Finance

Craigslist: A Barometer of the US Economy?

Written by: Emily Ferreira

Who would have thought that what was once a young entrepreneur’s hobby would turn out to be a significant barometer of the US economy?   

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Popularity: 1%

Finance

GDP: Gross Domestic Product Fails as an Indicator of Economic Welfare Part 2

Written by: Gaurav Bhola, MSM, Managing Editor & Community Manager

Gross Domestic Product has been incorrectly used as an economic indicator of the economic health and wellness of a nation and its citizens since World War II. GDP is used extensively by economists worldwide as the only and true measure of the health of an economy. As it has abroad, so has it at home, ill-served the American people by giving them a false sense of economic security. Its importance as an indicator for the standard of living has limited utility. Herein, over the years criticisms of GDP’s utility as a measure of an economy’s health and wellness are coming to the forefront.

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Popularity: 6%

Finance

How the Economic Stimulus Package Places the Burden upon the American People

Written by: Gaurav Bhola, MSM, Managing Editor & Community Manager

Is the US economy in trouble? If it is how long will the crisis last? Will the elected representatives and traditional news media tell the American people the truth or hide

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Popularity: 9%

Finance

How the Current US Economy Parallels Past Financial Crises

Written by: Gaurav Bhola, MSM, Managing Editor & Community Manager

Is the US economy in trouble? If it is what can be the extent of the damage? What is unique about the subprime mortgage crisis? Will the elected representatives and traditional media tell the American people the truth or Read the rest of this entry »

Popularity: 6%

Finance

Federal Government Seeks to Prevent Economic Recession

Written by: Gaurav Bhola, MSM, Managing Editor & Community Manager

The housing market corrections of 2007 may well continue into 2008. The government is scrambling to forestall any further market adjustments. The government wants to be proactive in avoiding any severe downturn in the economy. There is a feeling that the government needs to be doing more than the Bush mortgage rate freeze plan for certain subprime adjustable rate mortgages.

Recently, the Bush Administration announced that Read the rest of this entry »

Popularity: 10%

Finance

Credit Card Companies Target College Students - Part 3

Written by: Gaurav Bhola, MSM, Managing Editor & Community Manager

The credit card companies have ensnared the college and university system in their web of exploitation of college students. The schools have contracted with credit card companies in affinity programs that undermine students interests. An affinity program is a contractual agreement between a credit card issuer and a university in which a card company can market to the students, faculty, and alumni their cards exclusively; in return the university gets money.

The money in return for exclusivity can run into multi-millions, much needed funds for many universities. However, this comes at a steep price, with colleges forgoing their responsibilities to students. An inherent conflict of interest arises with these affinity programs; as the college overlooks student interest for sake of credit card company interest.

Affinity relationships can be worth more than $15 million, depending on the university. Usually, the affinity agreement includes the school partnering with a credit company to issue a co-branded card, a school logo card. Bank of America has majority of the exclusive deals with colleges, with 900 agreements. Chase has 40 affinity partnerships with schools nationwide.

Also, the schools can earn annual royalties, in the millions. In return for payments, card companies get access to entire student, faculty, and alumni lists. They also can market at school events, such as sports events and more.

So, what is the harm, some say? The affinity programs pose a direct threat to the schools responsibility to students benefits. The colleges when tempted with easy funds will not shy away from scrutinizing the credit terms or their marketing activities.

Chase’s wonderful credit card terms included double-cycle billing, which according to the General Accounting Office is a method used by one-third of credit card issuers. A double cycle billing example: I have zero balance and I purchase something for a $100. I make my payment on-time of $75 and carry over a $25 balance into the next statement. When I get me next statement, under the double-billing method I would be charged interest on the full $100, rather than the $25 balance alone. This is one of the most audacious, loan shark like, weasely, and reprehensible things credit card companies do.

Imagine, exploiting financially innocent students this way, let alone general consumers. Unless, there is grassroots uproar against the cozy nexus between the colleges and credit card companies, such practices will continue. The only ones to suffer will be students and their families.

