NEVER TRUST BANKS

[huggybear]

KSL

i think what you are doing is really complaining about the amount of margin you are being charged. for instance, what is the acceptable % mark up that a retailer or middle man or whomever should charge you?

u complained about high end watches having 1000% mark ups. if you don't like the margin, don't buy that watch. go buy a swatch watch or a used seiko. if there are people willing to pay 5k for a rolex so be it. of course you could always make your own watch....

as for the UK economy? It is fine. that is why the exchange rate is almost 2.00 for GBP / USD. i don't want to get into the specifics on this one really. debt isn't always a bad thing...you take on debt because you are expecting tto have a steady stream of income that you can use to slowly pay off the debt you obtain to purchase an asset (i.e. a house). Japan has a debt to GDP ratio of around 250% or 300%. they seem to be doing ok.

there will always be a few bad apples but you know what? the system works! you shouldn't punish the system because you have a few bad apples. y'day i swear the taxi driver took the long way to work to try to get more $ from me instead of the usual short cut. should we thus ban all taxis in the city?

In previous posts you were saying we should educate people about the evils of banks / credit cards yet you admit a lot of mistakes you made while you were young. young people are hard headed and don't want to listen to an old geezer's stories from you (even tho i'm sure u would have very sage advice). people will make mistakes and you hope they adapt and learn from them and move on. if they don't well that's what darwinism is for. the weak are weeded out and the strong survive.

and instead of teaching people about the "evils of credit cards" why don't you teach people to be less materialistic or to live within their means? Teach fiscal responsibility.

Sales / Discounts are very useful. Do you really think a store wants to have a sale? If you're a shop owner do you really want to sell an item at a discount or would you rather sell it at full price. Again i think you are blaming the "system" when you should be blaming the consumer.

Anyways, there was a DVD released called "The Corporation." KSL i highly recommend you purchase / watch this movie. It is an excellent documentary and has some eye opening information. It is right up your alley.

[ksl]

Huggybear, it obviously appears that you are in the financial institution business, So there can hardly be a discussion here! But it would be rather interesting to see how all the readers interpretate your post.

I was a little gobsmacked that you put all the fiscal headaches onto consumers for not spending their money in hard times. Careful it all doesn't backfire on your sales pitch!

Although like you say"who's going to listen to an old man" You seem to have done, thats for sure You get around a bit, from the US to UK, I must admit you made a good move to the UK side!

It's pitiful to see the US fall off its pedestal as the number 1 in the world, my condolences, although I did wonder why the US was so eager to buy London out.
I was also shocked to hear London becoming the new number one financial sector in the world! You have to watch those Brits you know

Anyway welcome to Singapore! Your not in the vulture business are you?

Must admit you did have a couple of valid points in your post, although I think maybe you had some sleep in your eyes, from the hibernation Your in sales right? I can imagine what the DVD is all about.

The Corporation rings a bell actually, and must be part of the establishment?

One person I did admire in the states was Greenspan!

BTW you maybe right here

and instead of teaching people about the "evils of credit cards" why don't you teach people to be less materialistic or to live within their means? Teach fiscal responsibility.

Although Credit cards are only cards and not evil, I do use cards all the time, although not credit only debit.

There was time when i did consider setting up courses, to save housholds money, I think it's quite feasible to do, especially in UK, where people use their central heating systems in the summer and open the windows. My god I've seen it so many times, the waste of utilities, and then they wonder why the large bills. I reackon I could save 20% on many household bills.

[huggybear]

Indeed i work in the financial instution business but i don't work in the hotly debated credit card sector. Credit cards are very profitable but honestly just plain banking is even more profiitable. Think about it...you suck in deposits from twits like us who don't want to put their $ under the mattress or bury it in the back yard next to fifi the family poodle. They pay an interest rate of about 1.5% to you. Then they turn around and invest in the US deposits which earn around 4-5% (these rates are only provided to other banks, not individuals). So for doing absolutely nothing you earn around 3-4% return with no risk whatsoever.

Credit cards are very risky for banks in turn. It's the reason why over the past 5 years most of the major American banks have sold what they call their "sub prime" lending services.

