Primary care physicians and short term personal loans are two things American society can’t afford to lose. In order to keep the populace healthy in body, people must have access to proper health care. If they are to stay healthy in budget, particularly when emergency situations threaten to burst their budget bubble, short-term loans should remain available. Yet when it comes to doctors, that’s exactly what might be happening soon if what the latest Physicians’ Foundation survey is true.

The Physicians’ Foundation is an organization whose purpose is to “advance the work of practicing physicians and to improve the quality of health care for all Americans.” Their commitments are to the safety of patients, doctor education and quality improvement of the physician’s practice.
The survey points to doctors’ great frustration

An overwhelming majority of primary care physicians who responded to the survey - 78 percent - believe that there is already a dangerous shortage of family physicians. As the population grows, the ratio of doctor to patient will likely be stretched to the breaking point. By 2050, it is predicted that 392 million people will be living in North America, so you can see how dire a physician shortage would be.

In much the same way, if government - in concert with banks and credit unions - manage to find a way to eliminate the consumer’s freedom to choose what kind of small-scale emergency financing best suits them - frequently products like cash advance loans - these customers will be driven to less desirable alternatives. Moreover, as studies like this one by Dartmouth College Assistant Economics Professor Jonathan Zinman indicate, consumers’ economic well-being has been impaired once payday installment services are capped and removed from their communities.
Why are doctors upset?

The news gets worse. Nearly half of the primary physicians who responded to the survey (49 percent), which is more than 150,000 of the total number of practicing doctors who replied, said that they plan to either stop practicing altogether or reduce their number of patients significantly over the next three years.

Why? The Physicians’ Foundation discovered that such issues as increased time dealing with non-clinical paperwork, difficulty obtaining reimbursement and heavy government regulations have all been significant contributors. Physicians say these issues keep them from the most satisfying aspect of their job: patient relationships.

Sandra Johnson, a board member of the Physicians’ Foundation, points the finger squarely at HMOs and government red tape:

The thing we heard over and over again from the physicians was that they’re unhappy they can’t spend more time with their patients, which is why they went into primary care in the first place.

Don’t let government red tape hinder your right to choose

If you don’t want to lose your family care physician, write your state representative and demand that they fight big HMOs and put medical choices back in the hands of the people. When it comes to your economic choices and the right to select short term payday advances, you should keep in touch with your elected officials in a similar manner. Don’t let anyone take away the freedoms you’ve been guaranteed as an American in the U.S. Constitution.

This story illustrates the nervousness investors have regarding the value of currency and investments in general. Thanks to Jon Crudele and the New York Post for this story. It’s Clint’s opinion that investors should look at investing in silver instead of gold at this time due to silvers, lower price and strong intrinsic value.

-TS

+++++++++++++++++++++++++++++++++

THERE’S a worldwide run on gold coins.

Even as the price of the precious metal itself comes under pressure along with commodities like oil and copper, people around the world are demanding so many of the valuable coins that government mints are having difficulty filling orders.

A spokesperson for the US Mint tells me that gold coins in this country, for the past month, “are being allocated because of an increased demand.”

And the price that the government charges coin dealers has recently been increased by as much as 10 percent for a 10-ounce coin.

Robert Mish, a coin dealer in Menlo Park, Calif., says customers who want to purchase 200 gold coins often have to wait up to two weeks. Six months ago, he said, a purchase that size could have been filled immediately.

Someone who recently tried to purchase 100 one-ounce American Eagle gold coins in the New York City-area was turned away, even though he’d uneventfully made purchases before through the same dealer.

And even when gold coins are available, dealers report that customers are paying a bigger premium than they would have just a few months ago.

Previously, American Eagle coins were going for 5 percent over the market price of gold on the Commodity Exchange (Comex). Now the premium can be anywhere from 10 percent to 15 percent, even though the US Mint raised its price to dealers by just 3 percent for an ounce coin.

In one sense, the attraction for gold coins isn’t surprising. Since ancient times, gold has been considered the safest investment to hold in times of uncertainty.

With fears of future inflation rising and concern about the value of paper currency and government-debt increasing with each new recovery plan announced in Washington and in foreign capitals, the desire to hold gold grows.

That part makes perfect sense. But there’s another more puzzling aspect to the recent gold rush.

Even as the demand for gold coins such as the Canadian Maple Leaf or the Krugerrand of South Africa has grown, the market price of the precious metal itself is off its highs.

In early October, the price of an ounce of gold on the spot market was about $930 an ounce. With the commodities bubble bursting in recent months, gold declined into the upper $600 range. Spot gold closed yesterday at $739.90, down $2.60.

Bill Murphy, chairman of the Gold Anti-Trust Action Committee, says the price of spot gold is even more perplexing given the demand for coins and the fact that central banks in Europe have stopped selling gold into the open market.