Part 4: Coming soon…

Popularity: 11%

Finance

Credit Card Companies Target College Students - Part 2

Written by: Gaurav Bhola, MSM, Managing Editor & Community Manager

In the world of credit card companies, anything and anyone is fair game, until the laws say otherwise. The targeting of college students is well researched and positioned. Like other predatory business, such as payday loans, credit card issuers also prey upon the weak, the financially unsavvy. Like cigarette companies, card companies want to hook consumers to their product at a young age. In their quest for business perpetuity, card companies have expanded their innovative marketing efforts to the halls of higher education.

The aim of credit card companies on campus is to get college students to fill out completed applications. With the full acquiescence of the college and university, college students are recruited by card companies to solicit their fellow college students to apply for credit cards.

A credit card college representative provides the initial training to a group of students interested in making easy money, commission sales. A student card salesman can earn upto $15 for every completed application. In return for completing an application, you get a free shirt or some other trinket. That seems like a fair trade, your personal information for a t-shirt.
So student salesmen play the role of enthusiastic credit card pushers; while their prey, fellow college students may end up as credit card addicts. This is a clever strategy, hiring college students to seek out their circle of influence (friends) and then walk the corridors of their university to target other unsuspecting students.

Students are employed to target students because they come off as non-threatening, as being one of their own. Certainly a middle aged person would have less success marketing to young college students, than another student. The student salesmen are provided training by the card reps on how to approach students, giveaway free gifts, and most importantly, how to overcome objections.

Some of the objection handlers are, “Once you get the card, you dont have to use it, you can cut it up,” “Once you get your dream job after graduating, you can easily payoff the card,” “If you start building your credit history now, youll have great credit right out of college,” “Can come in handy when youre strapped for cash,” “Show your college pride by getting your very own college logo credit card,” and more.

In addition to college campuses, card issuers use high traffic strategic locations around campus to market to students. They put up their flee market tents in these areas, and start doling out trinkets in exchange for completed applications.
However you look at it this is exploitation of financially unsophisticated students for profit. Where is the corporate conscience, doesnt corporate citizenship extend to putting an end to such abhorrent marketing practices?

Part 3: Coming Soon

Popularity: 8%

Finance

Top 10 Reasons Santa Needs a Payday Loan

Written by: Richard Smith

To all,

This morning, my dear friend and colleague (who will remain nameless) provided me with a Lettermen-esque Top Ten list of reason why Santa needs a Payday Loan. If you find this post either offensive or non-sensical, just chalk it up to…this is what happens when programmers try to be marketers!

Happy Holidays!

Top ten reasons Santa needs a Payday Loan

1. He’s broke! I mean, the elves only get paid once a year
2. He rents the factory at the north pole, shouldve bought when North Polean real estate was cheap, might have a chance if the real estate market continues to suck.
3. His elven accountants suck - They cant depreciate goods longer than a year
4. He hired an expensive PR firm to spin the scandal of being caught trying to save money by buying cheap Chavez heating oil
5. Reindeer gas more expensive since the corn prices have gone up due to ethanol demands rising
6. He really wants to buy the snazzy Apple iSleigh
7. He has to pay hefty legal fees resulting from fighting the US government that awarded the toy bid to Haliburton
8. He has a surplus of toys since he has to give fewer to politicians since so many were bad this year.
9. Higher costs for raw materials to make toys for all the new illegal immigrants
10. Court fees trying to block latest Tim Allen movie, “The Santa Clause 17 - Vegas Vacation“

Surely we can keep adding to this list! Leave a comment with yours and if we like we’ll add yours to the list.

Popularity: 8%

Finance

Top Ten Consumer Fraud and Consumer Scams

Written by: Gaurav Bhola, MSM, Managing Editor & Community Manager

Yesterday, the Federal Trade Commission released a statistical survey of fraud in America, and the figures are astonishing. The FTC report survey shows that 30.2 million adults, approximately 13.5 percent of the adult population have been victims of fraud so far this year.

