RealCurrents

It’s amazing that the bankruptcy bill’s provisions regarding hikes in credit card minimum payments aren’t being covered all over the mainstream press. I’m still not clear on whether credit card issuers are definitely required to double minimums on bills after October 17th, or just being pressured to do so (most reports indicate that it’s mandatory).

I’ve long been annoyed by how the press feeds us constantly news we can’t really do anything about, but ignores stuff we could actually use, or at least need to know about (one reason why blogs are growing in popularity). This sparse coverage of credit card changes would seem to be an extreme example of this. In a year where we’ve seen gas prices double, electric and natural gas rates rise rapidly, etc., it seems like a really bad time for any more abrupt changes.

I still remember the effect of the congressional bounced-check scandal back in 1994. Americans are sensitive about their pocketbooks. When they found out their congressmen were writing hot checks as a matter of course, Newt Gingrich put together the Contract With America and threw a bunch of them out. The Republicans have controlled the House ever since.

If this is true, that minimums are doubling this month, then I can’t help but picture in my mind millions of Americans furiously calling their credit card issuers, only to be told that it wasn’t their doing; Congress passed a law requiring it. I doubt that’s likely to go over too well.

Obviously, any big change ought to be phased in gradually (gradualism is one of the basic tenets of conservatism). As Austrian economist Ludwig von Mises observed, any governmental intervention in the economy is likely to produce opposite of the desired effect. Rather than “helping” Americans to pay off their credit cards faster, such a change is likely just to increase fees and therefore credit card balances, or else some other form of loans.

I don’t want to be alarmist, but I can’t help but wonder if blogger Dana Blankenthorn is right when he writes, “The next U.S. recession will start in earnest on October 17.” In any case, it will be interesting to see if there’s a quick reaction by Congress over this to fix it.

Certainly any hikes in minimum payments ought to be phased in, rather than doubled abruptly, but even if Congress reacts quickly, the holiday shopping season will likely be ruined. Add to that the housing boom and autos, I suppose.

I hope that if there really is a train wreck over this, that the press has to answer for their negligence, as well as the politicians.