Is there much hope for an economy that continues to be based on wanton consumption when events like this still happen?

These shoes are marketed specifically to provoke over-the-top consumer reactions. It’s like iPhone junkies on steroids.  This is the best news that Nike could ask for.

At some point (if it hasn’t happened already), the legions of low-rent lawyers will spring into action against Nike and the retailers for negligently marketing shoes in a manner likely to cause “rush the store” injuries to their pathetic clients.

Orlando police disperse rowdy sneaker seekers.

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The President is a smart man. Why does he embarrass himself this way?

Colleges and universities raise their tuition much faster than the rate of inflation for two reasons. First, too many of their customers (students) don’t care enough about what it costs to go to college.  These students are receiving  gobs of loan money to pay those costs. The government makes students even less sensitive to college costs by guaranteeing the loans, thereby artificially maintaining low interest rates.

When buyers don’t much care about the cost of what they are purchasing, why should the sellers keep costs low? This econ 101 stuff.

The second reason that tuition increases are out of control is that universities continue to expand their bureaucracies. They seem more interested in cultural education than practical education. For example,  the  ”diversity and inclusion”  apparatus at many colleges is sucking huge amounts of money from the primary educational mission.

Here is one article that discusses this second point and yet a third reason why the President gets an F in tuition economics.  At the same time that the government is pushing too many students into college with cheap loans, it is requiring colleges to make sure that the costs of attending exceed the amount of money that can be borrowed.

What?

Read it for yourself:  Obama Fosters the Skyrocketing Tuition He Criticized.

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First, the primary “benefit” – cash back rewards – is mythical because the cost of these rewards is passed on to the consumer through merchant fees.  This is why the credit card companies use every means (legal and illegal) possible to discourage the use of cash in retail shopping.

Second, the use of credit cards is accompanied with an unplanned spending premium.  Several studies have shown that consumers are willing to spend more for a product or service when using a credit card compared to a cash purchaser. The relative indifference to higher cost when using a credit card can easily trump any cash rewards.

More recent research casts further light on the issue. The Journal of Consumer Research has published a study entitled “Do Payment Mechanisms Change the Way Consumers View Products?”.  The authors conclude that paying with a credit card increases the desire to spend compared to the use of cash in an identical purchase situation.  This conclusion is supported by some interesting data from consumers themselves.  Consumers who pay with a credit card make a purchase decision based on their perception of superior product benefits rather than focusing on the product cost.  Conversely, a consumer who pays with cash is more likely to choose a product based on cost, even if that product offers inferior benefits.  Stated more succinctly, credit card spenders are more indifferent to cost compared to cash buyers.  (Here is a link to the study article.)

Some of you so-called “responsible” credit card users are now crying foul, thinking that this is just a research study that does not reflect the real world use of credit cards.

You would be wrong – again.

The Javelin Strategy & Research’s Online Retail Payments Forecast tells us what happened on Cyber Monday:

Frenzied purchasing periods such as Cyber Monday can cause consumers to throw cautionary spending patterns to the wind and take advantage of the “deal” phenomenon. Javelin’s study shows that consumers spend more money on a single online transaction using credit cards than when using other payment options, spending an average $82.10 with a major credit card versus $58.29 using a major debit card.

Credit card users spend more. It’s that clear and simple.

Credit card cheerleaders also like to argue that credit cards provide more protection against fraud.  Really? I was intrigued by this statement, also from the Javelin report:  ”As credit card fraud rates are higher than debit card fraud rates, consumers should set alerts and monitor their accounts carefully during this holiday period.”

‘Nuf said about that argument.

I like using my debit card, knowing that such use supports the 3% interest we receive from our rewards checking account.

Debit cards > credit cards. It’s science.

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Twice in my life I made a deliberate effort to grab a Black Friday deal. The experiences were more tiring than rewarding.  The “deals” on televisions and other electronics are mostly on the low-end models. The best deals on the better products can be found closer to Christmas, not on Black Friday.

Nevertheless, people show up in droves.  I saw people camped out in tents in a Best Buy parking lot.  For the spenders among us, it is their Super Bowl. What does that say about them? Is this considered a sensible frugal activity? Or are these folks simply caught up in the marketing hype? I think the latter. They have been told that shopping at 4:00 AM is “fun.” So to them, it must be, whether they like it or not.

