Wednesday, November 04, 2009

Credit Card Regulation

The House is currently debating legislation that would accelerate further regulation of the credit card industry. Essentially Congress is telling the industry when it can and cannot charge you for using their services.

Let's be crystal clear about what exactly a credit card is: You spending someone else's money. Whether it is because you don't have the money on you at that very moment, or won't have the money until later in the month, or won't have the money for several years, a credit card allows you to borrow someone else's money to buy the things you want today.

Now Congress wants to regulate how and when credit card companies can impose fees. This is viewed as 'consumer protection' but I fail to see how it qualifies. How does assisting already overspent Americans in running up their personal debt, by making it less costly to use their credit cards qualify as 'consumer protection?'

Aside from the invasion upon a corporation's ability to interact with its customers on its own terms, so long as those terms are lawful and forthright, why can't credit card companies charge whatever they want for the use of their services? Why does the government feel the need to get involved at all?

In an arrangement between a lender and a borrower, the lender sets the terms, and the borrower agrees to those terms in exchange for the money. But protection for the borrower comes in the ability to not accept the lender's money, in which case the terms, however onerous, get thrown out the window. This holds true for credit card companies and their customers just the same. If you don't like the fee structure, don't use the credit card.

Thursday, February 05, 2009

A Stimulus for the Ages

Our nation finds itself standing upon a truly frightening threshold, looking out upon an abyss of debt and deficit. This is the burden with which we have saddled our children. Through no fault of their own, they will be forced to labor under the heavy yoke of liberty-stifling taxation. Thanks to our fiscal indiscretion we may very well be the first generation to renege on that sacred American dream, that our children will have access to a better life than their forebears enjoyed.

It is not terribly difficult to see how we got here. The facts cut a clear path to a housing sector that was rife with corruption and rancid with greed. Homeowners who had visions of grandeur they could ill afford, met with creditors who foolhardily provided them the credit they wanted, regardless of their pecuniary fitness. Now we find ourselves afflicted with a financial cancer that has brought our economy to its knees. Our government, now entirely in the hands of Democrats, seeks to ignore the tumor and treat merely the symptoms, with a bill whose costs increase daily. The trillion dollar price tag associated with the current stimulus package is a dizzying sum; and like the stimulus and bailouts that preceded it, will prove to be a foolhardy lesson in futility, the costs of which we cannot begin to imagine.

We have arrived at a profound economic crossroads. The American people have borne the weight of job losses, cut wages, and reduced savings, by tightening their belts and revaluating their financial priorities. The government wants no part of that prudence however, and instead proposes to shower federal programs with money taken from the pockets of those same taxpayers. Throwing caution to the wind, Democrats are embarking on a path that will succeed only in shackling our children with a debt obligation that we can hardly fathom.

Inevitably, the day of reckoning will come. The buck will reach a point where it can no longer be passed, and the piper will seek to collect. Let us err on the side of restraint and good sense, because while our collective attention span is often brief, the reverberations of our actions will be felt for decades hence.

Friday, January 09, 2009

The Fallability of Trends

Recently I found myself reading an opinion piece by Ron Brownstein in the National Journal that somewhat snarkily portended that recent demographic trends would ensure Democratic electoral success long into the future. Republicans would do well to close up shop, and waste away their days burning money and cigars while lounging on the sterns of nameless corporate-sponsored yachts. Brownstein's contention was that traditionally Democratic voting blocs are growing, and traditionally Republican voting blocs are shrinking. He even goes so far as to predict how much Obama would have beaten McCain by in 2016 if current demographic trends were extrapolated

Brownstein's prognostication, we hold elections in this country not to validate demographic trends, but rather to assess and judge the validity of thoughts and ideas. To use a sports analogy, this is why we play the games. This is why a nation that elected Jimmy Carter can a mere four years later turn around and elect Ronald Reagan, and why a nation that elected George W. Bush twice can give a resounding victory to Barack Obama.

We are, simply put, a nation of moderates; a middle of the road electorate that tires quickly of one ideology or the other, particularly when that ideology and its standard-bearers perform poorly and fail to deliver; and in American politics this tends to be the rule, not the exception. Elections are the collective results of millions of individual actions; when the voting booth curtain closes, we make decisions not based on the collective wisdom of a group, but on our own perceptions of the candidates and their messages. To oversimplify elections to the point of group think, demeans our democracy.

Indeed, the Democrats have already done much to get the pendulum of public opinion swinging. Impeached Illinois governor, Rod Blagojevich and his scandal-tainted selection for the US Senate; Indicted Baltimore Mayor Sheila Dixon; Indicted Baltimore County Councilman Ken Oliver; disgraced New York governor Elliot Spitzer; Bill Richardson and Timothy Geithner, Obama Cabinet nominees who have been dogged by scandal (Richardson even went so far as to withdraw his name from consideration for the Commerce slot) all help to paint a none too flattering picture of the majority party; and their indiscretions will lead to their relegation as the minority part of the future.