy."
(All Things Considered, 3-20-08) "Keeping up with the fast pace of recent economic news and understanding the ramifications of this week's developments is no easy task. Laurence Meyer, vice chairman of Macroeconomic Advisers, talks with Michele Norris, Robert Siegel and Adam Davidson."
(All Things Considered, 3-21-08) "After a busy week at the Federal Reserve -- assisting with JP Morgan Chase's takeover of Bear Stearns and allowing big investment houses to get emergency loans directly from the central bank -- how does the Fed chief rate? Yale economist Robert James Shiller, Smith Moore analyst Juli Niemann with Noah Adams."

So it goes.

As I've written before, I don't think there's a problem interviewing some of these people who are insiders, but where is a historical perspective challenging the deregulation champions of the 80s and 90s [we hear from Rubin but not from Reich]? are the left leaning critics of US banking/investment policies? I heard Dean Baker once on Morning Edition, but why not more Krugman, Weisbrot, or even Danny Schecter who's been warning about a credit crisis for a long time?

Doesn't it seem like this current economic crisis would be the time to have a far ranging, in-depth debate and look at how wealth is generated in this country and who benefits and who loses? Unfortunately, NPR won't be the place where that happens.