Wednesday, April 29, 2009

Dumbest Idea Ever

Via Reason's Hit and Run come two stories with very different points. John Stossel writes on how President Obama's idea of a "credit card bill of rights" is a terrible idea that hurts poor people, while Slate's Christopher Beam makes the case for government backed credit cards. Stossel's piece is worth a read, but the real reason I'm posting is to point out this bit of inanity from Beam:

Creating a government-sponsored lending agency—a Fannie Mae for credit cards—would rein the whole system in. For one thing, it would offer lower rates than the usual 18 percent. The government could charge, say, 8 percent interest and still turn a profit. It would include none of the usual hidden fees or surprise charges. (In 2007, penalty fees were $7.5 billion, cash advance fees were $5.6 billion, annual fees were $4.6 billion, and interchange fees were $23.6 billion.) And while the credit card industry spent $34 billion on marketing in 2007, the government would avoid that expense entirely. The card would theoretically be accepted everywhere, because merchants would know Obama is good for it.

The caveat: You'd have to be supercreditworthy to get a card. The government doesn't want to have borrowers behind on payments; if they defaulted, taxpayers would have to pick up the tab.

So the supercreditworthy, the ones with no problem obtaining credit in the first place, the ones who have reached this status by being so financially responsible in the first place, are the only ones who would qualify for a government credit card in the first place? Excuse my language, but what the fuck? How can you yammer on about the unfair fees, unfair interest rates, and unfair policies of the credit card companies and then propose a plan that does absolutely nothing for the vast majority of people affected by those policies?

I can't help but think that the left has become insistent in reinventing the term "stupid." The government can't fix everything and they most certainly can't fix problems when their solutions are explicitly not designed to address the problems that were identified in the first place.


Anonymous rose said...

I could've summed up their plan in one sentence. "Make credit cards illegal for poor people to obtain, because they're too stupid to have them." That's what they're saying.

Not sure if you're keeping up with the happenings in Detroit right now, but LL, I don't think it is absurd to call Obama a Marxist anymore. We're essentially Marxising Chrysler and GM. Lot's of awful precedents getting set in Detroit right now. Let's see these company's sell bonds after the government makes existing senior lenders subordinate to employees pension claims. Their cost of raising funds will be far higher than Honda and Toyota after the government makes clear that no lenders are in fact senior to politically connected unions.

10:17 AM  

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