At least you can buy actual non-discretionary purchases with a credit card.
I've recently become much more alarmed by the rise of these "buy now, pay later" companies like Affirm and Afterpay, which partner with merchants that most would categorically put in the discretionary bucket (shoes, makeup, jewelry, designer clothes) charging similar interest or fees.
It would be interesting to run the numbers on a jubilee for certain kinds of debt.
I realize monetary policy of inflation is in-effect a debt jubilee, as it was applied to the boomer generation in the 70s and 80s. Since diminishingly few people keep their savings in cash (instead of putting into homes, durable goods, index funds, etc), inflating away debt seems like an inevitable policy outcome. In the US, if the democrats don't do it next term with MMT, the republicans will do it with negative interest rates. It's not just a partisan issue, and it seems like there is no alternative. The main problem is that without supporting the bottom end with a minimum wage increase to match inflation, it will just be a middle class debt bailout, and the precariat will remain as screwed as they always were. Approaching this by funding a minimum income with a new VAT doesn't improve the their situation since it just subsidizes exploitation by subsidizing disadvantaged wage levels. The horror is that it's going to come down to less of what's right, and more of finding people to screw who are less likely to vote. It's a grisly business.
These Capital One people were just following orders, as the saying goes, but unsecured debt is a form of slavery. Not sure how long people will accept incremental quality-of-life improvements in slavery, but at least now we have entertainment, software, and high speed pizza delivery.
Suddenly, those land parcels in New Zealand are looking more appealing.
Have you wax economist Michael Hudson? One of his central theses is that we need debt forgiveness, as debt is piling up beyond the capacity for people to pay it. Debt grows exponentially, and it acts as a hindrance to the economy, while enriching the banking, finance and real estate sectors.
Debt forgiveness might be more palatable if it is accompanied by changes to the system that allowed an unsustainable amount of debt to be generated in the first place.
Don't many debts already have a statute of limitations? IIRC, the statute of limitations on credit card debt can be as short as three years depending on the state. I know that's not exactly the same as debt forgiveness but after seven years, the debt even falls off one's credit report, making it essentially worthless to the debt owner. Obviously things like student loans aren't so easily dismissed but there does seem to be a disjointed system of debt forgiveness already for certain types of debt.
There was a profound moment in my career when I was working as a consultant for a company I wont name, but they were in Canary Wharf, which is the financial center of London, UK.
I was in a glass high-rise building, and had been working there for about 4 weeks. The project I was working on was at heart, selling loans and credit to people who couldnt afford it - all hidden by opaque language and euphemisms like the article mentioned. After a few weeks it became clear to me that this is nothing other than programmers being told to use machines to steal from the poor, while the managers walked around like they were geniuses when really they were total frauds and liars.
We were very high up, and I remember going on lunch break and overlooking the poorer areas of London. With knowledge that the algorithms I was writing were causing them misery.
At that point I just quit, I told my boss I didn't want to be part of it. He just looked at me like I was crazy, then when I grilled him to the point of belittling his intellect, he admitted he knew what they were doing, but had an insane burn rate (wife, kids, expensive house and shit) so he couldn't just quit.
I spoke to a guy from there (probably the same company) before who said they were swept up by some kind of drive towards goals, no clue if it was financially incentivised or what but the impression I got was that the targets were sufficiently high pressure to distract them from the ethical issues of the core product? I imagine it's very easy to suppress workers feelings by the right balance of workload and above average pay until they've gotten used to that pay level and can't back out.
I have a similar one: A bank I once worked at - long since absorbed by other banks, a Dutch daughter company of Chase Manhattan - had an internal project specifically targeting people in mental institutions. These were typically fairly wealthy because they couldn't spend their money but were paid a monthly stipend by the government. All that money just sitting there was too much of a temptation and they made a special project around relieving those people of their funds.
> he admitted he knew what they were doing, but had an insane burn rate (wife, kids, expensive house and shit) so he couldn't just quit.
A core belief I have, and I try to spread it where possible, is that a person owes it to themselves and to those around them to live in such a way that they have personal freedom.
