It has been months since I last shared confusion over the way everybody else uses credit cards. Today I am back at it.
Over the weekend the New York Times had a report about a new feature
being rolled out by MasterCard and Citigroup. (By which the Times means Citibank.)
The service, called inControl and already in use by some Barclaycard holders in Britain, is a sort of financial chastity belt that offers the potential to prevent a variety of budget sins and other money traps.
Worried about your restaurant habit? If your bank adopts MasterCard’s service, you could tell it to have your debit or credit card reject any restaurant purchase above whatever monthly cap you set.
I must admit I do like the name of the product. “inControl” neatly implies that without it you would be “outofControl” and I think that if this service appeals to you that is likely true.
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With a coordination that I am sure both found embarrassing, The New York Times and The Wall Street Journal both ran stories on Saturday with tips on how to deal with a bout of deflation.
This raises several questions. Do we expect deflation? If so, why? What is deflation, anyway? Why is it so bad? Is the advice from these two giants of the mainstream any good? And what was it about last weekend that inspired them to write about, of all things, deflation?
That’s a long post’s worth of rhetorical questions. So, without further ado, let’s dive right in. Personally, I do not expect deflation in the near term, at least not enough to notice. Whether or not it is expected, or even seriously worried about, in the larger investment community is a harder question to answer.
The WSJ opens its piece telling us that “The markets are signaling that a bout of deflation may be coming.” But the only market indicator cited is a rally in bonds. True, the yield on 10-year Treasuries is down this year, although it is up from where it was at the end of 2008. And yet a rally in bonds is not exactly an unambiguous statement about deflation. The bond market goes up and down all the time. Why is this rally a deflation prediction?
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SmartMoney carried an item the other day about how, according to a new survey, those crazy kids have found another way to act foolishly. They are 
taking less risk with their investments.
The factual basis for believing that younger people are taking less risk is a little thin, a single question on a survey of affluent Americans (Aflo-Americans?) done by Merrill Lynch. Still, it confirms my previously held beliefs and even fits into predictions of the future I made more than a year ago, so I am going to go with it.
52% of those under 34 described themselves as having a low risk tolerance. That is more than either the 35 – 50 age group (45%) or 51 – 64 group (46%). Only the oldest, and presumably retired, 64+ group came in at a higher rate of low tolerance, at 55%.
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The article is ominously entitled When Student Loans Live On After Death. And it begins, dramatically, thusly:
In July 2006, 25-year-old Christopher Bryski died.
His private student loans didn’t. Mr. Bryski’s family in Marlton, N.J., continues to make monthly payments on his loans—the result of a potentially costly loophole in the rules governing student lending.
And what, you may ask, is the nature of this hitherto obscure loophole that The Wall Street Journal heroically exposed this weekend? Turns out, if a loan has a cosigner, and the borrower dies, that cosigner is considered liable for the debt. This was a surprise to both Mr. Bryski’s father, who cosigned his student loans, and Mary Pilon, who wrote the article.
Are you freakin’ kidding me?
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I had not noticed this before, but apparently August is college textbook season. I guess that makes sense. School will start up in a month and college students are widely known for not leaving things to the last minute. Both SmartMoney and The New York Times’ Bucks blog came out with items on how to save on textbooks in the last 48 hours.
My first reaction to the focus on textbook costs is that it is misplaced. College is an expensive endeavor, and the price of textbooks does not help any, but let’s get real. It’s like worrying about the low gas mileage on a Ferrari. Double what you spend on books or eliminate it entirely and you’ll still graduate with essentially the same heap of debt.
Alas, this is yet another triumph of psychology over math. Textbooks, unlike tuition, are usually not financed, so the expenditure is more noticeable. Money not spent of books can be spent on Pizza. Further, my unscientific guess is that texts are more likely to be paid for out of the pocket of students, rather than by mom and dad.
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being rolled out by MasterCard and Citigroup. (By which the Times means Citibank.)
Credit Cards, Media | Frank Curmudgeon | 
August 17, 2010 11:59 am | 
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