I’m not the only one who is disappointed in the increasing scope of the Black Friday National Holiday. Target is receiving push-back on its “open at midnight” plan, including from at least one employee.

This is Target’s lame response:

By opening at midnight, we are making it easier than ever to deliver on our guests’ wants and needs.

Really? Then why doesn’t Target have killer deals and open at midnight every Friday?   Was a petition filed by thousands of “guests” demanding – needing – midnight shopping privileges ON THANKSGIVING?

Sad.

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The federal government has never accepted that all of its attempts to “rescue” the housing market are fruitless. Bad loans and unqualified homeowners are a sad fact of the real estate bubble. Nothing that Congress or the White House says or does can change that.

Actually, the White House probably does understand that. However, Obama and his team have been accurately labeled by most voters as economically incompetent. This is bad for them because election season is now upon us. It is time to buy some more votes, this time from “underwater” homeowners. According to the White House, these poor souls must be allowed to refinance their mortgages. The banks won’t do it and Congress won’t do it. So out come the “executive orders.”  Source: President Obama To Announce Major Revamp Of Home Lending Program, HARP.

This is so transparent. Don’t you agree?

Being underwater on your mortgage does not mean that you can’t afford your mortgage payments. It just means you aren’t highly motivated to make those payments. So this is really an effort by the Obama team to make the underwater homeowners feel less buyer’s remorse. They bought the wrong property at the wrong time and in the wrong place. It happens.

The Obama team should instead spend its time and resources prosecuting all of the bank fraud associated with stated income loans a/k/a “liars” loans that played a major role in the real estate bubble. Not even one lender or investment banker has been charged for their participation in this. To this extent, I agree with the Occupy Wall Street protesters.

After the much smaller savings and loan failures and scandals of the ’80′s, numerous criminal charges were brought, with great success. Why not now?

If you want a very clear explanation of how our government has failed to bring the Wall Street criminals to justice, listen to this report from NPR.  You will become angry. I did.

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The businesses that I dislike provide nothing of objective value to society or to an individual, except for the business owner. That would not be my sole criterion for taxing a business to death. In addition to not delivering measurable value, the targeted business would also produce results that negatively impact the rest of us.

One example of a business I would burden with oppressive taxes is a tanning bed salon. Tanning under the lights is universally recognized as dangerously unhealthy. Dumb-ass bronzers with skin cancer cost us all money. If they are insured, our premiums are higher to compensate. If they are not insured, we end up paying more taxes and/or higher medical costs to provide the free care.

You might ask if I would be in favor of simply banning the sale and use of all tanning beds. I won’t go that far. I just want the taxes high enough so that the only people who might go to tanning salons are both stupid and rich. Let them fill the tax buckets with huge personal donations while they slowly kill themselves.

There are other businesses I would target, if possible. Any retail store that relies on cigarette sales to survive needs to be gone.

If I could find a way to target the worst 25% of my fellow lawyers with killer taxes, I would. Do I need to explain why? I didn’t think so.

My fellow blogger Kyle at Amateur Asset Allocator also suggested that “junk food” be taxed to death. That would difficult. First, some folks would classify 75% of the products in a typical grocery store as “junk food.” Second, some people would starve to death if they couldn’t eat junk food. That’s harsh, even for Mr. ToughMoneyLove. Also, what would happen to the pharmaceutical industry if we wiped out diabetes?

What would you tax to death?

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Wait – it gets worse when you read the specifics: Banks and credit unions received $30.8 billion in overdraft fees in just the first 6 months of 2011.

That’s $30.8 BILLION!

How can people complain about government excess when they are wasting so much of their own money writing bad checks?  Will nothing cure them of personal finance stupidity?

I suppose that some of these folks have surrendered their credit cards (or had them taken away) and feel good that they aren’t using them.

Instead, they now write checks (or make ATM withdrawals) against insufficient funds as a way to obtain “credit.”

This is one of the worst forms of  ”stupid tax.”  Part of it is fee gouging by the banks, of course. But lack of personal accountability is the primary cause.

The feds will try to intervene but anything short of forcing the banks to close the accounts of serial overdrafters is doomed to failure.

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