Credit Scores are a Sham: They are no longer that important

I am really tired of this whole credit score crap.

Your credit score only matters when you are going to borrow big money. And if you do qualify, then the lender will charge you whatever they damn well please. Basically, if you own property and have a credit card, you do not need to worry about your credit score, ever. Suze Orman is delusional.

Second, they way banks have stopped making loans, you probably could not get a loan anyway, so again, your credit score does not matter. Montgomery Burns and Warren Buffet would have trouble getting a loan right now.

Now, truth be told, lenders do look at credit scores, but income and cash flow are more crucial to loan repayment. Banks do not give a significantly better rate to people with better credit scores anymore. Instead, banks look at the credit score to justify how many extra fees, insurance premiums, and pre-payments they can squeeze out of you.

Your credit score does not affect you credit card rate either. Credit cards charge everyone 27% regardless of credit score. They have never waived a $39 fee because of a credit score. It has always been more important to generate income and cash than worry about a credit score. I paid my credit card late all the time and they never reported me. They were making too much money.

Now some of this stuff is personal. I got in to an argument with someone who was concerned about trying to preserve their credit score. And their mortgage was under water. I also had a run in with a collection agency who threaten to ruin my credit by reporting me to the credit agency. I laughed and told them I would pay off the debt on my terms, over several months and then have it removed. It addition I would add a comment that I was harassed and threaten by PCR, the collections agency.


So, what can you do....

1. When borrowing, shop around for a better rate. There are community loan programs and internet sites. Watch the application fees, they are also a sham. Only pay if their is a good chance of getting the loan.
2. Credit report issues can be corrected. If you have the income, then pay off the debts. Income and cash are more important than a credit score. I have been so crapped only by my credit card company that I paid of the balance.
3. If there are blemishes on you credit report, and you have the cash, you can pay them off. Plus you can write a reason for the debt in you credit report that must be reviewed by the bank or lending officer.
4. Pay cash and save some money. I pay cash or use my debit card a lot. I have also started to save some small amounts of money. We are returning to the days of hard credit, savings and investments.

So, the credit score really doesn't mean that much any more. Lenders will charge what they damn well please. The score is really just a big fraud put on the middle class to squeeze more money from them.

By the way, nothing personal against Suze Orman. I love her meassage of female financial empowerment, but she is still delusional.

Foreclosures and Bank Profits

I have been reading a lot about sub price load market, the number of underwater mortgages and the attempts to stop foreclosures. Banks are using about every trick in the book to maintain profitability in the mortgage markets despite foreclosures.

Jobs in the State of the Union

Job proposals in the state of the Union


The president gave his State of the Union Address on Wednesday. In the address he announced several specific job creation proposals. He spoke for a little longer than an hour and mentioned the word "job" or "jobs" 29 times.

In the state of the union address the president proposed the following methods:

1) An additional stimulus plan
2) extended unemployment benefits
3) Small business incentives such as:
a)Increased small business lending by community banks by $30 Billion.
b)Tax credit for new hiring
c)Eliminate capital gains taxes on small business investment
4) Tax incentives to invest in new plants and equipment for large businesses
4) Infrastructure project like high speed rail and clean energy facilities
5) Home energy efficiency grants

The president admitted there was jobs deficit of 7 million jobs.

He also announced a national export initiative to double US exports over the next 5 years. It will help farmers and small businesses export as well and better align export controls with US security interests.

The best job related quote was "That is why jobs must be our number one focus in 2010, and that is why I am calling for a new jobs bill tonight."

Summary

We are all learning how complicated creating good jobs really is. We are also getting a great lesson in economics and how the world really works. For many decades the US and it's middle class workers have been insulated from the global and domestic economic reality.

Jobs are a both and input to and a by product of the production process. Good permanent jobs are difficult to produce through direct government actions. Instead the president and congress, have many indirect methods such as subsidies, taxes and investments to affect the economic. One of the effects is job creation.

Job creation is really the long term issue of our generation.