Sub prime means the riskiest credit names (people with poor credit history which are unfortuantely poor people with a inconsistent history of employment or others who are otherwise on hard times but honestly, poor people never have any power and that's how it has been for the past 5,000 years). Banks typically charge these consumers what some term as usurious rates. They are far above what a good credit person would achieve. But honestly the rate of default for these names is quite large as well. And when economic times turn tough (recession etc.) then defaults soar. it's a very cyclical business.

Hah, i live in singapore (day 13)...tho have a number of relatives in the UK (Briston, London, Manchester) ... so have visited them a number of times.

London has always been the number one financial sector in the world and will always be because it trades three time zones (in the morning when london begins asia is still open, and in the london afternoon, NYC is open).

We bailed out London in WWII...but seriously, the middle east is buying you out now. In the 80's it was japanese names notoriously buying up basically all of the prime real estate in the USA. currently Middle east names are heavily buying UK assets. This is because as you point out below, the US's foreign policy has its reputation reeling. The US is still number 1 (who is the current superpower if it isn't???) but due to the unfortunate circumstance of 8 years of george bush if some other country got their act together they could supercede us.

yes i listen to old geezers (as painful as this can be)...but everyone makes the same mistakes.

maybe i think the crux of this issue (for me) is the american way versus the european / asian way. the american way is minimal regulation, more independance and allow the consumers the freedom to make their own choices and ultimately their own failures. govt only interjects when things get out of hand and threaten to destabilize our economy (thus we routinely allow companies to fail such as Eastern airlines, Pan Am, Enron, Worldcom, etc.).

it seems the european way from talking to my relatives is to rely on the government to take care of you (education, health care, protect you) and leave less power to the consumers. But then they always seem to bitch and moan when the government wants to raise taxes or fares to modernize or keep up with the rising costs associated with these prime socialistic institutions. They want 3rd world / developing countries a chance to rise up from poverty but then don't want to give up their prized government subsidies that protect their jobs and don't seem to understand that a 3rd world country that rises to prominence will cause consumption of basic materials and services to rise and again complain about the rising cost of health care etc.

i think i am rambling i apologize.

But there is another excellent book i want to point your attention to. It's called Confessions of an Economic Hitman which goes into detail on how the USA uses economic might and power to enslave developing nations forever and thus the USA only uses military power when the developing nations try to break out of this economic stronghold.

[Bonbon]

huggybear I see where and what you spend your time working on

they really should have logged you on to BB by now !!!! go and do some more work for our bank!!! so I get more and better bonuses!

[huggybear]

finally got it but still missing other key applications ...


i've adpated to the company way...spend the day surfing the web and go home early....

[Plavt]

KSL

i don't want to get into the specifics on this one really. debt isn't always a bad thing...you take on debt because you are expecting tto have a steady stream

However, what banks and other financial institutions overlook is; people circumstances can and often do change, the main reason most people get into debt contrary to what may or not be published or believed. When this happens the creditors spend a good amount 'wailing' about not getting their money back by perpetually harassing those who have fallen on hard times. Forget about the insurance policies they are not only expensive, they are a complete farce. When you lend money and cannot get it back because some unexpected event has occurred in somebody's life, whose fault is that?

All very well for you to rant on about 'financial responsibility' (nice cop out by the way), if people had decent incomes they wouldn't need credit cards to start with! All credit cards do is build up what I perceive as a 'false economy' and banks as far as I am concerned are mere parasites.

[ScoobyDoes]

..... if people had decent incomes they wouldn't need credit cards to start with! All credit cards do is build up what I perceive as a 'false economy' and banks as far as I am concerned are mere parasites.

Um, i have what i think is a decent enough income and have a credit card or three. I use the card a lot because i get points, more frequent flier miles and blah, blah, blah because let's face it i have to buy what i need anyway so may as well whatever others are prepared to give away.

It also allows me to consolidate all my payments into one - no need to carry walletfulls of cash but when the statement comes in, it's paid in full.

The problem is not the credit card itself, it's the training of their owners and users to still live within their means, not the means of their collective credit limit.

[Plavt]

Um, i have what i think is a decent enough income and have a credit card or three.

Bully for you, plenty of people don't.

It also allows me to consolidate all my payments into one - no need to carry walletfulls of cash but when the statement comes in, it's paid in full.

The problem is not the credit card itself, it's the training of their owners and users to still live within their means, not the means of their collective credit limit.

