Earn What You Spend

Only a few short months ago the media was raising the alarm about the impending threat of deflation.  Deflation is the phenomenon of things getting cheaper.  While that may superficially sound great, it is actually quite devastating to the economy.  This segment from NPR’s Planet Money outlines the potentially troubling effects.  The crux is this: we get stuck in a downward cycle of fear, unable to buy or make significant investments.  

In the past few months, however, the forecasts for inflation (or even hyperinflation) have been raised dramatically.  According to some economists, the national debt, combined with monetary policy that has [...] Continue Reading…

It was a slow train coming.  General Motors filed for bankruptcy protection this morning.  This path certainly has a number of pitfalls, but, according to the WSJ, has the potential for a rosier scenario: 
Bankruptcy should allow GM to pull off one of the most expedient downsizings in the industry’s 120-year history. Long hampered by laws, union strife and management practices that kept it from fast action to fix problems, GM plans to eliminate almost all of its debt, halve its U.S. brands, shutter 2,600 dealers and rewrite labor contracts almost overnight.

Emerging sometime this summer would be a GM with a [...] Continue Reading…

The Case-Shiller data for March was just released, and it, as expected, doesn’t look good. The NYTimes writes: 
Prices in 20 major metropolitan areas dropped in March by 18.7 percent from March 2008, according to the Standard & Poor’s Case-Shiller Home Price Index that was released Tuesday. That was about the same as February and just shy of January’s record plunge of 19 percent…

Seventeen of the cities tracked by the index declined from February. That was an improvement over the previous month, when all 20 fell. Managing tiny gains were Denver and Charlotte, while Dallas was flat.
For more analysis, head over to Calculated Risk, [...] Continue Reading…

Foreclosures haven’t abated; if anything, they continue to pick up steam.  They vary significantly by region - hotspots like Phoenix and Detroit are facing true epidemics.  Other locations - like parts of NYC, for example - seem to be mostly bypassing the worst of things. 

Yet now we’re facing what some economists are calling the third wave of the foreclosure crisis. This stage has the potential to further spiral things out of control.  The NYTimes describes these three stages: 

An initial spike in the foreclosure rate due to speculators abandoning property, largely because of declining real estate values.
The second spike came [...] Continue Reading…

The House passed the new credit card legislation, joining the Senate in legislation that will now go to Barack Obama to be signed into law.  

This is certainly the most ambitious credit card legislation we have seen in years.  I think it’s a good thing.  I’m still shocked by stories like this one -  you realize any one of us can fall into hard times rather quickly. 

The NYTimes does a great job of outlining the biggest changes: 

banks must now wait “until you’re 60 days late in making the minimum payment before applying a penalty interest rate to your existing debt.”
A required [...] Continue Reading…

If you haven’t read it already, go find a copy: this weekend’s New York Times Magazine is all about debt, and it is well-worth reading.

My favorite articles: 

Suze Orman is having a moment. 

What our credit card companies know about us is rather scary.

And an amazing story from Edmund Andrews about his personal credit crisis.   What makes it notable is that he is a finance writer, armed with plenty of financial literacy.