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New York Fire Department must fix past hiring bias

If you have ever been in Bed-Stuy, Harlem or the Bronx and wondered who those big, older, out of place white guys are ?? Well now you know! They are firefighters. And they got their cushy jobs through discrimination. At least that's what a Brooklyn Judge says.

Last week, a Brooklyn federal judge, Nicholas Garaufis, found the Fire Department of New York had engaged in intentional discrimination. Last year, he has found that the FDNY used two employment test that resulted in disparate impact discrimination. This January, he found that the deparment practiced intentional discrimination.

Now that the complaint phase is completed, the remedy phase can begin. He has ordered the city to create a new exam and compensate hundreds of Blacks and Hispanics who took the exam between 1999 and 2007. Of the 11,000 firefighters, about 3% are Black and 4% are Hispanic.

Some of his suggested remedies is the priority hiring of Blacks and Hispanics at the same rate as whites to correct for past discrimination.

The original complaint is here.

The finding and remedy proposals are here.

Don't shop where you cannot work

One of the discussions I continually hear is that Black people should spend more money with other Black people. The principle sounds great, but is very difficult to do in practice. Blacks, by many standards are extremely integrated into the US economy. Black also own very few establishments. I generally follow the principal of "Don't shop where you cannot work". In other words, if no one working in the store looks like me, I try not to shop there.

US Black National Income

One of the discussions I continually hear is that Black people should spend more money with other Black people. The principle sounds great, but is very difficult to do in practice. Blacks, by many standards are extremely integrated into the US economy. Blacks also own very few establishments. I generally follow the principal of "Don't shop where you cannot work". In other words, if no one working in the store looks like me, I try not to shop there.

So, just what is the size of the US black economy. According to the Bureau of Labor Statistics (BLS, US Black National income is approximately $640 Billion dollars after taxes. The income comes from wages, investments and government transfer payments. The analysis is based on information from the Consumer Expenditure Survey which was released in October 2009 for data gather in 2008.

 Black "Family" Income continues to grow. The average income was recorded at $43,482 after taxes.

Weekly Unemployment Claims Rise for 2nd week in a row

The Department of Labor released it's weekly unemployment claims figure for the week ending January 16th, 2010. The claims figure rose by 36,000 from 446,000 to 482,000. It was the second weekly rise in unemployment claims.

The jump could be due to seasonal factors related to end of year business layoffs. But a continued uptrend is a worrisome sign of a continued recession.





The good news is the long term trend is slowly downward after a huge peek in March of 2009.

Black Income is $644 Billion Dollars in 2008

In the BLS's Consumer Expenditure Survey US National Black Income can be computer to be about $644 Billion after taxes. There are about 14,832,000 black consumers and the earn $43,482 after taxes.

Respect for Jesse Jacskon's Wall Street Project

I attended the Rainbow/Push Wall Street Project in midtown Manhattan yesterday. The projects goals are fantastic! The goals are to increase corporate dollars spent with minority suppliers, to influence the business and economic policy of the US, to educate corporations about diversity, to showcase black businesses and to educate black businesses and consumers.

However, the low attendance shows how difficult it is to tackle economic issues in the Black Community. I could have attended as part of the press contingent but it is more important to pay and support events like the Wall Street project. We must support our institutions. As far as I know, there is no other group devoted to economic opportunity for Blacks in the United States as its primary goal.

The only disappointment I had was the low attendance. The session I attended on social media marketing was very good. But there were 30 people in a room for 200. Below is a photo from the job fair. See what I mean. There were approximately 10 organizations in attendance at the job and only one private company. It was nice to see corporate purchasing officers from NY power Authority and MTA.

Free trade for China hurts all of US

Does any see a problem with all the Chinese exports floating around. I know in a perfect world free trade benefits all of us(thanks Ricardo), the world ain't perfect.
We should spread around our trade dollars in a more strategic way. We should buy from central and south american. We should buy from Mexico and the Caribean.

Manufacturing and jobs have a longer term value above the product that is made of the wage paid. The contribute to stable societies that are allies.

If anything we should give preferences to Mexico, Central and Latin America and the Caribean. At least those countries buy US products, vote with us at the UN and aren't military competitors.