This is precisely the way in which debt is pernicious. This man is trapped in a debt cycle - just as those below him are.
We really don't need a lot to get by. But people find ways of trapping themselves - golden handcuffs - it's the house, or the car, or the kids, whatever.
These entities are very much like hostile AIs, or at least the closest we have to them in our world. Since solid state AI is not yet good enough, they use tactics like the ones you describe to assimilate meat brains and use them as components.
The whole financial industry seems very much like this. There are all these conspiracy theories that propose that someone -- some group of actual humans -- is on top, but look closely and it seems that in reality the entities themselves are on top and the whole system exists to feed itself as an end in itself.
Throughout civilization we’ve sorted all the simple problems. What should we do when someone murders? Solved. What if it’s because they were bullied? Solved. How do we identify corruption? Solved. How do we deal with alcohol? We have a half-working answer. What do we do with dictators? Solved. How do we compete to create better industries but no so much as not to have thug mentality, employees burning out at their desk and without depleting Earth’s resources?
The remaining problems are the hard ones. No surprise they are hard to solve. Ones that can be solved with our current intelligence already have a known solution.
if you'd been able to speak candidly to your boss's bosses you would have discovered that your boss had been encouraged to lead an expensive life precisely because it would lock him into the lifestyle and control his choices.
If you'd stayed and worked your way up the ladder, that would have been your fate too.
So much respect for quitting - rare, and much appreciated when it happens.
It's easy to call this kind of lending predatory, but when you leave the problem of poverty to private businesses to solve you end up with high-interest loans and payday loans.
If the government banned this kind of lending and didn't provide an alternative, poor people would have no lending options. Regulating this kind of lending (e.g. by tightening the already regulated limits on interest rates) can only go so far before the products become unprofitable and will be discontinued.
That's not really so. If you have a bunch of bad luck in one month, you sometimes need a line of credit to get to the next. Did you have a flat tire? Did the baby need three trips to the doctor because of croup?
Banks exist to make our life better when we need extra spending cash. If we ban lending to the poor than it will be one more thing that only the rich will have.
I agree that the lending rates are insanely high, but that's largely because of defaults. The rates for secured goods (car, house) are insanely low, even when the defaults are taken into account. Car loans from credit unions are below 2% because they're secured.
The real problem is that the easiest way to cure defaults is to start saying "No" more often. But no one likes to be told "no" and that's unpopular too.
Uh, car loans are below 2% only for people like you and me with excellent credit scores. "The other half" can only get financing directly from shady used car lots, where good luck even getting them to tell you the interest rate (or the purchase price) -- they focus instead on the monthly payment (and try to downplay the fact that it's for 72 months).
Yes, they are a higher for people with bad credit, but they are still reasonable compared to unsecured loans. And that was my point, not this social justice diversion.
And, yes, the rates do go up for people with a bad credit history. You can call them "the other half" but the simplest way for you to demonstrate your devotion to helping them is to quit writing comments and go lend your retirement savings to them. You seem to imply the banks are just overcharging out of some evil motive. Now is your chance to prove how wrong they are by cashing out your trust fund (you sound like a trustafarian) and loaning it out at "fair" rates.
Just remember that every default by "the other half" destroys hard earned capital of retirees. The low rates really hurt the older savers. They're part of the "other half" too.
We already banned interest, it’s even criticized in the Bible
We brought it back because it’s useful for finding business enterprises - then they looked at private individuals and businesses wondered why they couldn’t expand into those markets too - and here we are
And borrowing from loan sharks or other criminals is not the best idea. A predatory pay day loan company can set you up to fail in civil procedings about the money you owe them, and then garnish your wages, take your savings, resposess your car, etc. But there's still a limit to what they can do, and there's still that final-resort escape hatch of bankruptcy procedings.
Conversely, criminals, by definition not being bound by any such structures, can come take not just your wages or savings, but also you kidneys,
your wife or daughter, etc.
This is not to say that all criminal lenders are or would immediately become as bad as the worst stereotypes about the mafia, but whom do you think it would be a better to owe money to, when considering your long term ability to get out of debt, or even the long-term survival of yourself or family & friends? Predatory Payday Providers, or Big Tony?
