New York Times Surprised Rebate Checks Not Consumed

Reid Cramer — Mon, 02 Jun 2008 14:30:00 -0400

I found Sunday's front page New York Times story on the fate of rebate checks a bit odd. With the remarkbale increases of gas prices, mortgage delinquencies, and household debt, the paper of record sounded surprised that families were not exchanging their windfall directly for more consumer goods.

Perhaps I shouldn't be shocked given how Washington sold this $158 billion package. As I said before, people would be forgiven if they felt it was their patriotic duty to spend their rebates. We knew at the time that many people were inclined to use these resoures to pay down their debts or even contribute to their savings. We know that other people in pretty good financial shape would hardly be inclined to change their behavior in any significant way.

That is not to say that there was never a macroeconomic justification for the policy but it was hard to hear it articulated by our elected leaders. Perhaps this should be an excuse for the Times. On second thought, perhaps they should have been required to read their own in-house economist (Paul Krugman) who has a spot on their op-ed page. This may have made for a more illuminating piece.

The New Thrift

Reid Cramer — Tue, 13 May 2008 16:50:00 -0400

In true blogger fashion, I've brought my laptop along to a conference we are co-hosting today on Confronting the Debt Culture.

It is a pretty compelling gathering for a couple of reasons. First off, the idea behind the conference is to raise the profile of the concept of thrift and all of the anti-thrift institutions that now prevade our culture. Secondly, the conference is sponsored by a really diverse set of organizations. It has been spreaheaded by the Institute for American Values, a group lead by David Blackenhorn which has mainly been known for its work promoting marriage. In recent years David has become a champion of thrift and has teamed up with other groups such as Demos, Consumer Federation of America, Public Agenda, and others.

It is being filmed and I supsect the keynotes will be posted. I highly recommend the presentation of Christopher Peterson, a law professor at the University of Utah who has focused his research on usury laws. It turns out that it is an ancient concept. Chris showed a slide of the babalonian stone that stated a 33% cap on loans of grain. He went on to describe the legal framework which governs payday lending across the country today and the wide range of abusive practices that are completely legal in many states. Recently, Congress capped payday loans at 36% APR but in many places it can exceed 450%! This is an area that needs alot more sunlight. He had a couple of great charts which showed how the proliferation of payday lending stores has vastly outpaced Starbucks shops and McDonalds Restaurants. And they dont add value, they strip assets from households that can not afford the hit.