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General News    H2'ed 5/7/09

American Expressions; A Time for Credit Card Reform

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Message Danny Schechter

New Rules: Little attention has been given to the $48 billion in fees that credit card companies extracted from merchants last year. Largely invisible to the public, these fees, which amount to $427 per household, are ultimately passed on as higher prices to all consumers, whether they use plastic or not. These fees, known as interchange, are set by the credit card processors: Visa, MasterCard, and American Express, which together control 93% of all card transactions in the United States.

Current credit card company losses may be behind the current round of gouging but they are nothing new. It is also part of the attempt to resuscitate our speculative economy based on credit and debt. Public debt is at its highest since the l950s. Deficits are growing along with federal borrowing even as tax revenues collapse. These trends show that a squeeze on consumers will continue and could get worse.

What's even worse is that the whole government strategy with its emphasis on trying to get lending going again seems bent on returning us to the status quo ante, a failed system designed around promoting more and more consumption.

"That's the root of the credit crisis today and the economic crisis," argues professor Ben Barber, author of CONSUMED,  "The United States today has a gross national product 72% of which is consumption.  72%.  ...So the question is, how can America have a sustainable capitalism when it depends on selling people stuff they don't need they don't want and they can't afford ..."

Barber fears that the Obama economic plan like the Bush post 911 " time to go shopping again" faith-based "plan," is, "Let's get people getting those credit cards again.  Let's get people to the mall.  Let's get people spending again.... Unfortunately the new economic team of the new president may be saying somewhat the same thing.  Let's meet this world crisis by getting Americans back to the mall, getting them back to their credit cards, getting them to be able to buy the houses again they still can't afford."

Adds Economist Max Wolff: "And a bigger question to me is will we see a structural change or will we go through a long bad recession while we waste our money struggling to rebuild an unsustainable system that should have never been erected in the first place?"

So, dear American Express, thank you for your concern about my economic well being, for protecting me from my own financial situation, and for rewarding my loyalty by abandoning your own. Oh, yes, good luck in keeping the company going even as your own bonds are now considered JUNK. Last year you cut 10 percent of your work force with profits off; more recently thanks to monies from our government and more people living off their cards you are doing better.

Your last quarter brought in a net income of $437 million with revenue at $5.93 billion, an 18 percent drop from $7.24 billion in the quarter a year ago.  Your net charge-offs, a measure of bad loan write-offs, rose to 8.5 percent from 7 percent in the previous quarter.

Maybe it was all my card. Perhaps  I was the problem. I will soon  be gone.

Also, thank you for once again funding the Tribeca Film Festival which may have been one reason the Festival turned down my film In Debt We Trust.

No fear, even as I charge it, I know, contrary to your marketing slogan, my card is not my life.

Mediachannel News Dissector Danny Schechter made the film IN DEBT WE TRUST exposing credit card practices. He is following up with a film based on his book PLUNDER (newsdissector.com/plunder)  Comments to dissector@mediachannel.org

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News Dissector Danny Schechter is blogger in chief at Mediachannel.Org He is the author of PLUNDER: Investigating Our Economic Calamity (Cosimo Books) available at Amazon.com. See Newsdisssector.org/store.htm.
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