AskDong

The House passed new legislation intended to protect consumer from the big bad credit card companies.    I’m both personally ambivalent, and politically ambivalent about the new regulation.  Personally, I realized that I’m probably going to be hurt by the new legislation.   The new laws are not intended to protect me as I’m the type of credit card user credit card companies don’t really like.  I sign up for lots new credit cards, snapping up all the great offers, and don’t carry a balance or pay my bills late.   They don’t make money off of me because I don’t fall into their traps.  The credit card companies never have a chance to raise the rate on me or stick me with exorbitant late fees, but I still benefit from the teaser offers.   The new legislation is likely to reduce the number of great offers that come my way.

I’m willing to take a personal hit if I think the new legislation will truly help most Americans.   Sadly, I don’t think it will.   The new regulation will help some, but not enough.   The true costs of credit card debt will become more transparent and that is good.  Some of the worst practices such as puting payments towards the lowest interest rate balance should be eliminated.   However, the legislation fails to address the other side of the problem - credit hungry consumers.   Yes, the credit card companies need to be reigned in.   I believe in many of the provisions of the legislation, but we should also be issuing a firm rebuke to credit consumers.   Consumers are in trouble not just because credit card companies have taken advantage of them, they are in trouble because they have shirked tomorrow’s responsibilities for pleasures today.

The last 2 months in the stock market have felt like a return to the heydays of 1996 when Alan Greenspan so famously spooked the market with his proclamation of “Irrational Exuberance.”  Of course the market quickly forgot and rode one bubble (the tech) to the next (real estate).

I can’t but feel that we’re taking a mule ride up a rather unsteady path in the dark of night, not knowing if the next step is off a cliff.   There is legitimate good news on the economic front.  We are not facing another great depression, it seems as we have learned some economic lessons from the last.  The economy is only contracting at lesser rate than it was a few months ago.  The Economy is not healed, it’s just not losing as much as blood.  I think this should be obvious when you have less people employed, it’s hard to lay off as many people.

The stock market has responded to the less dire news with glee and joy.  We’re nowhere near the highs from early last year, but we’re far above the lows of mid March.   Who knows if we rally further from here or test new lows?   I certainly don’t.   Still, my gut feeling is that we’ll pullback as investors realize while things are not as bad as they may have looked, they’re still not good.   That’s a good thing.   I wish the economy the best, but I also want economy to recover slowly via increased savings, and healthy investment in business.  I don’t want another bubble, sustained by excess consumer spending and unconstained speculation.

I made my first trip to New York in almost over a year.  I’ve typically taken the Chinatown or Greyhound bus, but decided I wanted to try something different this time around.  The bus options have increased  since I first wrote about traveling to New York in 2007.

• Megabus: ~$30 Roundtrip*
• Bolt Bus: ~$40 Roundtrip*
• Chinatown Bus: $30 Roundtrip
• Standard Greyhoud Bus: $69 Roundtrip (Non-Refundable)
• Limoliner: $178 Roundtrip
• eFare Greyhound Bus: $38 Roundtrip
• Airline Shuttle: $165-$244 Roundtrip
• Amtrak: $144-$278, $278 is for the Acela
• Driving: $40 in Gas, and potentially anohter $40 for parking (though I usually manage to find street parking)

* Megabus and BoltBus have variable pricing for seats.  There’s are limited seats that can even be had for $1 if booked far enough in advance.

The bus routes in the northeast corridor have happily become more competitive.  Megabus and BoltBus both offer free wifi, and BoltBus offers power outlets as well (not in every seat, but enough).  The other advantage for both Megabus and Bolt over the chinatown buses is that seats are guaranteed.

BoltBus is actually owned by greyhound and peter pan and is basically their low cost carrier, kind of like the now defunct TED (United) and Song (Delta) airlines that were operating a few years back.   Megabus is subsidary of Coach USA.  While I have yet to take Megabus, I found the Boltbus lived up to advertisements.  I had more leg room than I typically have on a bus.  The wifi worked well.  I didn’t grab a seat with a powerplug as I’ve found that traveling with my iPhone to be enough.

I think one thing to keep in mind with all the discount bus carriers is that one need to plan their trip smartly.   The bus that is leaving is usually a bus that may have just arrived.  As a result, there are days when buses can be hours late because of traffic.  I would never for instance take the bus at 6pm on the Wednesday before thanksgiving.   I think taking the bus requires a certain willingness to be flexible.   I remeber a few years ago, I was taking the chinatown bus t New York.  I arrived a little late and had no seat.  I asked the woman if there were seats on the next bus, and she said yes.  As a result I decided to head out for a snack.  I came back with 15 minutes to spare, but the next bus was already full and a line had already formed for the next bus.   At that point, I demanded a refund and headed to train station and got myself an Amtrak ticket.

Many people will have a bus travel horror story to share when prompted.  Everyone has them.  Just as everyone has a airline horror story.  The train does seem to fare better than other modes of transportation - I can’t say I’ve ever had a bad train experience.   At the end of the day though, the bus is just leagues cheaper than either the train or the flying.  I found my ride on the BoltBus pretty good.

There’s some hubub regard the rejection on the part of some creditor’s of the Government proposal to Chrysler debt holders to write off a greater portion of the debt.  These “Non-TARP” lenders have appealed to the public that they represent everything that’s right in America.   They have refused to take pennies on the dollar for their nickels on the dollar.

Let’s set aside the issue if the Government should be involved at all.   The Government’s involvement is a big issue, and one that should be debated, but not critical in evaluating how lenders should be behaving.  Assume that role of the Government in this case were instead being played by that of a private investor who already owns a large stake in Chrysler.

Chrysler had hoped to avoid bankruptcy by negotiating with its lenders and union workers.  The investor was willing to put more money into Chrysler if lenders were willing to take a haircut on the money they were owed.   Most lenders and the unions agreed to these concessions.  A few held out.

On the most part, I don’t have a problem with the “Non-TARP” lenders holding out.  That’s perogative, they should decide what’s the best decision financial decision for them.   Maybe they can get more out of the Government by holding out?  Maybe they will get more via a bankruptcy proceeding.  There is one case in which the actions of these lenders may be morally questionable.  If they hold credit default swaps that insures their debt and would actually make them better off if the company were to go bankrupt.  That situation would be akin to me lending a large sum of money to a friend and then taking out a life insurance policy on that friend.   So far so good, but then let’s say that my friend is critically ill and needs a life saving blood transfusion from me.   My friend might get better but if he dies I’m definitely better off financially.

What I object to is the notion that the current actions on the part of the Government in demanding concessions somehow “breaks the rule of law” as some voices of the other end (of the White House) political spectrum have screamed.   Renogitiating when circumstances change is part of a well functioning society, and well within the idea of the “rule of law.” Chrysler is not asking for a renogitation just because it wants to, but because it has to. That’s good business. Those who believe that the “rule of law” is sacrament must believe the only option for dead beat debtors is prison. Even if we still had debtor’s prison, how do you put corporation in prison?