> If the government banned this kind of lending and didn't provide an alternative, poor people would have no lending options.
IIRC poor women's self-run savings groups enable microcredit for poor people, and these loans generally have high repayment rates and relatively low interest. It has been a while since I read about this so it is possible that my info is now out of date.
Debt is just another business. So long as the poor keep paying on the debt, it makes business sense to keep pushing debt to them. It seems the idea is to squeeze the rock just to the point it bleeds, but not kill it.
Capital One’s secured card helped me build credit when I arrived in the US years and years ago. Interest rates were high but I wasn’t shocked by that given I was someone with no credit history.
Cap One gave me credit when I probably shouldn't have had it and I ruined it lol.
A decade+ out I have rebuilt my credit to excellent and secured cards were instrumental in that. Ironically my two secured cards from when the rebuild started have both been aquired by Capital One ;D
I defaulted on my student loans a while back and royally screwed my credit. When I decided I was going to get my shit together it started with a Capital One card with a $300 limit and I’m sure a really high interest rate. But my plan was to, of course, not carry a balance, which I didn’t.
These days my credit score is ~780 and I do some casual churning for travel points.
I hate to be cynical, but it's a bit rich to keep cashing the checks for five entire years and then having some come-to-Jesus moment. Did the change of heart go alongside some new boss who didn't like the work product? Or perhaps a plan to just move?
It's easy to dis something on the way out the door.
This sort of moment is sometimes called a "crisis of faith", and it's probably been part of the human experience since before recorded history. People sometimes have them after decades of genuine belief.
The article does spend a fair amount of time talking about why this happened, the euphemisms and mindset used by the corporate culture to avoid inspecting what they were really doing.
I don't think the cynicism is warranted. In fact, it takes a fair amount of introspection then courage to put your name on an article saying you spent so much time doing something you now find morally repugnant. The easy path is to either (a) not ever recognize you were taking advantage of poor people or (b) sweep it under the rug and go on with your life.
45 comments
[ 23.9 ms ] story [ 1546 ms ] threadI've recently become much more alarmed by the rise of these "buy now, pay later" companies like Affirm and Afterpay, which partner with merchants that most would categorically put in the discretionary bucket (shoes, makeup, jewelry, designer clothes) charging similar interest or fees.
I realize monetary policy of inflation is in-effect a debt jubilee, as it was applied to the boomer generation in the 70s and 80s. Since diminishingly few people keep their savings in cash (instead of putting into homes, durable goods, index funds, etc), inflating away debt seems like an inevitable policy outcome. In the US, if the democrats don't do it next term with MMT, the republicans will do it with negative interest rates. It's not just a partisan issue, and it seems like there is no alternative. The main problem is that without supporting the bottom end with a minimum wage increase to match inflation, it will just be a middle class debt bailout, and the precariat will remain as screwed as they always were. Approaching this by funding a minimum income with a new VAT doesn't improve the their situation since it just subsidizes exploitation by subsidizing disadvantaged wage levels. The horror is that it's going to come down to less of what's right, and more of finding people to screw who are less likely to vote. It's a grisly business.
These Capital One people were just following orders, as the saying goes, but unsecured debt is a form of slavery. Not sure how long people will accept incremental quality-of-life improvements in slavery, but at least now we have entertainment, software, and high speed pizza delivery.
Suddenly, those land parcels in New Zealand are looking more appealing.
There was a profound moment in my career when I was working as a consultant for a company I wont name, but they were in Canary Wharf, which is the financial center of London, UK.
I was in a glass high-rise building, and had been working there for about 4 weeks. The project I was working on was at heart, selling loans and credit to people who couldnt afford it - all hidden by opaque language and euphemisms like the article mentioned. After a few weeks it became clear to me that this is nothing other than programmers being told to use machines to steal from the poor, while the managers walked around like they were geniuses when really they were total frauds and liars.
We were very high up, and I remember going on lunch break and overlooking the poorer areas of London. With knowledge that the algorithms I was writing were causing them misery.
