We Predict Inflation Better than Experts

A very interesting piece of economic research appeared this week in ScienceDaily news service from the department of economics at Kansas State University, entitled Consumers Can Predict Inflation as Well as Professional Economists. This of course will come as no surprise to regular people, for whom economist’s double-talk is often seen as deliberately vague and couched in jargon that has no application to those in the lower echelons of economic stratification in this society.

Turns out that the actual price of milk and bread and gasoline can alert the average citizen of increasing inflation rates quickly and surely, and their predictions will then translate into how the family budgets their spending. Apparently one doesn’t need an Ivy League degree and a 5-figure Wall Street income to figure out that things cost more today than they did yesterday. Who would have thought such a thing?

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The Loan Shark Bailout Bill

…er, Housing & Economic Recovery Act

The US Congress, both House and Senate, finally cleared the Housing and Economic Recovery Act of 2008 today, after nearly a year’s worth of hemming and hawing and slipping goodies into the legalese in the middle of the night. A regular miracle of modern political tug of war and a bill that’s changed its name and focus so many times nobody’s quite sure what’s in it other than a trillion or two to bail out Fannie Mae and Freddie Mac. Having weathered a total of seven [7] Senate cloture votes, President Bush is likely to sign it into law.

No one expects a handout from this bill unless they’re 1. a robber baron, or 2. a loan shark, or 3. a speculator and/or house-flipper (buys real estate only to flip it immediately at inflated price), or 4. an fossil fuels dealer. Thus not surprisingly, the stock market opened low this morning [7-28-08], down more than 134 points at noon. Though Fannie and Freddie were on the upswing on that promise of taxpayer trillions.

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Attack of the Zombie Debt Collectors

Some years ago while visiting my husband’s then newly widowed and elderly mother, we were moved to intervene on her behalf after some jerks claiming to be collectors for delinquent student loans went on a rampage of gross harassment against her because someone much younger had her same first and last name. They were calling her so often and being so verbally abusive that she changed her phone number, which she’d had for more than 20 years and which all her distant friends and relatives knew by heart. They were sending threatening letters - sometimes 3 a week - telling her they were going to ruin her credit and attach her wages.

After hubby calmly informed them they had the wrong person - do your homework, don’t call, stop writing and there were no wages to attach (she retired long ago) - Mother-in-Law got a call from her banker telling her they were now trying to attach her bank account! Hubby put a stop to that right quick by showing the many threatening extortion letters to that banker right there in his office, explaining the situation, and getting some good advice. Call the state Attorney General immediately, follow up with a formal letter detailing the illegal tactics, and if worst comes to worst, get a lawyer.

Now, I know it sounds weird that a woman who graduated from college in 1947 could be so thoroughly confused with the ~30-something single mother who was actually in arrears on her student loan payments, or that a sweet old lady could be so horribly abused by professional con artists/thugs. But the truth (as best we could figure) was that they figured they could brow-beat Mom into paying someone else’s debts just because she was old and living alone and had some money in the bank.

Luckily we had gone to high school with the AG and he was more than willing to go after these crooks wearing size 1000 pointy cowboy boots. The harassment ended in short order, and Mom now knows to simply let her contact with his debt/fraud task force know whenever she gets targeted in some scam. The shame is that there are so darned many scams out there targeting people like her, and once you get on one scammer’s list (even if they end up in jail), you’ll be sold to every other scammer in the con-club fleecing little old ladies out of their meager life’s savings.

So when I saw CNNMoney’s article entitled Debt collectors on the rampage, I figured it might be a good idea to document a bit about your rights if you happen to end up on the scam list. This article has a list of rights and procedures as well as a run-down on ways that third party collectors violate the rules. Those rules are detailed in the FDIC’s Fair Debt Collection Practices Act, and explained in some detail through the links at fair-debt-collection.com.

Even if you really do owe the debt, the collectors are required to abide by rules. For instance, they cannot call you before or after certain times of day, must stop calling if you tell them not to call, and may not demand any payments on debts for which your state’s statute of limitations has expired [a.k.a. “Zombie Debt”]. If you find yourself in a situation of unethical or illegal harassment the best thing you can do is educate yourself about this law and its provisions, and know what steps you can take to defend yourself.

If there’s anything unethical shysters are legitimately frightened of, it’s a mark (target) who knows his/her rights and isn’t reluctant to assert them.

Links:

Fair Debt Collection Practices Act
CNN: Debt collectors on the rampage
Debt collectors calling? Know your rights
Fair Debt Helpers [attorneys]

Is Bankruptcy ‘The End Of All Things’?*

* [h/t Frodo Baggins]

The cost of everything is still rising fast, despite the influx of ready cash to taxpayers in the way of rebates going to pay arrears on the mortgage or electric bill. The number of people losing their homes and losing their jobs continues to rise as well. And in a little-publicized indicator no one likes to talk much about these days, the number of Americans declaring bankruptcy is shooting through the roof - up nearly 30% [27.0] in the first quarter of 2008 over the same period in 2007. As Samuel J. Gerdano, Executive Director of the American Bankruptcy Institute says…

“Bankruptcies are rising due to the heavy burden of household debt and growing mortgage problems. We expect this trend to continue through 2008.

So there doesn’t look to be any break in the recession cloud this year, with indicators that it may well descend all the way into depression by election day in November.

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Is It Depression Yet?

