REMINDER: All investment, economics, and finance related material now appears at the new IaconoResearch.com. For the time being at least, this has become a personal blog covering a variety of mostly unrelated topics.

More on “Professional” Credit Cards

John Ulzheimer, President of Credit.com, provides a few more details about the surge in credit card company mailings for “Professional Cards” that are exempt from new regulations imposed by the Card Act (see the previous post for some context).

I’m probably the exception to the rule here, but, it seems to me that unless you have an excellent excuse (e.g., medical bills or some other emergency), if you’re over the age of 30 or 35 and you’re paying credit card companies any money in interest or fees, you’re going about your finances all wrong and you deserve to be their debt serf.

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Beware the Banks’ New Credit Cards

More evidence that banks and other institutions are already finding ways to skirt recently enacted regulations designed to protect consumers and will, someday, probably make an even bigger mess than the one the nation is still in the process of cleaning up comes in this WSJ report about purveyors of credit cards becoming quite creative recently.

Amid all the junk mail pouring into your house in recent months, you might have noticed a solicitation or two for a “professional card,” otherwise known as a small-business or corporate credit card.

If so, watch out. While Capital One Financial Corp.’s World MasterCard, Citigroup Inc.’s Citibank CitiBusiness/ AAdvantage Mastercard and the others might look like typical plastic, they are anything but.

Professional cards aren’t covered under the Credit Card Accountability and Responsibility and Disclosure Act of 2009, or Card Act for short. Among other things, the law prohibits issuers from controversial billing practices such as hair-trigger interest rate increases, shortened payment cycles and inactivity fees—but it doesn’t apply to professional cards.

Until recently professional cards largely had been reserved for small-business owners or corporate executives. But since the Card Act was passed in March 2009, companies have been inundating ordinary consumers with applications. In the first quarter of 2010, issuers mailed out 47 million professional offers, a 256% increase from the same period last year, according to research firm Synovate.

I’ve noticed these coming in the mail lately, but, like every other credit card solicitation, they quickly end up in the circular file. There has been only one exception though. We recently took American Express up on their gold card offer in return for getting a free Bose SoundDock Music System after we make $100 in purchases. The annual fee goes from free to $175 after a year, so, you know we won’t end up being long time gold card holders.

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From the current issue of the Weekend Update at Iacono Research comes this graphic that goes a long way in explaining how the model portfolio has produced a year-to-date gain of more than 11 percent. (Note that ETFs with asterisks are currently in the model portfolio.)

Of course, an all long-bond portfolio would have produced even bigger gains for those who dare lend that much of their money to Uncle Sam. For links to all of the ETFs, see below.

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Economists on the Economy

Given their mostly dismal forecasting track record in recent years and their continuing inability to reconcile what happens in the real world with what passes for economic theory, it’s not clear why economists continue to be asked for their opinions on these matters or why their views continue to be published in the financial media, but they are and they do. This CNN/Money report examines the results from the latest survey of business economists.

The air is quickly coming out of the recovery balloon, and economists have mixed views on how to pump it back up.

The National Association of Business Economists said Monday that three-quarters of its members believe that promoting economic growth should be a higher priority than reducing the national deficit, according to an August survey of the nation’s economic policy.

However, nearly the same number of NABE economists said they do not think another stimulus package is necessary to halt the economic slowdown and get the economy back on track. At the same time, a majority believe that policymakers should do more to boost job growth.

The survey, based on responses from 84 NABE economists who work for private-sector firms and industry trade associations, comes as economic growth in the United States has slowed significantly after rebounding from a deep recession. Economists have been reducing their growth forecasts, and some are worried the economy could slip back into a downturn.

Part of the problem is that it pays to be positive, that is, if you want to make a living in this field. Unless you’re one of the select few bearish economists who have been able to make a name for themselves over the years (e.g., Rosenberg, Roubini, etc.), you’ve pretty much got to have the curves on your charts going from the  lower left to the upper right.

Why would anyone hire you if you had a dim view of the U.S. economy?

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Rogers: Stop Printing Money

Long time commodity bull Jim Rogers, chairman of Rogers Holdings, was on CNBC a short time ago and shared some thoughts about how the Fed should stop printing money and advised investors to bet against Ben Bernanke and his printing press rather than with them.

Nothing Bernanke has ever said has turned out to be right. Please go back and look up his record and you will see. The man just doesn’t understand economics. He doesn’t understand finance. He doesn’t understand currencies. All he understands is printing money. This is not going to work.

Lest you think this is just spouting off, see the classic clip Ben Bernanke Was Wrong.

Monday Morning Links

MUST READS
Obama’s Old Deal – NewsWeek
Time to let home prices fall? – LA Times
No Decision on Reviving Homebuyer Credit – NY Times
Mullen: National Debt is a Security Threat – ExecutiveGov
How sugar-rush economics has left the West with a headache – Telegraph
New database on the maturity structure of publicly-held debt – EconBrowser
Monetarists Follow Milton Friedman to the Grave – Baum, Bloomberg
Why We Need a Second Stimulus – Tyson, NY Times
Defeating Demon Deflation – Chris Martenson
The Age of Mammon – The Burning Platform

MARKETS/INVESTING
Oil hovers near $75 as global stocks rally – AP
Gold firms slightly, eyes U.S. data for impetus – Reuters
Japan Eases Monetary Policy to Combat Yen’s Rise – NY Times
JP Morgan cuts Q3 oil price forecast to $75 a barrel – MarketWatch
As September Comes In, Investors Begin a Rough Month – CNBC
Stocks ready for rebound as bulls retreat – USA Today
Is There a Bond Bubble Ready to Burst? – CNBC
The true value of gold – FT

ECONOMY/WORLD/HOUSING/BANKING
Why the Faltering Recovery? – Real Clear Markets
Policy Options Dwindle as Economic Fears Grow – NY Times
Hometrack: U.K. House Prices Drop the Most in 16 Months – Bloomberg
Have we underestimated Chinese consumption? – China Financial Markets
Flipper Cash Propping Up Housing Market – National Public Radio
Foreclosures of million-dollar-plus homes on the rise – LA Times
Debate on Recession Risk a Challenge for Central Bankers – Bloomberg
Economists Consider Asset Purchases By Central Banks – WSJ
The Fed should raise rates and lower them too – FT

 
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