In certain circles there has always been plenty of discussion of credit reports and scores. But since the Great Recession, interest in the topic has grown to the verge of mainstream consciousness. Ordinary folks now routinely consider the
credit score impact of their actions, including such esoteric issues as the undesirability of closing unused credit card accounts. (It increases the ratio of used to available credit, which is bad.)
But through all this it seems as if the underlying point of credit scores has been lost. It is not a game with arbitrary rules meant to keep consumers on their toes. Nor is it a measure of virtue.
If you are in the business of lending money, what you want to know about a potential borrower boils down to a simple question: will this person pay me back? Credit scores do nothing more than give a probability that a borrower will make good, based primarily on his history of paying other people back, but also considering such measures of financial stress as how many times he has asked for a loan recently and the credit lines to credit used ratio mentioned above.
Read more »
I am always amused by things that started as a mocking joke but then, through repetition, slowly became 
unfunny enough that they were taken seriously. The word “software,” once used derisively by engineers who built actual electronics to refer to the work of their programmer counterparts, is a good example. Daylight savings time, first proposed in a satirical essay by Ben Franklin in 1784 is another.
To this list of the absurd becoming ordinary we can now add the idea that richer Americans should arrange to die in 2010 to save on estate taxes.
In May 2008 the Wall Street Journal ran an article with the eye-catching title of Death by Taxes: Seniors May Plan Their Demises to Maximize Their Bequests. But the author made clear his humorous intent in the opening paragraph.
Read more »
In March I wrote a post explaining how and why the US Postal Service had
begun to slowly circle the drain. It had the impact on policy makers that my more clever posts usually do, which is to say none at all. So here I am trying again.
The USPS is a business (term used loosely) with high fixed costs and a variable income. That means that what it costs to run the operation is not particularly tied to the amount of business being done. It is a setup that is typical of transportation companies, not just postal services but also, for example, airlines. (And telecoms and media companies, BTW.)
When revenues are growing, all is well. Incremental income is mostly profit, since the overhead has been paid for. But when the trend is in the other direction, an irreversible death spiral often results.
Read more »
I will admit that what got me to click on the article at the Wall Street Journal was the mug-shot-like picture of the sad middle-aged guy who could really use a shave.
Turns out, the picture is mug-shot-like because it is, in fact, a mug shot. The ennui filled subject is one Steven Brasner, a Florida life insurance salesman. He has the unmistakable look of a man who’s entire life has suddenly come crashing down around him.
I feel for the guy. It is not like the insurance thing was just a cover for some glamorously dangerous life of high-stakes crime. In that case you might expect an expression of I-knew-they’d-get-me-eventually resignation or perhaps an I’ll-beat-the-rap defiance. No, Brasner really sold insurance for a living.
Read more »
There was a (for me) thought provoking article in The New York Times the other day on Weighing the Value of Home Security System.
Our house had an alarm when we moved into it 11 years ago. It was not particularly useful. With children too young for school, there was somebody
in the house almost 24/7 so the alarm almost never got turned on. After a while it broke, I never bothered to get it fixed, and eventually I just cancelled the contract. All that is left now are some unobtrusive but ugly motion detectors in the corners of some rooms.
Home alarms are more about psychology than economics. That much is clear from the overwrought TV commercials the alarm companies run. They do not mention the discount you will get on your insurance or the average reduction in property loss. Instead we get unlikely dramas with burglars in ski masks and foiled home invasions.
Read more »
credit score impact of their actions, including such esoteric issues as the undesirability of closing unused credit card accounts. (It increases the ratio of used to available credit, which is bad.)
Credit Cards, Media, PF Blogs | Frank Curmudgeon | 
July 13, 2010 11:59 am | 
Comments (26) 
Subscribe