Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke (Credit: Chip Somodevilla /Getty Images
Paulson announced the funds will be used in a program being designed that will leverage private financing, expand the program to financial institutions other than banks, and address a freeze in the consumer credit market. The $1 trillion secondary market for credit card, auto and student debt has come to a standstill. This market normally provides the funding for 40% of these loans. The Federal Reserve may partner with the Treasury on the credit program.
Paulson does not want to expend funds to help unregulated financial institutions, meaning auto companies. Only $60 billion of TARP funds are left from the $350 billion allocated for this year:
- $40 billion went to purchase AIG preferred stocks,
- $125 billion to purchase preferred stock in the top nine banks
- $125 to purchase preferred stock from regional banks around the country.
Comments
Would it really be so bad if credit card credit were more difficult to obtain? Isn’t the fact that so many people are so far in debt that we’re in the financial situation we are?
If people only bought what they could afford, a financial landscape like we’re seeing today would be a great opportunity for people.
Prices have come down or stopped their climb, interest rates are low, consumers are being enticed with everything from perks to good service; perhaps that’s how it should be.
Many people, if not most, use credit cards for what they NEED versus what they WANT willing to pay the credit card finance charge. The issue is when banks MAY raise rates as high as 32% on a balance that was paying 9.99%. This issue is much more than a one or two sentence problem. Our representatives/government should consider:
1. regulating fees and finance charges (after all they are infusing our money into the financial industry)
2. regulation may include keeping rates at Libor + 2 (with 1 of the 2 going to the bailout repayment)
3. cap fees at $10 (versus $30+)
4. cap annual fee (if the card has one at $15/annually)
5. eliminate the lobbyist.
Others will have other, better solutions. I hope that they write their representatives and president. The problem exists, we need solutions.
Thanks for the forum.
I have decent credit but I had cancelled all my cards when trying to get out of debt. I am now free of all unsecured debt but I need to have a card so in the future I won’t be hurt by having no credit.
Here are some great tips for getting a new credit card from About.com’s Guide to Credit, LaToya Kirby.
Reestablish Your Credit
Kimberly
Great tips have to be followed in use of credit cards ,this may leads to extension limits and ineffective payments .
How To Manage A Fiat Money Creation System
Think about it. What the Zero Inflation Taxation Policy does is, it makes the banks responsible for the value of money. If the banks create too much money, which creates inflation, the tax code would automatically change and encourage savings and money investments and less credit creation, there-by increasing the banks liabilities and reducing its assets. The banks would become sensitive to the purpose of the loans it was making and total money being created. This would include government debt. Our savings pool would increase for normal production and consumption to take place. The velocity of money would slow down without raising cost after inflation has started to occur in an economy.
We have a fiat money creation system in our country. A fiat money system can create an unlimited amount of money. A fiat money creation system is backed only by promises, not by gold or other commodities. It is banker controlled not government controlled. Bankers (Federal Reserve and Banks) determine the amount of money that is created in our economy. Inflation is created when too much money is created in an economy. A recession is created when there is not enough money or purchasing power in an economy. As we have found out by the current economic crisis, bankers are not very good at controlling the amount of money that is created in our economy. Think about it. The banks profit from the amount of money that is created. The more money they create the more profit they make. Profit is a good thing but when it endangers the economy, the security of our country and people’s standard of living it must be correctly managed. Just like any other danger.
The income tax benefits bankers by encouraging an increase in the creation of debt, which is money in our economy. The interest deduction and the long-term capital gains tax rate are more for the banks benefit than yours. It causes hard capital asset investments to become more valuable than money investments. This occurs because of the taxation difference between money investments and long-term capital gains, this increases demand in the hard capital asset markets. The extra demand causes the price of the collateral to go up. Therefore, the owner or buyer of a hard capital asset, with an increased collateral price can obtain a larger loan, thereby increasing the money supply. This process increases as inflation goes higher, creating higher inflation rates.
It is when and why people save and spend in the economic cycle that determines if we have an increase in our standard of living or bubbles and deflations. It is our psychology about our money that determines its value. Do we use it as a rational means of exchange? Do we spend it as fast as we can before it loses more purchasing power? Do we hold it as a store of value? Do we buy hard capital assets as a store of wealth? Do we use it to obtain and create more money without creating an increase in the supply of products or a beneficial service to the economy? Our income tax and which economic cycle is occurring in our economy or which cycle is perceived by people to occur in the near future in our economy, influences all of these decisions.
The income tax unbalances normal production, consumption and investment decisions. We have a dynamic economy with a static income tax system. Our economy is continually changing from recession to inflation and then recession again. The income tax must change, without government approval, as our economy changes from recession to the inflation cycle. You cannot put the economic pedal to the metal and not expect to go over a cliff. The income tax guides us into the herd effect. It causes a vast majority of the people to all go in the same direction and do the same thing. This is one of the reason we must enact the Zero Inflation Taxation Policy.
This would include government debt. Our savings pool would increase for normal production and consumption to take place. The velocity of money would slow down without raising cost after inflation has started to occur in an economy.
The excessive use of credit in business, investment and consumption got us into this economic crisis. Our income tax system encourages credit use and investing with credit. This is fine as long as the economy needs more credit use but when the economy is showing signs of excessive credit use, such as economic bubbles and inflation, credit encouragement should be curtailed and money investments (savings, bonds and securities) should be encouraged to maintain balance in our economy. If we first use the income tax to guide investors and consumers before the Federal Reserve must raise interest rates in the inflation cycle, this will maintain the lowest possible interest rates and maintain the value of existing savings, bonds and securities.
I do not want to eliminate the long-term capital gains tax rate. We need to encourage people to make productive investments and take investment risks. I want to neutralize it at the correct time in the economic cycle. Even though it will be neutralize for inflationary investments by the Zero Inflation Taxation Policy, it still will be available for productive investments. It would only go into effect after the Fed and the banks have created inflation in our economy.
The Zero Inflation Taxation policy would work like this. As inflation or under investment in savings, and in the bond and securities market begins to occur, the tax on money investments should automatically be decreased and the interest deduction should be decreased by the same percentage rate, based on the inflation rate. When money investments are taxed at the same rate as long-term capital gains, (currently 15%) money investments will be as valuable as inflationary investments. The balancing of money investments and capital investments would occur at the end of the year, based on the annual inflation rate, when we file our income taxes. This procedure would correct the imbalance each year instead of it building up over many years, which cause a major correction, as we are experiencing with our current economic crisis. Enact the Zero Inflation Taxation Policy
Think about it again. What the Zero Inflation Taxation Policy does is, it makes the banks responsible for the value of money. If the banks create too much money, which creates inflation, the tax code would change and encourage savings and money investments and less credit creation, there-by increasing the banks liabilities and reducing its assets. The banks would become sensitive to the purpose of the loans and total money being created.
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Leonard C. Tekaat economysflaw@yahoo.com/