Weather Report – The Economy — Credit Cards, The U.S. Debt, and Ideas for Coping

THE ECONOMY–CREDIT CARDS : cnn.com/2008/US of 12/17/08 provides the personal credit card story while cnn.money.com of 12/17/08 gives us the small business perspective.

The personal credit card story is entitled, “Credit card holders livid about ‘rate-jacking’ “ and tells of credit card companies beginning to initiate instant rate hikes (‘rate-jacking’) without regard, in many cases, for good credit status and saying in effect, “If you don’t like it, quit the card!”

Rep. Carolyn Maloney, D-New York, notes that the credit card companies have this right, expressed in the fine print of their contracts, and can raise their rates “…any time, (for) any reason.”

The small business perspective is expressed in the title, “Credit cards gone wild: Shocking rate hikes. ”An NSBA (National Small Business Association) survey in April found that 44% of small business owners used a credit card to finance their businesses, “That’s more than any other source of financing, including bank loans and earnings.” That’s tremendous reliance on credit cards for financing.

The article concludes with a credit card company’s on-line expression of their terms and conditions “catch-all phrase“, “We may change any of your account terms, including rates and fees, at any time for any reason.”

What we have here, as they say in the movies, “…is a failure to communicate.” This mis-communication is absolutely on the part of the credit card holder as the card company absolutely communicates their contract position in the “finest” of print. The only way, as we see it, that the card holder can effectively communicate both their position and interests is through the MOST DISCREET USE of the credit card “privilege.”  SUCH AS : maintaining minimum balances with the goal of a zero balance always in mind (a “Zero Balance” x 27.9% INTEREST = 0). The effectiveness of just a few percentage points drop in oil use seems to have done wonders to help clear-up communications between oil producers and consumers.

THE U.S. DEBT: oftwominds.com (Charles Hugh Smith. Weblog & Essays) of 12/17/08 is the source of a gem of observation, via contributor Harum I., concerning the Fed’s reduction of the cost of money to near zero, “The fundamentals in the American debt markets, private and public, are severely impaired. The belief is that the U.S. government will print money until collapse rather repudiate it’s debt. The fallacy of this is evident; collapse is repudiation.”

How about this Harum I.? MONETIZATION = REPUDIATION

IDEAS FOR COPING : Here are a few ideas for coping with these “…times difficult to deal with.”:

Strengthen Ties: to your faith, family, friends, and neighbors.

1. Walk Away: from a consumer mindset and economy that places you in dependence and near-servitude. Look above at ‘Credit Cards’.
2. Prepare: simplify, downsize, economize, & develop a storage program.
3. Skill-Up: develop skills (especially low-tech ones) that will enhance your independence such as: home-maintenance, gardening, food preservation, first-aid, healthy life-style, etc.
4. Help and encourage others in 1-4.
5. Keep Aware: know what’s going on locally, nationally & internationally in the areas of essentials (food, oil, natural resources, transportation, weather, & geo-politics, etc.).

Until next week, keep your eyes on the horizon.