This is just the sort of smug reply I was expecting, in the first instance there are are plenty of debit cards which carry the visa symbol (not just electron). As for training the owners you are either oblivious or ignorant of human nature and the banks tactics in encouraging people to get into debt - their sole purpose. However, nobody can stop you living in your 'bubble'.

[huggybear]

there are always unfortuanate circumstances. one of which comes to mind is death. based on your assumptions, we should not lend money to anyone because they may die at any moment and then collection becomes difficult. businesses have to make reasonable assumptions..

you want to protect the small minority of credit card users that get into trouble and cannot pay their debt back because of sad and unforeseen problems. i don't think life is so black and white meaning a few people are fiscally irresponsible and run into problems or a few people are downsized and cannot find remployment fast enough. i'm not sure about the exact #s but i think the default rate is smalll perhaps around 10%. so you want to end all credit cards then because a few bad apples or a few people run into problems?

i'm not sure about you but i prefer the speed of a credit card transaction versus having to lug around a check book and sit there and painfully write out a check...or if i want to buy a nice watch, carrying a wad of $5,000 singapore to the store....

furthermore, remember newton's first law of physics? for every acttion there is a seperate and opposing reaction.

if you were to ban credit cards, you would cause a global recession as most people would be unable to purchase items unless they had the exact amount of cash in their bank account or would have to go apply for a loan (which is really a credit card anyways...). most likely half of us would lose our jobs as global consumption (mostly americans) stop consuming.

a hot area of lending right now is also called microfinancing. microfinancing is the loans of tiny amounts mostly to villagers in far flung regions (i.e. a $5 loan to buy a goat so you can milk the goat to feed your family and produce a revenue stream as you sell goat milk to other people). the person who invented it won the nobel prize. default rates are surpringsly low as the poor people are aware they have no other access of credit and that the only thing they have to fall back on is the pride in their family name.

microfinancing has been hugely successful as the majority of people use the credit resourcefully. there are always a few bad apples in every lot. and i'm sure a few people hit unforeseen circumstances, but really can you protect everyone?

[Plavt]

Huggybear,
You are the one making assumptions; in the first instance I never said we should not lend money to anyone because 'they may die' as you so piously assume. Peoples circumstances change for a variety of reasons and in case you don't know as seems to be the case 1 in 4 people in the UK are now struggling to pay off debts, hardly a 'tiny minority'.

Secondly I never said end all cards there are of course those with such inflated incomes they can use them to their benefit. Yes some people can and do find alternative employment but for many that can mean a huge drop in income.

Your defence of having to carry a credit card to avoid carry large wads of cash I find quite laughable; as I mentioned earlier I have a card with the Visa symbol (not Electron) which is used the same way as a credit card so need to carry large wads of cash - I never do! By the way when I buy my airline tickets I get points like anybody else, as far as any electronic system is it is a credit care even though it is not.

if you were to ban credit cards, you would cause a global recession as most people would be unable to purchase items unless they had the exact amount of cash in their bank account or would have to go apply for a loan (which is really a credit card anyways...). most likely half of us would lose our jobs as global consumption (mostly americans) stop consuming.

Global recessions occur for a number of reasons and I doubt if anybody can predict global recession based on whether not people have credit cards. In any case economics is not about that not to mention what happens when there is a global recession and people are unable to meet their financial commitments.

Microfinancing sounds like a 'stunt' the bank are very good at; lending money to countries who then have great difficulty in repaying it and who suffers in the end? The likes of us through 'hiked up' interest rates, banks have sure got a lot to answer for!

[ScoobyDoes]

Um, i have what i think is a decent enough income and have a credit card or three.

Bully for you, plenty of people don't.

I'm not disputing that and i didn't say otherwise, only that you said people with decent incomes don't need credit cards when in fact they become a useful tool. Your point about debit cards is fair, however many banks on this side of the Causeway have no such facility and it was only recently they were even introduced into Hong Kong, after i moved out.

It also allows me to consolidate all my payments into one - no need to carry walletfulls of cash but when the statement comes in, it's paid in full.

The problem is not the credit card itself, it's the training of their owners and users to still live within their means, not the means of their collective credit limit.

This is just the sort of smug reply I was expecting, in the first instance there are are plenty of debit cards which carry the visa symbol (not just electron). As for training the owners you are either oblivious or ignorant of human nature and the banks tactics in encouraging people to get into debt - their sole purpose. However, nobody can stop you living in your 'bubble'.