The main avenue for consumer fraud entailed deceptive weight-loss products, ensnaring about 4.8 million consumers. The consumers report two other methods involving fraudulent buyers club memberships and foreign lottery offers.

The lottery scamsters enticed victims into giving out their personal bank account information by telling them that they had won a foreign lottery. Of course, the bank account information was needed to “transfer the winnings.” In the case of consumer scam involving buyers clubs, victims were sold “memberships” they had not purchased.

The FTC consumer report shows consumer scams of several hues. The top ten consumer fraud on the FTC consumer reports*:

1. “Fraudulent Weight-Loss Products (4.8 million victims)
2. Foreign Lottery Scams (3.2 million victims)
3. Unauthorized Billing - Buyers Clubs (3.2 million victims)
4. Prize Promotions (2.7 million victims)
5. Work-at-Home Programs (2.4 million victims)
6. Credit Card Insurance (2.1 million victims)
7. Unauthorized Billing - Internet Services (1.8 million victims)
8. Advance-Fee Loans (1.7 million victims)
9. Credit Repair Scams (1.2 million victims)
10. Business Opportunities (.8 million victims)”

The consumer affairs in regards to fraud are mainly handled by the FTC Bureau of Consumer Protection. The bureau’ mission is to protect consumers against unfair, misleading, fraudulent or deceptive practices. The Bureau addresses consumer complaints, protects consumer rights, develops rules for consumer protections, conducts investigations, enforces consumer protection laws, sues people and businesses who violate the law, and educates businesses and consumers about their fundamental duties and rights.

The FTC is a consumer protection agency that not only offers consumer fraud protection but also shares and collects consumer fraud and identity theft information making them available to law enforcement agencies across the country.

The consumer report found fraud cut across age, race, and education demographics. Young consumers between 35 and 44 were thirty-two percent more likely to be ensnared than consumers between 65 and 74 years of age. African American were 22 percent of the victims, Hispanics 18 percent, and Whites 12 percent. Furthermore, college educated consumers were less likely to be defrauded than consumers without a college degree*.

The main avenues of fraudulent advertising as reported by consumers were:

• Print advertising, direct mail, includes catalogs, magazine and newspaper and advertising, and flyer’s and posters - 27%
• Internet, includes Web sites, e-mail, and auction sites - 22%
• Radio or television - 21%
• Telemarketing - 9%
• Others - 21%

If it sounds too good to be true, it probably is. You must be constantly vigilant against offers or promotions that provide quick fixes, easy money, instant remedies to various ills, and income without effort. Remember, anything in life worth doing is going to be difficult, requiring you to challenge yourself. I live by this creed, if you imbibe it as well, you are less likely to deceive yourself and be deceived by others in life.

*Source: Federal Trade Commission Consumer Fraud Survey 2007

Popularity: 11%

Finance

GDP: Gross Domestic Product Fails as an Indicator of Economic Welfare - Part 1

Written by: Gaurav Bhola, MSM, Managing Editor & Community Manager

Conceivably there is no other headline that captures the essence of the Gross Domestic Product or GDP better than the Reuters headline after the catastrophes of hurricanes Katrina and Rita.

The disasters ravaged the citizens of our country, over 850,000 homes damaged, thousands of people becoming refugees, devastation of over 1.3 million acres of forests, avoidable deaths of 1,836 men, women, and children, and more unthinkable residual destruction.

Herein, the above catastrophes profoundly illustrate the fallacies of using GDP as an indicator of economic health and wellness. Pragmatic economists for decades have been shouting from the rooftops that the GDP is an inadequate reflection of the true economic welfare of America and Americans. American government officials and politicians always talk about economic progress; their solutions for sustainable and consistent growth of the economy come in various hues. However, there is one common theme, one commonality in their arguments; they always cite the Gross Domestic Product or GDP as the only measure of economic progress. Unfortunately, the GDP is not the universal indicator of growth as the above officials make it to be. The lackadaisical use of US GDP by politicians and government officials as the one size fits all benchmark of economic health and wellness is a disservice to the American public. Alas, the public is not provided the true picture of economic progress. Herein, I will endeavor to clarify GDP and offer some alternatives for benchmarking economic health and wellness.

