12.30.08
Posted in Uncategorized at 4:11 pm by Eric
My apologies for the slow posting. The reasons: (1) Illness, (2) Busy-ness at the office, (3) Holiday busy-ness at home, (4) Knowledge that it normally takes weeks for a new blog to get into the search engines, with the result that my posts this year will probably get read by fewer than 50 people. Starting in 2009, the holidays will be over, hopefully my six-week illness won’t return, and the blog should be into the digital halls of Yahoo, Google, Alta Vista, Ice Rocket, and other search engines.
For now, I offer this piece of justice: “The family of an Eastern Michigan University student settled with the school for $2,500,000 following the student’s rape and murder in one of defendant’s dorms. Plaintiff cited breaches in security as the reason for the woman’s death, which defendant disputed. The settlement was reached prior to the filing of a lawsuit.” Readers might recall that EMU (allegedly) engaged in a questionable cover-up following the incident.
That’s it for 2008. Let’s hope for a better 2009!
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12.11.08
Posted in Uncategorized at 9:24 pm by Eric
Many people might be aware of the Fraudulent Transfer Act. It basically says, “If you transfer assets in order to avoid creditors’ claims, you’re committing fraud and the person that receives your assets must disgorge them.” Under a recent Michigan Supreme Court ruling (Estes v. Titus), the Act now applies to divorce: If you get a divorce (presumably, a pretty friendly one) and give your spouse most of the assets with the intent that your creditors can’t get much, your spouse can be sued and forced to disgorge the assets.
In these troubled times, it seems to me that the arm of the Fraudulent Transfer Act is growing longer and stronger. If you have creditors on the horizon, tread carefully if you plan to start divesting yourself of assets.
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12.10.08
Posted in Uncategorized at 2:50 pm by Eric
America hits recession in late 2008, but some areas of our country have been suffering for many years, both geographically (Michigan and, to a lesser extent, Florida) and segment-wise, especially newspapers. The economic downturn combined with the advent of the Internet is killing print. The Tribune Company has filed for bankruptcy. I’m often opposed to newspapers (I hate the mess they leave on hands and the kitchen table) and I dislike their predominant political tilt, but this is a sad ongoing development.
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12.09.08
Posted in Uncategorized at 5:58 pm by Eric
The real reason for the Big 3 bailout: NASCAR needs it. Excerpt:
NASCAR — the titan of American motor sports, perhaps second only to the NFL in prestige and drawing power — knows that without Congress intervening to help the Detroit Three, the world of stock car racing will be rocked as if hit by a giant meteor.
Manufacturer support in the hundreds of millions of dollars from GM, Ford and Chrysler would dry up. The Sprint Cup Series — NASCAR’s showcase — could disappear, or change radically, before the dust settles.
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12.04.08
Posted in Tax at 12:47 pm by Eric
The left-leaning Citizens for Tax Justice want more Americans to pay estate taxes. Why? Because the government allowed them to earn their money, so they ought to give more back to the government. “Looking at America’s millionaires today, one doubts that very many of them would ever have acquired their wealth if the government had never provided these goods and services. It’s entirely logical that the families who have accumulated large fortunes be asked to contribute more to the society that made these fortunes possible.”
The argument fails on so many grounds, it’s impossible to get into it here. But just two points for now:
Is someone a millionaire because he saved all his life and, thanks to an inflated money supply, now has over a million dollars? Or does he need to earn $1 million annually in income? Or is there some other test?
Society provides a framework for a man to make money, but does government? And since when are the terms “society” and “government” synonymous? Many cogent thinkers, such as Robert Nisbet, have pointed out that government is often anathema to society: the more government does, the less the little platoons on society have to do, and then those little platoons start to fall apart.
You can read the group’s the nauseating palaver here.
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12.03.08
Posted in Uncategorized at 3:34 pm by Eric
This came across my bankruptcy docket monitoring system today: A complaint by Discover Card to hold its credit card debt nondischargeable on grounds of fraud. It’s rare I see these types of complaints, so I checked it out. I figured, “This must be some sort of monster debt and saturated with all sorts of bogus expenditures.” Not so. Although it can certainly be argued that the debtor racked up charges with no intent to pay, this case didn’t seem exceptional compared to scores of other Chapter 7 filings I’ve seen.
It makes me wonder: In light of the credit card industry’s problems, are credit card companies starting to go after bankrupt debtors more? I don’t blame them. A whole lot of consumers who figured they could merely charge up their cards then discharge them in Chapter 7 might be receiving harsh corrections.
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12.02.08
Posted in Tax at 9:28 pm by Eric
Fifty states, fifty tax laws. And this tax lawyer is going to tackle all of ‘em. I’ll be curious to see how she grapples with Michigan’s oddities.
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12.01.08
Posted in Uncategorized at 3:07 pm by Eric
You ever wonder how credit card companies can offer cards to every 18-year-old and every person who has just filed Chapter 7 bankruptcy (yes, it happens every time)? This op-ed is one of the best explanations I’ve ever seen . . . and should make everyone scream at the Treasury Department’s suggestion that we bail out the industry. Excerpt:
The card industry’s business model is the heart of the problem and needs to change. Just as with subprime mortgages, the credit card business model creates a perverse incentive to lend indiscriminately and ignore delinquencies. Card issuers make money on every credit card transaction, regardless of whether the consumer ultimately pays a finance charge. The issuer receives around 2% of every transaction in a fee paid by the merchant (and passed on to all consumers in the form of higher prices). This fee is called the interchange fee. Card issuers will collect about $48 billion in interchange fees this year.
Because interchange is based on transaction volume, it creates an incentive for banks to issue as many cards as possible, regardless of the creditworthiness of the borrower. . . .
Banks have compounded this problem by shifting much of the loan risk to investors through securitization. When card issuers securitize credit card debt, they transform the credit card debt into a pool of assets used to pay off bonds. If the pool turns out not to be large enough, the bond investors take the loss. But if there’s a surplus, it goes to the card issuer.
While card issuers sell off most of the default risk, they keep any upside that comes from inflating their fees and rates. This is a heads I win, tails you lose situation and leads the banks to increase fees and interest rates on securitized debt. If the higher fees and rates cause more defaults, it is investors who bear the loss. If the higher fees result in more income, however, it is the card issuer, not the investors, who benefit.
In order to ensnare consumers in these fees, the card companies employ an ingenious system of billing tricks and traps. The hallmark of credit card pricing is obfuscation through disclosure. Card issuers have created enormously complex pricing structures, with multiple interest rates and fees. On top of this Byzantine structure, issuers then layer a filigree of abusive and deceptive billing practices, buried in reams of fine print.
Making the total cost of using a card utterly inscrutable allows issuers to play a game of three-card monte. Card issuers distract consumers from the total price of credit cards by emphasizing teaser interest rates and rewards programs. Meanwhile, issuers raise the back-end fees that consumers inevitably underestimate. Since the 1990s, overlimit fees have gone up over 115% and late fees over 160%. . . .
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