As we start moving into summer I thought it might be interesting to take a look at some economic predictions made way back in 2007 by an “informed” opinionator over at Sustainable Living’s Natural Hub, a Q&A piece entitled Timing of a depression triggered by high oil prices.

An Overview of unfolding recession as the oil economy fades was published in 2006 explaining the various factors that would mark a worldwide recession due to increasing oil prices. Some of its indicators have long since come and gone, others have been with us for years already, and some of the predictions have come true in these last few months. For those of us living in the real world, recession and ’stagflation’ have been facts of life for years despite the mainstream news media’s reluctance to actually use the word when reporting on where speculators have taken futures on oil and food supplies lately. They won’t use the ‘D’ word either [depression], but here’s a list of signs that it’s already upon us.

Sign 1. “For there to be a deep recession, there first has to be a credit bubble - a high level of personal indebtedness in the community.”

Well, this one’s sure a no-brainer! Hopefully most readers of this blog have made real efforts to minimize or get out from under personal debt over the past few years (exempting mortgage issues), or were never deeply in debt in the first place. Those who consolidated credit card and other installment loan debts by refinancing when the mortgage boom was on may be facing serious issues with that mortgage now, but that’s such a huge issue that if mortgage debt is the biggest of your worries, you’re doing pretty well.
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Wall Street “Crisis” Double-Speak

What it Means to the Home Mortgage “Crisis”

Many of us watched with serious confusion the strange financial market machinations that led to the Fed bailout of investment bank Bear-Stearns, taxpayers taking on bad debt paper held by speculators rather than any actual member of the central banking community. JP Morgan bought B-S for mere pennies on the dollar, ending up buying for just a 5th of what B-S’s Madison Avenue headquarters building is worth - the rich folks have taken their hit. What matters now is how much of a hit the average cash-strapped citizen will have to take.

Government bailouts of junk paper speculators is outrageous, and does not a thing to help homeowners whose mortgages far outstrip the current reduced value of their homes - while the price of every necessity is going through the roof. Yet at the same time Fed chair Ben Bernanke pledged to “do all that is possible” to help struggling homeowners. There actually may be hope on the horizon, though nobody should bank on Fed “pledges.”

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Ways to Live On Almost Nothing - 4

Part 4: Items 16 - 20

In this last entry on our 20 ways to live on little-to-nothing, some further ways to take honest stock of your situation and prospects, plan accordingly, and make use of systems already in place to stretch the dollars you’ve got left.

16. Who Are You Supporting?

If your habit is to always buy new, who is that supporting? In a serious recession, it’s probably not supporting some skilled worker in a factory in your area, since the US has already stripped its manufacturing capability to almost zip. Are you supporting the call center bill collectors? Do you really WANT to support them?

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Ways to Live On Almost Nothing - 3

Part 3: Items 11-15

NYC Bread Line

Installment three of this series of 20 ways to live on little-to-nothing. In these we’ll look at some basics about food, using all of your abilities, and taking honest stock of exactly what you need to do in your life to get through the hard times. If you get hit hard by what’s happening - and cutting back on luxuries just won’t fix the problems - you’ll need to learn to rely on yourself.

11. Taking Honest Stock

If you don’t want to go all Gypsy (and have a family to support), you can still take control of your situation. Keep a careful record of where the money goes over a month. Examine your ‘necessary’ expenses (home, utilities, car, insurance, food, gas, any other fixed expenses). If the ‘necessary’ expenses are larger than net income, it’s time to get out from under the big ones and take a good look at less expensive ways to live. You can live through hard times, but first you have to acknowledge you’re in hard times.

Housing markets are bust right now, so it’s difficult to sell your house even if you were willing to take an equity loss. Same is true for cars and light trucks. It can be the best option to make a clean break and declare bankruptcy, which can allow you to start fresh with a whole different way of approaching life.

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Frugal Youth: Stuff Does Not Equal Happiness

Age Counseling Youth

Once Upon a Christmas… my Mother-in-Law gifted my children with some thickly quilted fuzzy slippers to put on in the morning when the wood stove in our little cabin had gone out and the water in the dog dish was more often than not frozen solid. Unfortunately both of the pairs of slippers she’d bought consisted of two right feet. So off she went right after Christmas to the store where she’d bought them, and let the kids pick out new pairs that they could wear on both their feet.

The saleslady remembered when Mom had bought them, and the story she told about the kids living in the cold mountains without automatic heat. She asked the kids how they could stand living in a house with no heat. The kids looked at her quizzically, my daughter answered that of course we had heat, we just didn’t have electricity. That really threw the young woman for a loop, so she just had to ask…

If you’ve no electricity, how can you have heat? Daughter smiled. “Fire,” she answered calmly. “Fire is hot.”

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A Non-Consumerist Way of Life

Habits of thought that won’t cost you a thing…

My last post offered some Tips for Avoiding Pressure to Shop, mostly in the context of getting out of the usual “girls’ day out” type of expensive, mall-hopping, credit card fueled frenzy that way too many people in the modern world view as entertainment. At least, until the bills come due. Sad statistics demonstrate that if medical costs from an accident or illness in the family don’t lead to bankruptcy, credit card debt will. These are the two biggest contributors to middle class bankruptcies in the U.S. at this time, and as the mortgage crisis becomes ever worse, it’s not going to get any better.

In this post I’m going to offer some ways of thinking that can become habitual without too much trouble, that will help keep you out of debt by not going into debt in the first place. Not everyone can put these to good use, but those who can will find that their shoestring budgets go a lot farther in covering necessities.

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