Here's what a credit crunch is...

[smilingcat]

staying clean, out of debt and paying on time IS worth doing. Like Mr. Silver says those who don't will suffer treamendously. New bankrupcy law is very tough on those who file. And those who buried themselves in debt may find that the bankrupcy court will not discharge their debt. So they WILL have to repay no matter what.

As for GM and Chrysler. It's about the dumbest thing I heard when I first saw. Too bad there isn't a 10k statement from Chrysler. The word on the street is that Chrysler's burn rate is even higher than GM. GM is burning $1billion per month. Expected time to run out of cash is sometime next summer.

Get rid of Chrysler in exchange for complete control of GMAC then keep the good part of GMAC and jettison the bad part to the federal bailout. Cerbus will have a profitable operation.

kind of simplistic. I heard that the talks fell apart. I wonder why

smilingcat

[smilingcat]

oh and credit tightening. expect the following to start:

1. if you had maxed out your card and paid down a bit, expect your limit to be reduced.
2. if you paid off your card, don't be shocked if your CC to be cancelled.
3. penalty cost to go up
4. payment schedule may become every two weeks instead of monthly. (less likely)

[Tuckervill]

There are two extremely informative podcasts from This American Life which helped me understand the whole thing a lot better:

http://thisamericanlife.org/Radio_Ep...px?episode=366
http://www.thislife.org/Radio_Episode.aspx?episode=355

Also, on the TAL homepage there is a link to the Planet Money podcasts on the same subject.

Karen

[Red Rock]

Ok, I understand all the basics of all of this but my question goes to what smilingcat had to say.

On your last post you say that if you pay off your credit card-no matter what the balance is-they(the company) will cancel it for no apparent reason? This seems a bit strange to me. That or I am not understanding this fully. Why not reduce the amount that can be used-or something to that effect?

Red Rock

[smilingcat]

Ok, I understand all the basics of all of this but my question goes to what smilingcat had to say.

On your last post you say that if you pay off your credit card-no matter what the balance is-they(the company) will cancel it for no apparent reason? This seems a bit strange to me. That or I am not understanding this fully. Why not reduce the amount that can be used-or something to that effect?

Red Rock

if the creditors/bank think you are a credit risk and even though you have paid down your card to zero, they rather not have you because of a poor credit score. In other words, they don't want you to lower the overall "quality" of the credit they extend. So they cancel you.

I've actually heard this happening to some home crafters who are involved in street fairs and art fairs.

smilingcat

[smilingcat]

Mr. Silver,

I hope your bank is doing alright. I've heard two banks were taken over in Ill just this past Sunday. Main Street and Meridian Bank were seized by FDIC. Meridian Bank is in Ill and I thought you might be from Ill.

sending you and silver a calming thoughts,
smilingcat

[Red Rock]

smilingcat-thankyou for your explanation for this.

Yes-we wish Mr. Silver is doing ok through all of this mess. Hope things are ok.

Red Rock