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Sep 26, 2008 -- Time to stop living on borrowed money
This is a time when average people who normally don't focus on Wall Street minutiae have a lot of questions and that's understandable. Clark could bore you all day with talk of CDOs and SIVs -- just a few of the investment schemes that helped bring about the breakdown in trust between financial institutions and the freeze in credit markets.
One thing is clear: This is a "made in America" mess that we're going to have to clean up. It won't be easy, but it won't be all gloom and doom. Now we have to take on debt to deal with the foolish debt that the wealthy took on with their high-stakes gambles that failed. This is a problem with many layers and the solution won't be as simple as flicking on a light switch.
In the aftermath of 9/11, we were told it was our patriotic duty to buy cars with 5-year loans that we didn't need, and to buy on credit in the stores. But Clark wants to hear the president say that we're living on borrowed money and we have to stop -- beginning in Washington D.C., corporate America and our households across America.
We need to get back to basics.
Unfortunately, Clark won't be able to answer any questions submitted via commenting. If you have a question, please try posting it to our message boards.
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What others are saying
Tax it back
I want to know how gubmint is going to get all the money back from those Wall Street thieves?
Credit Score
Belinda - At one point, I thought the same as you. Unfortunately, we are wrong in our assumptions. The more (unused) open lines of credit you have, the better it is for your credit score. Very low balances against huge sources of credit make you more credit worthy. Banks don't care one iota about whether you could get yourself into trouble with all those open lines of credit. They only care about your score. Which is why it doesn't surprise me we have all these banks failing. Completely messed up lending practices!
Until this gets changed (which I hope it does) do NOT close out open lines of credit with low or zero balances as this will have a negative impact to your credit score. I made the foolish mistake of doing this and it impacted my score for a while.
Credit Score and Open Credit
I was under the impression that the more open credit lines a person has (credit cards with low or zero balances) the lower the credit score. Banks knowing that you could possibly max out your credit cards at any time were less likely to want to extend you even more credit. Isn't this what banks used to council on when trying to get a home loan? When did this change? I am confused but I still do not want a lot of open lines of credit.
Owners of the Banks & Busnesses in the USA
The Saudies own 60% of Citi/Chase Bank Corp. The Arabs own a large % of other Banks & businesses. Check it out....and bank like we are taking AMERICA back.
Spending Based Economy
Unfortunately, we have become a spending based economy. Cash was passed around in the 1990's like "free love" in the 1960's. I said it then and see it now, that type of spending would come back to bite us. I was concerned in 2001 when the President encouraged people to spend money they didn't have in the name of patriotism. I was horrified when he changed laws regarding credit cards and bankruptcy...quite the setup I feel! I was further disappointed when he failed to address the failing economy and sky-rocketing inflation due to unchecked oil prices. It resulted in what we have now. I am not placing this whole situation at Bush's feet as I feel several others before him also led us down this dangerous path. I do feel his solutions early on were flawed and the signs ignored too long. But then if he'd told us no when we wanted to spend he'd have been disliked also. WHAT A MESS!
Credit Scores
I haven't had a credit card since 1997. You are correct... your score is LOW. My friends who have $30k - $50k in credit card debt can qualify for anything they want. However, my score is low because I choose to pay cash. It takes extreme discipline and you don't have what "everyone else has", but you have peace of mind when you go to sleep at night.
Credit Score vs. Credit Worthy
Is there any wonder why we are in this mess? I have often wondered why a persons credit score is higher when they have MORE lines of credit open (no balances) with the chance to get into all kinds of problems. Once I became debt-free (minus mortgage) the first thing I did was pull my credit report and close all the open lines of credit that had been opened over the years that I was not using. I only learned after the fact this is the wrong thing to do for you credit score. This seemed really wrong to me....
Seems to me the real credit worthy people are the ones who show a history of on-time payments with very few open accounts.
Does anyone else feel like I do??
STOP IT! Puulease!
"Instead of giving $700B to the financial institutions, give it back to the citizens. With that, they/we ALL could pay off their home mortgages and credit card debt"
Will somebody please buy these people a $2 calculator? If they split the money up it amounts to maybe $500 per person, not hundreds of thousands of dollars.
We partied too much, and now comes the hangover. This one looks to be a doozie.
The Bailout
Instead of giving $700B to the financial institutions, give it back to the citizens. With that, they/we ALL could pay off their home mortgages and credit card debt resulting in an immediate solution to this economic nightmare.
That would free money, normally used to pay monthly bills, for purchases that would stimulate the economy, put manufacturing back on the fast track, immediately improve our image of strength throughout the world, and send the terrorists back into their caves from lack of support.
Next, we should go after the CEOs and Board of Directors of the major institutions who put us in this position. Don't forget some of our congressional leaders who, too, were complicit in this fiasco. Seize their assets and sell them, returning their ill gotten wealth back to the American people. Jail those who broke the law. We already have Randy "Duke" Cunningham cooking behind bars. He needs some company.
No I'm not a Socialist, Communist, Democrat, or Republican. I'm an American Citizen and retired Naval Officer who served for 21 years. It's time to take back control of our country.
response to wasteful spending
We DO need to get back to basics and stop overspending. If our president wants to prove himself as a leader, he needs to encourage Americans to do this and set the example by cutting back in DC.
