Exclusive Credit Card From Barclays Bank

Even before the credit card bill was formally signed into law in late May but more so since, credit card companies have been furiously cutting the existing customers' credit limits, raising fees, raising APRs, sometimes cancelling the cards altogether, just when the U.S. consumers can use extra help to get through the tough times that are getting tougher. This bill has joined so many others in creating "an unintended (but very predictable) consequence". (I sure hope that it was indeed "unintended", but I may be too naive.)

But no, not at Barclays Bank. One of my friends got this invitation to apply for their exclusive card.

BLACK CARD. The World Awaits.

It claims to be the world's most prestigious and versatile credit card. The features include:

• Limited membership


• 24-hour concierge Service


• Exclusive rewards program


• Luxury gifts


• Patent pending carbon card


• Annual fee $495

APR is variable at 13.24%, and it has one feature that hardly any other credit card issuers offer these days: Maximum fee on balance transfer of only $50. The norm these days for balance transfer fee is 3 to 5% of the transfer amount, with no maximum.

If they charge $495 annual fee, they can be gracious and charge only $50 for your balance transfer, I suppose. But this annual fee of almost $500, I've never seen anything like this before, not even during the bubbly late 1990s or mid 2000s.

(What's with "carbon card"? Does Barclays Bank want us to think this card is capturing "carbon" therefore it is so "green" to carry this card?)

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Unintended Consequences Part II

(For Part I, click here.)

Every action has reaction, and that reaction is often not what the action was supposed to cause, not at least by the people who planned/executed the action. There are people, however, interested in the action and or its resultant reaction but having no say in its planning nor execution: a third party, you might say. These third party people often see the unintended, negative consequence before the action is to take place and warn the ancion implementers. They often get totally ignored, or worse, ridiculed. And when that unintended consequence actually happens instead of intended consequence, they are often still ignored, ridiculed, or worse, attacked as agents of bad outcome as if they are the ones who caused it. All the cool-headed third party could do is to say "I told you so".

Spanish experience shows so-called "green jobs" cause more job and money losses:

The March 2009 Study of the effects on employment of public aid to renewable energy sources says

• Every job created in renewable energy sector that the State (Spain) managed to finance, 2.2 jobs were lost from the non-subsidized sectors.
• Spain spent 571K Euro per each green job since 2000; 1 million Euro per wind power job.
• Only 1 in 10 green jobs resulted in permanent position.
• Spanish citizens should expect to pay higher utility rate (31% higher) or pay higher taxes in order to cover the cost of subsidizing the inefficient renewable energy generation.
• Spain runs the risk of being straddled with obsolete, inefficient legacy assets (particularly in wind and photovoltaic).
• The executive summary is titled "Lessons from the Spanish renewables bubble". It's a green bubble.
• Spanish experience is what President Obama cited as model.

Government and cutting-edge technology usually don't go together. But I was encouraged to see the word "bubble". Here we go! We need a new bubble so that we can re-inflate the economy, right?

To be fair, Germany says green job will shorten recession. I lived in Germany for a brief period (6 months or so). I rented an apartment. What I still remember is several huge dumpsters in the apartment courtyard, where the residents were supposed to sort out 5 or 6 different types of garbage. Most residents didn't have that kind of time - they were busy making a living. So what seemed to have happened was they brought down the garbage, in paper or plastic bags and just left the bags outside the bins. Every week I saw piles of these bags in the courtyard, outside the dumpsters. The only thing that was sorted out was newspaper. I'm sure they had a surge of employment at garbage sorting facilities.

Britain's wind farms stopped working during this January's cold spell, though it was blamed on UFO. Seriously.

Proposed crackdown on offshore tax havens and the so-called "tax cheaters" upset the British bankers.

And they are threatening to throw out the US clients because it will be too expensive to service US clients if the new international tax proposal by the Obama administration (it's in the budget proposal) gets enacted.

If I remember right, the Brits, from the prime minister on down, were openly and enthusiastically supporting the candidate Obama. They now have to be prepared to take the whole package, I'm afraid, and that may include a US invasion of the UK territory (Cayman Islands), as expressed by a US journalist (see my post, 2nd half).

Standard and Poor threatened the UK with downgrade.

And they ended up scaring the US financial markets and threatening the US dollar. The stock market lost interest in going up, the yields on longer-dated Treasuries skyrocketed, and the US dollar index sank to a multi-month low, to a 20-year support level.

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Unintended (and Predictable) Consequences

Credit card reform bill

• Intention: To protect consumers from "unfair and abusive" practices by credit card companies.
  
• What many consumers are already getting: Notice from credit card companies for increased rates and fees, reduction of borrowing limit, or outright cancellation.
  
• What all consumers will eventually get: higher rates across the board, regardless of their spending and paying habits.

Federal Reserve's decision to buy longer-term Treasuries

• Intention: To keep the interest rates on longer-term loans low.
  
• What's happened: Fed becoming the buyer of last resort. 10-year and 30-year Treasury yields have gone up.
  

Bank "Stress Test"

• Intention: To restore public confidence
  
• What's happened:
  - The test itself, and the test results are perceived as joke or worse.
  - Has helped banks to raise capital at a much higher level, which has made investors more suspicious of the test's intention.

The White House and Congressional outrage over AIG bonuses

• Intention: To show that they share the outrage by average citizens over excessive compensation by an entity on life support with taxpayers' money
  
• What's happened:
  - Initially it was working, until the word got out that AIG may have been used to funnel tens of billions of dollars to the US and foreign banks. The sheer size of AIG bailout ($170 billion) started to get more attention, too.
  - The punitive 90% tax rate proposed by Congress for AIG employees who received bonuses was perceived as setting a dangerous precedent.

Chrysler's bankruptcy/restructuring

• Intention: To restructure Chrysler into a viable, competitive business; to protect US workers [=UAW workers] and keep the jobs in the US.
  
• What's happened so far:
  - Fiat is getting a free lunch with no money down.
  - 1st-lien secured bond holders got half of unsecured claim holders (totally ditching the bankruptcy law).
  - Investors will be wary of investing in any troubled US company receiving any form of US government aid.
  - It looks more and more like Chapter 7, not 11. Chrysler and soon-to-be bankrupt GM are shutting down their dealerships which will result in job loss and bankruptcies.
  - GM says it will import cars made in China.

I hope they were at least "unintended".

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