The GDP is used to define the market value of services and goods produced within US borders irrespective of nationality during a period of time. This differs from Gross National Product or GNP which is the total value of all final services and goods produced by Americans irrespective of their location globally. Hence, GDP and GNP are almost similar and yet wholly dissimilar; GDP (or GDI - Gross Domestic Income) focuses within the region in which income is generated and GNP (or GNI - Gross National Income) measures accrual of income to a region. The GDP reflects the economic production within the US. The most common method of estimating production is the expenditure method.

This approach evaluates the amount that government and people expend on finished goods, investment for business in plants and equipment, and net exports of America. However, GDP counts only final services and goods while certain things are not counted towards GDP:

• sales between companies
• savings & financial investments
• level of utility the public gets from consumption and production
  • doesn’t measure the effects to the public or environment’s well-being as a direct result of a financial transaction

So, GDP counts many transactions as benefits to the current economy at the expense of future growth.

Henceforth, GDP is a national average which ignores the importance of the distribution of income or economic wealth. Here are some examples of what GDP doesn’t measure:

• Simply doesn’t distinguish between financial transactions that diminish the well-being of people or environment.
• Simply doesn’t distinguish costs from benefits, presupposes that every financial transaction profits people and environmental well-being.

A Look through the GDP Prism

• GDP: Income Includes Depletion of Natural Capital

GDP treats natural capital depletion as income, unlike in accounting where it is measured as depreciation of an asset. This is counter intuitive as this would mean there is an inverse relationship with regards to depletion of natural resources and GDP count; hence, as more natural resources are used up, the GDP will increase.

• GDP: Crime and Natural Disasters are Viewed as Economic Benefits

Crime is counted as a benefit to the economy from the GDP prism, since crime spurs consumption of security items, repair or replacement of property, and spending on crime prevention security services. Damage caused by the recent natural disaster Hurricane Katrina through the GDP prism injected billions of dollars into the economy and is seen as an economic benefit, completely ignoring the negative impact upon people and the environment.

• GDP: Ignores Income Distribution

The GDP doesn’t take into account the distribution of income, as all tides don’t lift all boats. During two decades of GDP increase by over 50 percent between 1973 to 1993, wages declined by 14 percent. Also, in 1980, the real income of the top 5 percent of the households rose by 20 percent. The GDP increase was presented as a benefit to all Americans, it benefited a select few.

• GDP: Overlooks the Disadvantages of Financing the Economy through Debt

America borrows money mainly from abroad to sustain the economy. The main avenue for economic sustainability is by procuring cash through debt, by sale of our US Treasuries. This activity contributes to the GDP; alas, the debt has to be repaid. Americans mainly go into debt for consumption not capital investment. Herein, this national and personal debt must ultimately be repaid; this downside of excessive debt is not reflected in the GDP.

• GDP: Disregards Non-financial Services

The GDP doesn’t include any services of non-financial transactions such as volunteer work, elderly parental care, child care and such are not measured. Remember only monetized services are measured for the GDP. Herein, as non-financial services are replaced with more monetized services, from the GDP prism it is seen as economic progress.

• GDP: Goes Up with Rise in Environmental Pollution

The Environmental Protection Agency’s multi-billion dollar Superfund Clean-up Program of waste and toxic sites will take over 3 decades to complete, during which time the economic activity generated and expenditure for the clean-up will be added to the GDP. The initial economic activity used to generate the waste was added to the GDP, the ensuing clean-up will again add to the GDP. Thus, polluting the environment is seen as an economic benefit through the prism of GDP.

Consequently, the GDP is used whimsically by government and political officials to portray an unrealistic view of the health and wellness of America and Americans. There are measures available that can reflect the true picture to the American public. After all, we and our children have a stake in the wellbeing of our nation in all spheres; thence, we desire and deserve information critical to the wellbeing of present and future generations of Americans.

Part 2: Coming soon

Popularity: 12%