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Interesting Times

We’ve recently gotten distracted by how foul and evil insurance companies are, and that’s fine. It should never be forgotten that it’s an industry run by utterly vile shitbags; I worked briefly in insurance, and I’m glad I got fired because every day I went to my job I felt like I was actively making the world worse.

But when you’ve got your eye on the sparrow, that’s when the pigeon shits on your head. So while we’re temporarily distracted by the malfeasance of the insurance industry, let’s remember that the banking and finance industries are forever hoping for your eyeballs to wander so they can get back to screwing you straight into the ground.

In Australia, for example, the prime interest rate has just been raised – a move which makes absolutely no sense except as a way to fatten the fat, and which prompted Paul Krugman to call it out as particularly, and perhaps disastrously, premature. (He recommends that the prime shouldn’t even begin to move back up until the bleeding of job loss can be halted – that is, for at least two years.) Additionally, in advance of some extremely mild and long-promised credit card reform, a lot of banks (including, sad to say, my own; they’re usually not this nakedly greedy, but they’ve got, surprise surprise, a major takeover to pay for) are starting to hike their credit card and loan interest by shockingly high amounts.

This is nothing more than pure profiteering of the sort that banking regulation exists to stop in most countries; here, unfortunately, “banking regulation” means “creating laws by which banks can charge usurious rates of interest that would make a street-corner loan shark blanch in embarrassment”. Even the minor consumer protection laws that are scheduled to go into effect next year are too much for the banks to bear, so they’re going to spend the next 6-8 months soaking their customers for everything they can get.

Is it short-sighted? It goes without saying. Doubling someone’s interest payment at a time when jobs are hemorrhaging and people are having trouble paying their bills will almost certainly lead to more defaulted loans and cards going unpaid altogether, and in the long run, this will result in less profit for the banks than leaving the interest rates alone. But short-term gains over long-term stability has been the signal call of the financial industry since the deregulatory waves of the ‘80s and ‘90s, and since history has shown that we’ll bail them out no matter how badly they fuck up, we’ve given them precious little motivation to change that call.

There’s really not much you can do about it other than to keep an eye on your bank or switch to one of the few that isn’t going along with the gouging frenzy. But even that won’t do you any good if you’ve already got debt riding with the gougers. Times like this, the best thing you can do is memorize the names of the CEOs so you can paint them on a wall when the revolution comes.

Comments

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eatsoylentgreen
Oct. 14th, 2009 03:21 pm (UTC)
vile shitbags
word
brandiweed
Oct. 14th, 2009 03:42 pm (UTC)
But short-term gains over long-term stability has been the signal call of the financial industry since the deregulatory waves of the ‘80s and ‘90s,

Hasn't it been more like the signal call of EVERY industry since the '80s and '90s?
krinndnz
Oct. 15th, 2009 04:05 am (UTC)
Distressingly many, yes.
perich
Oct. 14th, 2009 03:52 pm (UTC)
since history has shown that we’ll bail them out no matter how badly they fuck up

I wonder sometimes, in the quiet evening hours, how badly a major sector of American industry would have to screw up such that Congress and the Treasury wouldn't bail them out. Not only did General Motors, Goldman Sachs et al fail at the fluffy value statements which they tout to the press - create a competitive domestic automobile; build a secure institution in which to grow wealth, etc - they failed at the most bottom-line item on their agenda! They failed to create value for their shareholders! They are objectively bad investments! They not only failed at building cars and accounting for money; they failed at being corporations!

And yet that's not enough to merit their extinction. So I wonder, sometimes, what it would take.
stavner
Oct. 15th, 2009 12:32 am (UTC)
A failure so catastrophic that the government would have to take over those companies entirely and permanently, similar to the British government taking over Rolls-Royce.

But Britain eventually sold Rolls-Royce. I don't know if Washington would be able to sell any companies that fail this badly.
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Leonard Pierce is a freelance writer wandering around Texas with no sleep or sense of direction. If you give him money he will write something for you. If you are nice to him he may come to your house and get drunk.

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