My dire warning
Like I said earlier, if there is one thing that will cause major problems, it's this: if banks start pulling credit from consumer en masse, it will start a chain reaction that will quickly - much more quickly than anyone can imagine - throw us into a massive depression. The entire population of the US is dependent on credit. Heck, the population in Israel is just as dependent, Israel simply uses overdraft instead of revolving credit cards. I haven't lived anywhere else but I'm assuming it's true elsewhere too. If the banks in their panic suddenly decide that everything is risky, and pull the rug from under everybody's feet at once, heck, forget the real estate crisis, we're talking complete financial system meltdown almost overnight.
I guarantee that.
What triggered this post is that just like it happened with BofA last month, we just had one of our HELOCs dropped to loan value - luckily, we had been steadfast in our refusal to pay the balance down over the past few months, and thus the overall "damage" was only about $1,500 in credit. I quickly logged in and checked the other HELOC (on the other house), and since that one wasn't "frozen" yet, I took out the entire rest of the available balance straight into my savings account. I don't need the cash, but goddamit, I need the cushion. Better to pay interest on it than not to have it available.
We are now looking at our revolving credit lines - we have around $80,000 available for withdrawal - and thinking of taking every last penny and putting it in savings. We don't need the cash. But if they took those lines away, we'd be decimated with the first unexpected twist (say, an expensive mechanical car problem). I don't think we're the only ones. Big financials are doing the same, drawing credit lines down just so they can sit on the cash. I urge you to think the same way. If you have a HELOC that hasn't been frozen yet, draw it down immediately. Take the money, put it in savings or money market (make sure it's highly liquid though), and pay the interest for money you don't need.
J'e Accuse', big banks. You are causing a meltdown right now, and it is completely and entirely your fault. There is no one else to blame but you.
And I also accuse our congressmen. Will one of them stand up and actually push through a bill that cares about consumers? how about one that doesn't allow banks to retroactively renegotiate terms on credit without actual reason (like missed payments) as opposed to internal changes in risk methodologies? sure, don't extend any more credit if you don't want to, or change your criteria moving forward, but this going backwards and changing things retroactively is the number one danger to our economy which is 70% dependent on the consumer.
Folks, I have been pretty cheerful up til about now. I'm changing my tune. My advice, get whatever you can lay your hands on. Get it now, before it you can't get it anymore. Keep it liquid, and wait. If the worst doesn't come to pass, you will have paid a bit for the privilege. If it does... you may be able to keep afloat longer. And sometimes, a couple extra breaths is all the difference between drowning and getting saved.
I guarantee that.
What triggered this post is that just like it happened with BofA last month, we just had one of our HELOCs dropped to loan value - luckily, we had been steadfast in our refusal to pay the balance down over the past few months, and thus the overall "damage" was only about $1,500 in credit. I quickly logged in and checked the other HELOC (on the other house), and since that one wasn't "frozen" yet, I took out the entire rest of the available balance straight into my savings account. I don't need the cash, but goddamit, I need the cushion. Better to pay interest on it than not to have it available.
We are now looking at our revolving credit lines - we have around $80,000 available for withdrawal - and thinking of taking every last penny and putting it in savings. We don't need the cash. But if they took those lines away, we'd be decimated with the first unexpected twist (say, an expensive mechanical car problem). I don't think we're the only ones. Big financials are doing the same, drawing credit lines down just so they can sit on the cash. I urge you to think the same way. If you have a HELOC that hasn't been frozen yet, draw it down immediately. Take the money, put it in savings or money market (make sure it's highly liquid though), and pay the interest for money you don't need.
J'e Accuse', big banks. You are causing a meltdown right now, and it is completely and entirely your fault. There is no one else to blame but you.
And I also accuse our congressmen. Will one of them stand up and actually push through a bill that cares about consumers? how about one that doesn't allow banks to retroactively renegotiate terms on credit without actual reason (like missed payments) as opposed to internal changes in risk methodologies? sure, don't extend any more credit if you don't want to, or change your criteria moving forward, but this going backwards and changing things retroactively is the number one danger to our economy which is 70% dependent on the consumer.
Folks, I have been pretty cheerful up til about now. I'm changing my tune. My advice, get whatever you can lay your hands on. Get it now, before it you can't get it anymore. Keep it liquid, and wait. If the worst doesn't come to pass, you will have paid a bit for the privilege. If it does... you may be able to keep afloat longer. And sometimes, a couple extra breaths is all the difference between drowning and getting saved.
posted by Blinkered at 11:42 AM
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