At that point I just quit, I told my boss I didn't want to be part of it. He just looked at me like I was crazy, then when I grilled him to the point of belittling his intellect, he admitted he knew what they were doing, but had an insane burn rate (wife, kids, expensive house and shit) so he couldn't just quit.
If these institutions would die, I would be glad.
A core belief I have, and I try to spread it where possible, is that a person owes it to themselves and to those around them to live in such a way that they have personal freedom.
This is precisely the way in which debt is pernicious. This man is trapped in a debt cycle - just as those below him are.
We really don't need a lot to get by. But people find ways of trapping themselves - golden handcuffs - it's the house, or the car, or the kids, whatever.
The whole financial industry seems very much like this. There are all these conspiracy theories that propose that someone -- some group of actual humans -- is on top, but look closely and it seems that in reality the entities themselves are on top and the whole system exists to feed itself as an end in itself.
The remaining problems are the hard ones. No surprise they are hard to solve. Ones that can be solved with our current intelligence already have a known solution.
If you'd stayed and worked your way up the ladder, that would have been your fate too.
So much respect for quitting - rare, and much appreciated when it happens.
If the government banned this kind of lending and didn't provide an alternative, poor people would have no lending options. Regulating this kind of lending (e.g. by tightening the already regulated limits on interest rates) can only go so far before the products become unprofitable and will be discontinued.
There is not a market solution for this.
Banks exist to make our life better when we need extra spending cash. If we ban lending to the poor than it will be one more thing that only the rich will have.
I agree that the lending rates are insanely high, but that's largely because of defaults. The rates for secured goods (car, house) are insanely low, even when the defaults are taken into account. Car loans from credit unions are below 2% because they're secured.
The real problem is that the easiest way to cure defaults is to start saying "No" more often. But no one likes to be told "no" and that's unpopular too.
And, yes, the rates do go up for people with a bad credit history. You can call them "the other half" but the simplest way for you to demonstrate your devotion to helping them is to quit writing comments and go lend your retirement savings to them. You seem to imply the banks are just overcharging out of some evil motive. Now is your chance to prove how wrong they are by cashing out your trust fund (you sound like a trustafarian) and loaning it out at "fair" rates.
Just remember that every default by "the other half" destroys hard earned capital of retirees. The low rates really hurt the older savers. They're part of the "other half" too.
Not in a society that looks after it's people.
>Did you have a flat tire? Did the baby need three trips to the doctor because of croup?
You shouldn't be paying for healthcare, guaranteed minimum income and social connections should suffice for the other stuff.
>If we ban lending to the poor than it will be one more thing that only the rich will have.
We shouldn't ban lending to the poor, we should ban lending with interest period.
This is the worst opinion I have ever read on HN.
https://www.coindesk.com/sharia-goldbugs-how-isis-created-a-...
We brought it back because it’s useful for finding business enterprises - then they looked at private individuals and businesses wondered why they couldn’t expand into those markets too - and here we are
Then they borrow from criminals, which historically provide services the government bans.
Yes... That's why they're called.. criminals?
Conversely, criminals, by definition not being bound by any such structures, can come take not just your wages or savings, but also you kidneys, your wife or daughter, etc.
This is not to say that all criminal lenders are or would immediately become as bad as the worst stereotypes about the mafia, but whom do you think it would be a better to owe money to, when considering your long term ability to get out of debt, or even the long-term survival of yourself or family & friends? Predatory Payday Providers, or Big Tony?
IIRC poor women's self-run savings groups enable microcredit for poor people, and these loans generally have high repayment rates and relatively low interest. It has been a while since I read about this so it is possible that my info is now out of date.
A decade+ out I have rebuilt my credit to excellent and secured cards were instrumental in that. Ironically my two secured cards from when the rebuild started have both been aquired by Capital One ;D
These days my credit score is ~780 and I do some casual churning for travel points.
It's easy to dis something on the way out the door.
I don't think the cynicism is warranted. In fact, it takes a fair amount of introspection then courage to put your name on an article saying you spent so much time doing something you now find morally repugnant. The easy path is to either (a) not ever recognize you were taking advantage of poor people or (b) sweep it under the rug and go on with your life.