Dementia for 2

Bankrupt- From the 16th century Italian "banca rotta" meaning broken counter. The root in Latin means corrupt. Legend has it that when the money changer became insolvent, his counter was broken.

I watched another documentary tonight and wanted to share what I learned. My husband gets tired of me going on about the state of this country so you guys are my new audience. I hope you don't get tired of this. He has started calling me his little militant. lol So feel free to tell me to lay off I can take it.

The film was done in 2005 so a lot of the data is out of date, but you will get the general idea. We already know the consequences of the actions of the banks and congress.

Almost everyone I know is either filing for bankruptcy, going through bankruptcy, or thinking about bankruptcy. My husband and I had to file about 7 years ago. My son was really giving us a lot of trouble and because of this I was not working as much as I should have and we almost lost everything. We filed chapter 13 because I have very strong feelings about not paying debt, so it has been hard to bounce back. We are now in a position to have credit, but it is VERY limited on our part because we don't want to fall in to the same trap so many others we know are falling in to.

So here are the stats in no particular order

1. College students leave college with an average of $20,000.00 in credit card debt. We all have seen the news shows talking about how credit card companies prey on college students.
2. The American Revolution was largely driven by American planters that were heavily in debt to European banks. They realized that they could not prosper under the outrageous demands by these financial institutions. So part of the American Revolution was to free them from the enslavement of financial debt.
3. Barbie has a cash register designed for girls 3 years and up. It gives the exact sound of a credit card being accepted when you play with it. Malibu Barbie comes with her own gold MasterCard and Shopping Girl Barbie comes with credit cards and accessories include stores she can shop in. So at a very young age our children are being taught how to use credit cards by the toys they play with.
4. In credit card circles, a "deadbeat" is someone who pays their balance in full every month or pays more than minimum payment on time every month. They want you to be a "revolver" someone who only pays the minimum every month. Then they can lay on the interest of up to 30%!
5. It is believed that 10 banks dominate 92% of the banking industry. I think it is only 9 but I can't be sure. These banks got congress to deregulate the industry. This has lead to consolidation, higher prices and also has allowed them to set up shop in states with low taxes Delaware and South Dakota are the 2 biggest. This move also ended consumer protection against usury (new bankruptcy law).
6. Each credit bureau uses a different formula to determine your credit score. Since these formulas are secret, there is no way to determine how they get your score. FICO is a joke. It has been proven to be unreliable over and over again.
7. 2/3 of our economy is based on consumption. America is in debt to China for over 200 BILLION. This was as of 2005.
8. Consumers in 2005 were in debt to the tune of 7 TRILLION. This includes credit cards, car loans, and mortgages.
9. Fines and lawsuits against credit card companies for unethical practices including deceptive advertising and improper fees: Citibank 15.5 million, Chase 22.2 million, Bank One 40 million, and Providan 405 million.
10. In 2005, ten credit card companies spent over 2 billion on advertising and marketing.
11. The largest contributors to political campaigns are the financial institutions and large real estate developers. So to get elected, you have to make promises that support these 2 sectors.

Back to the college kids. The credit card companies know that once they get used to living on borrowed money they are likely to continue this pattern throughout their lives. Because of their debt, they are forced to make hard choices about their careers. Not only do they have student loans to pay off but a lot of them have credit card debt that is in the 5 figure range.

These students are taking drastic measures to pay off their debt. Some have robbed banks, committed suicide, and some women have sold their eggs. Others have filed for bankruptcy before they are even 23!

We talk to our kids more about sex and how to prevent the unwanted disease or pregnancy than we do about managing their money and just how important good credit is and how hard it is to maintain. I don't know if it is fear because of our own poor choices or just ignorance as to what it is to manage money and credit effectively. I can only speak for myself. I have stressed to both my kids how important it is not to buy into the hype these companies send out ad nausium. Thankfully, they both actually listened to this advice.

Our own indifference and ignorance as to how these companies act and think are the real danger to us. Steve Barnett a former credit card company executive talks about how we are deceived by these companies. American Express noticed that their cardholders were getting older. So to attract a younger generation they came up with the "blue" card. MasterCard's "priceless" commercials urge us to spend and we do. They take your eye off the credit card and get you to focus on the family or whatever that is priceless. Since we desire these things we are deceived into believing if we buy we will be that family. While you and I may not buy into this, a lot of people do.

The card itself also says something about who you are. Gold, platinum, titanium, American Express has a black card for their cardholders who charge 300,00.00 or more a year. The fancier and more elite the card, the more money is made off the card.

The credit card companies state that it is our responsibility as consumers to know the laws and limitations of their cards. I think they are right. We should be informed citizens. But they have deliberately mislead and manipulated the laws to the extent that unless you are a MIT graduate you can't figure it all out.

Tamara Draut an analyst, states we will not be able to budget or educate ourselves out of this mess because we are up against an economy that is stacked against us. Some of the reasons she listed for this are: stagnated or lower incomes for middle and lower class, rising cost of health care, college, etc., and public policy.

The credit card industry is the leading money maker in the banking industry. They make more money on the excessive fees they charge than on the things we buy. The new bankruptcy law was lobbied for and financed by banks and credit card companies as we know. What I didn't know was just how well funded this bill was. Rep Shirley Lee Jackson said this was probably the most well funded bill to ever go through congress. The banks spent 36 million, credit card companies 13 million, accounting firms 6.3 million, and business associations added 98.85 million. We never stood a chance. I know a lot of people that were in favor of this bill. Now that the housing market is falling and these same people are losing everything, I can't help but wonder how they are going to get through all this.

The bankruptcy bill that was signed in to law by Bush specifically rules out floods as a grounds for bankruptcy. This was before Katrina and all the flooding and hurricanes that have followed.

There are consumer groups in Washington fighting for us. The problem is they are the last on the list. Congressmen see them after lobbyists for banks, credit card companies, etc. By the time the panel of consumer groups is seen, most have already left congress. They have given their vote to the highest bidder with no concern for the people who supposedly put them in office in the first place.

We as a nation cannot continue to sustain these high levels of debt at these high levels of interest. The America I know will not be here for my kids or grand kids. It will be hocked at the local cash for title place at 300% interest compounded weekly.