Embarrassed Again -- Investigating Standard and Poors
Though I didn't like the affect it had on my retirement portfolio, I applaud Standard and Poors for having the courage to downgrade the US Government debt. The US Government is disfunctional at the moment. Congress didn't have the will to make the cuts needed to avoid exceeding the debt limit, and the Republicans with their commitment to never raise any taxes even if that means removing unfair loop holes preventing some from paying their fair share nearly took us to the brink of... well probably only a Government shut down.
I give President Obama the credit for preventing the worse case scenario, a sure thing had he left congress to do the job on their own. But either way, the behavior of congress was irresponsible. They even went on vacation without finishing the work on the FAA budget causing millions of dollars of revenue from being collected, making our debt situation worse, grant perhaps insignificant given the total deficit. And, people wonder why Standard and Poors downgraded the US. The question is why didn't the other rating agencies follow suit. I guess they didn't learn from the mortgage securities they rated AAA before they went bust pushing us into the recession in the first place.
To make it worse, now the Government is investigating Standard and Poors. And, the City of Los Angeles fired Standard and Poors after downgrading its debt. And, people have the gall to complain that the rating agencies have a tendency to rate high in order to maximize their own profit.
President Obama has only disappointed me a few times during his presidency. This is one of them. The second was when he decided to promote oil drilling on the East Coast, which of course was followed shortly by the huge oil spill.
Taking retaliatory action against rating agencies for downgrading debt is only going to prevent them from rating securities higher when they should be lower. It's bad policy for the US and it's bad policy for the City of LA.
Magobrillo
Thursday, August 18, 2011
Saturday, February 26, 2011
I love the convenience of a credit card, and I hate giving away my own cash to banks and other owners of ATM machines, and I feel safer not walking around with $500 in my wallet all the time, so I was pleased when I heard two incorrect statements regarding credit cards:
1) California state law prohibits cash discounts.
2) California state law prohibits minimum purchase amounts for credit cards.
Again, these two statements are wrong.
Now, I admit that I have made the claim above in the few cases where I have been charged a higher price for using my credit card or asked to add additional items to get my purchase price to some minimum limit, usually $10. I was surprised one day when I made my haughty claim that requiring a minimum charge was against the law when the merchant stated with complete confidence that it was definitely not against the law to require a minimum purchase.
Within a month when I went to order the services of a resume writer, I was told there was an additional charge for using my credit card. This time I wasn't so confident, so I held my peace and decided to do some research.
What is the truth?
1) California law does not prohibit requiring customers to make a minimum purchase to use a credit card. I should note that Visa and MasterCard agreements with merchants do forbid minimum purchase amounts. A merchant is violating this agreement when they refuse to take your card for a small purchase.
2) California law does prohibit charging extra to use a credit card. In other words, charging a surcharge to use a credit card is illegal.
3) The right to provide a cash discount is specifically protected by California law provided that the discount is made available to everyone. Additionally, the law states that any agreement between the credit card companies and the merchants to not provide cash discounts is void.
Merchants can offer a cash discount, but merchants can't lure you to the register with a low price only to tell you that they will tack on an extra charge if you want to pay by credit card. The difference is subtle.
Merchants take credit cards as a means to maximize profit. They know that more people will buy when they take credit cards, and people will spend more when they use credit cards. If the cost of taking credit cards is built into their prices then they will make an extra profit every time someone pays cash. If a merchant has stiff price competition then it may make sense to offer cash discounts as a means to attract customers away from the competition.
Regardless, every merchant should know that customers are annoyed and sometimes more than annoyed when they are told that there is a minimum purchase amount to use a credit card. And, charging extra is against the law, at least in California.
Magobrillo
Reference:
1) California state law prohibits cash discounts.
2) California state law prohibits minimum purchase amounts for credit cards.
Again, these two statements are wrong.
Now, I admit that I have made the claim above in the few cases where I have been charged a higher price for using my credit card or asked to add additional items to get my purchase price to some minimum limit, usually $10. I was surprised one day when I made my haughty claim that requiring a minimum charge was against the law when the merchant stated with complete confidence that it was definitely not against the law to require a minimum purchase.
Within a month when I went to order the services of a resume writer, I was told there was an additional charge for using my credit card. This time I wasn't so confident, so I held my peace and decided to do some research.
What is the truth?
1) California law does not prohibit requiring customers to make a minimum purchase to use a credit card. I should note that Visa and MasterCard agreements with merchants do forbid minimum purchase amounts. A merchant is violating this agreement when they refuse to take your card for a small purchase.
2) California law does prohibit charging extra to use a credit card. In other words, charging a surcharge to use a credit card is illegal.
3) The right to provide a cash discount is specifically protected by California law provided that the discount is made available to everyone. Additionally, the law states that any agreement between the credit card companies and the merchants to not provide cash discounts is void.
Merchants can offer a cash discount, but merchants can't lure you to the register with a low price only to tell you that they will tack on an extra charge if you want to pay by credit card. The difference is subtle.
Merchants take credit cards as a means to maximize profit. They know that more people will buy when they take credit cards, and people will spend more when they use credit cards. If the cost of taking credit cards is built into their prices then they will make an extra profit every time someone pays cash. If a merchant has stiff price competition then it may make sense to offer cash discounts as a means to attract customers away from the competition.
Regardless, every merchant should know that customers are annoyed and sometimes more than annoyed when they are told that there is a minimum purchase amount to use a credit card. And, charging extra is against the law, at least in California.
Magobrillo
Reference:
CALIFORNIA CODES
CIVIL CODE
SECTION 1747-1748.95
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