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Wednesday, March 09, 2005

Haha, with my hotel, the rent is 1200$US

So I haven't been applying my super-human powers of analysis to track down every dollar and the motivations of every politician, as I said I would. That's cuz nothing's happening. I can amuse myself indefinitely with dystopic visions of the world, but until there is a policy proposal I am impotent.

What's that? The bankruptcy bill? I've only skimmed the summary. I don't think there's a problem with the current system, but there are two ways to view the effects of tightening restrictions on debtors: marginal and absolute. These are my own terms, but I will explain.

Interest rates, as others have noted, (though everyone should be aware of this), are based on the cost of money and the risk involved. In theory, all investments have the same return/risk ratio. Anyway, by reducing the risk of creditors, the interest rates will decrease. So this is a good thing from a marginal perspective.

From the absolute perspective, the change in interest rates might be less than a tenth of a percent, or they may be swallowed as profits. So, although interest rates will go down, they might go down by a tiny percent. Credit card companies will be the most affected by this, and their rates are mostly overhead and cost of short-term loans, not risk.

Supposedly this bill will also hurt people who declare bankruptcy, but I fail to see much difference between levels of bankruptcy. The time it takes to regain solvency might be extended slightly.

The bill is reputed to be primarily for special interests, but given the extreme liquidity of credit, I don't think that this will translate into a permanent rise in revenue for the creditors. If they all increase their profits, they will all be forced to lower their rates to stay competitive with each other. Of course, in the final analysis, if this bill did result in a permanent increase in profit per company, the stock prices would rise and the owners would have the same return on their investment as before, with a one-time capital gain for those that hold stock when the bill takes effect.

From an absolute standpoint, the changes in rates, profits, et cetera are insignificant. I don't know how to quantify the negative effects on debtors, which may be equally insignificant.

Or the bill may do what it claims to do- hahaha- and crack down on people cheating the system. Yeah, right. Hey, if you Right Wingnuts start to feel bad about the bill, just remember, the debtors do owe the money. They are morally obligated to pay it back anyway.

So, why is USCON so gung-ho? They managed to get 69 votes to end debate on amendments. I'm sure for many of them campaign contributions played a role, but I generally give politicians credit for adhering to their principles. Their poorly thought out, unethical principles. I can see how Republicans would be in favor of personal accountability, but it seems odd that so many Dems would be going along with it. If they are saving their energy and limited political capital for the war of attrition being waged in SS reform, then they are more inept than I thought. Among other reasons, Bush is using SS as a smoke screen for smaller issues like this. Perhaps he is not personally pushing this bill in particular, but the USCON GOPers benefit from the effect whether they are aware of it or not.

Probably, the pro-s.256 Dems just don't have any major objections, and the other 31 do. The bill seems innocuous enough.


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