The credit card biz used to love people with "a taste for credit" -- folks who kept high balances and more often than not paid barely above the minimum. But alas, the party is over. As the economy circles the toilet, credit card banks are reversing course -- offering incentives to pay off balances quickly so your debt balance is off their books like so many other "toxic assets." It's an interesting reversal of a long-standing policy that your balance was a good thing (I wrote about that policy a bit more indirectly here on this blog).
So why do we care? Well, they're in a panic. The banks don't know which way is up. A few weeks ago, the message was, "Buy stuff!!" Now it's, "OK - How can we make you go away?" It is times like these that a re-orientation of our relationship to debt and banks, like a debtors' union or a "bank strike," becomes more viable. The "cultural space" for (the popularization of) resistance is growing, if you will.
PS - By the way, as you might have figured out, "You are not your credit score!" rings truer because you can't even trust the accuracy of that score to begin with.
Thanks, capitalism - enjoy retirement.
Monday, March 2, 2009
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I read Mark Twain sd something to the effect: "banks are like people who lend you an umbrella when the sun is shining and want it back when it is raining."
ReplyDeleteBut as banks start putting the squeeze on people they will exacerbate the crisis.
The straw that broke the camel's back in the housing market was the Fed raising the interest rates. By raising the rates they made it harder for people to borrow money to buy houses, which caused the housing bubble to burst and houseing prices startin falling.
Once housing prics started to fall the whole logic of the sub prime mortgages was exposed as insane (the idea is that poor people can buy houses they can't afford because housing prices always rise--house prices were rising because of low interest rates).
With these moves the credit card companies are about to destroy the logic of consumer credit. Which rests on debtors ability to roll their debts over from one 0% interest rate to the next.
Without 0% financing servicing the debt becomes impossible and the realization of not being able to pay back debts become clear.
The housing market/credit crisis was just round one. This is the beginning of round two.