Hardly a bubble. With banks charging 17-20% interest on credit card balances i am the last to say they are the best line of credit however used properly there is little to argue against them, except the obvious security concerns. When debit cards become more widespread and i end up being able to get one then i will look again, but until then i am happy earning points and taking all the free gifts.

[Plavt]

When debit cards become more widespread and i end up being able to get one then i will look again, but until then i am happy earning points and taking all the free gifts.

Ok, I see your point and that would seem to suggest that such a system has yet to catch on in Asia. Although as far as I am able to ascertain Singaporean banks are far stricter about issuing them than UK banks; I remember reading elsewhere they are only issued to those with an income above a certain level.

[jpatokal]

All very well for you to rant on about 'financial responsibility' (nice cop out by the way), if people had decent incomes they wouldn't need credit cards to start with! All credit cards do is build up what I perceive as a 'false economy' and banks as far as I am concerned are mere parasites.

Credit is a bit like gambling: some people get their fingers burned, badly, but most people are smart enough to indulge responsibly.

When I was a kid, my parents taught me a very simple little rule: if you can't afford to pay the price in full now, don't buy it. I'll admit that my sample set is limited, but I've known a few people who've gotten into problems with credit card debt, and not one of them ended up there because they used their credit cards on groceries or paying for Mom's hernia operation. No, it was just instant gratification (I want to go clubbing! I want a big TV! I want a fancy computer! I want that LV bag!) and a lack of understanding of how credit actually works. Then they lost their job, or had to pay for that hernia operation, and the carpet was pulled out from their sand castle (if you'll allow me to mix my metaphors).

[Plavt]

Credit is a bit like gambling: some people get their fingers burned, badly, but most people are smart enough to indulge responsibly.

All very well for you making this statement along with the rest of your post. However, a large percentage of people in the UK as I mentioned earlier are struggling to pay off credit card bills. The fact is banks through advertising and other tactics have encouraged people to get into debt. One trick is to keep raising somebody's credit limit even though they never asked for it!

I doubt if the banks lose that much; the simple fact is they have ways of proctecting themselves against such loss although to what extent I do not know. As for the debtors a simple solution and one that is becoming more common is; more and more people are declaring themselves bankrupt despite the possible implications. Although that said a good many possibly the majority have nothing to lose.

[ScoobyDoes]

When debit cards become more widespread and i end up being able to get one then i will look again, but until then i am happy earning points and taking all the free gifts.

Ok, I see your point and that would seem to suggest that such a system has yet to catch on in Asia. Although as far as I am able to ascertain Singaporean banks are far stricter about issuing them than UK banks; I remember reading elsewhere they are only issued to those with an income above a certain level.

Actually i may concede that it's easier than you think.

My wife, back in Hong Kong, still has more than 12-cards of various sorts. One of the competitions at her company's annual dinner a couple of years ago was to give a prize to the table with the most cards, then another prize to the individual with the most...... my wife's table won, but she didn't.

It is VERY tricky keeping a track of all this, this is true, but why so many? Some cards have special promotions from one month to the next, such that maybe one gives double points, one gives a special conversion rate to air miles, one has a lucky draw when spending x-amount of dollars etc. All will give discounts at restaurants but obviously the preferential card changes from one restaurant to the next so to get that extra 15% off the bill means having the right card.

Whilst the credit card company does look at a person's income i don't really know if it checks on how many cards a person has etc. although this is most likely a lower consideration than directly looking at a person's own credit rating. I think through all her cards my wife has probably more than twice her annual income in the line of credit. Scary stuff indeed.

This is where training/education, call it what you will, in personal finance is ever more important. It should be more of a subject at school than let's say ancient Greek history (you know, we were taught more about Egyptian history than British history at school when i was back in the UK!). I'm not denying people get into trouble, and often through no fault of their own but there are many more that get sucked in simply because they don't know how to play along. This is where debit cards have their advantage right enough and i had one of those in the UK more than 10-yrs ago and got by just fine.

I know you are quite far away but take this as a further example (although very off topic)..... we are getting adverts on TV here for NEW Pepsi Max. This is not a new version of Max, this is just NEW in that we've not had it before. I was drinking this stuff 20-yrs ago in the UK so some countries are a little far behind yet, in many things.