Occassional reflections of a moderate (hey at least I think I am)

Friday, June 24, 2005

What happens if credit card rates do not decrease as a result of the bankruptcy law?

Prof. Zywicki is revisiting the bankruptcy reform act and, specifically, its impact on credit card interest rates. He notes that after the law was passed credit card rates “shot up above those for personal loans” for the first time since the rates have been tracked by the source he uses. He points out that this discrepancy might be (is likely?) caused by the fact that many portions of the law do not take effect until later this year and that there has been a surge in bankruptcy filings by folks trying to get treated under the prior law.

He concludes by saying “if economic theory holds equally well once the law takes effect, we can expect lower credit costs in the long run.” He, of course, is correct with a few caveats. Most notable among these is that there needs to be real competition among the credit providers and that they will not act like a cartel. In any event, this is an empirical question (though I am not convinced the “personal loans” rate vs. “credit card” rate is the proper comparison) which we will have an answer to in six months and from there on out.

One thing I am curious about is: What happens if credit card rates do not decrease as a result of the bankruptcy law?

Tuesday, June 21, 2005

"Rorschach Test"

The TaxProf (via Andrew Sullivan ) points to this this Tax Foundation report indicating that the number of Americans who pay no income taxes is at an all time high. I think the report’s observation that the fact that so few are paying taxes is “[O]ne of the biggest obstacles facing President Bush’s Advisory Panel on Federal Tax Reform" is very true.

What is interesting to me, however, is how these facts are a kind of “rorschach test”. Do you look at the data and worry “that as the number of people paying taxes dwindles, they could become an abused and persecuted minority” or do you worry that the underlying income disparity "is not the type of thing which a democratic society - a capitalist democratic society - can really accept without addressing" ?

Monday, June 20, 2005

Patriot Act Yields results against the President's "Enemies"

I confess that I do not know all I should about the Patriot Act. There are arguments on both sides I am sure. That said, this LA Times editorial sure makes me like the Act less. (Via Kaus )

For those who don’t want to click through, short version: Cuban-American is dean at the U.S. Naval War College. Being moved by the previous Pope’s position toward Cuba, in the past five years or so he has come to side with anti-embargo advocates. This has upset many friends of the president. He goes to visit family in Cuba on a legal trip. While there he has an affair. He comes home and gets prosecuted for lying about the purposes of his trip. How did the government get the information? “Sources close to Coll believe that his liaison was discovered through secret wiretaps by the Justice Department at the behest of influential Cuban hard-liners.” {In an effort to be “fair and balanced” I include a link to this Washington Post which suggests that the affair was the “real reason for the trip” and that the disclosure of the purpose of the trip “came out during a standard debriefing at the Naval War College”. I link, you decide}

So the Patriot Act may not yield many arrests of terrorists, but at least it is nabbing the President’s enemies who are having extramarital affairs.