“Gold should be moving up,” Murphy says. “How could there be such a dichotomy between the historic high premium for coins all over the world and the low Comex price?”

The Motley Fool published an interesting article about the largest payday lender in the United States. No, not Advance America, CashNetUSA, or Check-N-Go. It’s Well Fargo. Thats right, the bank you probably use for checking or a mortgage is in the business of payday lending. If you are disappointed by the fact that you can’t get a cash advance loan through Well Fargo take heart. US Bank, a major competitor of Wells also offer their own payday advance product. Chances are if you need a short-term loan a bank or even your local credit union (yes, they are in the business too, just Google the term “CU on Payday.”)

The Fool points out that the fees charged by these two large bank and a dozens of fee-funded credit unions are often as high as your local payday lender. Cash advance lenders suggest, and a number of studies by universities and accounting firms have shown, that the high fees charged by payday lenders is justified. However, to say the risks to depository institutions and private lenders are the same is untrue. Credit unions and banks have a leg up on the short-term lenders and on their borrowers. When a borrower utilizes their credit union or bank for a short-term or payday advance the credit union ensures the borrower has direct deposit. With direct deposit, the risk to the bank or credit union is minimal. The fees charged by the credit union or bank don’t appear to be justified. The profit margin for depository institutions on these loans is large, and in light of the ongoing credit crunch, they are a bright spot in an otherwise dismal lending landscape.

It is little wonder that some of the loudest critics of payday lenders are banks and credit unions. Could it be that payday advance lenders offering personal loans are an unwelcome competitor to banks and credit unions? As criticism of cash advance lenders has increased in the last few years interested parties should be suspicious of credit unions and banks who claim that short-term lenders are hurting consumers. If that is the case, then what are these depository institutions doing by offering the same loan products?

Here is an article from Dartmouth College that suggests that consumers fair better when they have access to cash advance loans. It appears the facts appear to be getting in the way of self-appointed consumer advocates’ agenda of expanding the “nanny state” government.

-TS

========================================

Study Compares Oregon and Washington Households; Analyzes Changes in Key Aspects of Household Finances Before and After the Rate Cap

HANOVER, N.H., Nov 12, 2008 (BUSINESS WIRE) — Survey data on 400 payday loan users collected before and after the imposition of an interest-rate cap in Oregon suggest that the cap caused deterioration in the overall financial condition of the Oregon households. The results suggest that restricting access to expensive credit harms, rather than helps, consumers.

The study, conducted by Prof. Jonathan Zinman of Dartmouth College, seeks to evaluate the effects of interest-rate and loan-term restrictions imposed by the State of Oregon in 2007. Previously, payday lenders had been charging borrowers at least $15 per $100 for two-week loans; effective July 1, 2007, the maximum finance charge that can be imposed on Oregon borrowers is approximately $10 per $100, with a minimum loan term of 31 days. The effective yield to lenders was reduced by two-thirds as a result of the new regulatory scheme.

Most payday lenders have exited Oregon following the cap, and the study finds that payday borrowing has fallen dramatically as a result. It also finds evidence that some former payday borrowers turned to alternatives that can be even more costly than payday loans, such as overdrafts and late bill payments.
The study estimates the effects of the Oregon cap by comparing changes in key aspects of household finances before and after the effective date of the cap, using comparable households in Washington state (which retained consistent regulation) as a “control.” The study covers changes from late June 2007 to early December 2007.

The most important finding in the study is that, relative to their Washington counterparts, the Oregon households were far more likely to experience a change for the worse in the key financial outcomes measured by the survey: job status and respondents’ assessments of their recent and future financial situation. These results suggest that restricting access to payday loans harmed Oregon respondents over the term of the study.

“Like some other studies, these results suggest that access to credit, even if expensive, can help some people make productive investments and help others manage their cash flows through emergencies,” Prof. Zinman said. “There’s more work to do to reconcile these results with findings from other studies that suggest access to expensive credit can exacerbate financial distress.”

The data collection for the study was funded by a grant from Consumer Credit Research Foundation, which did not participate in the analysis of the data or the drafting of the study.

The complete working paper on the study is available online at http://www.dartmouth.edu/~jzinman/Papers/Zinman_RestrictingAccess_oct0 8.pdf.

There is not a better television commercial out there today that describes the times in which we live. Yes, it’s the Cash4Gold.com spot.

Two major items of note:

1) The old lady by the lake saying, “I had no idea my gold jewelry was worth so much!” is priceless.
2) The dark haired lady saying, “I turned in my wedding band from my first ‘marrwidge’ and got money the very next day.” This lady is creepy, like a black widow.

Anyway, enjoy a laugh at the expense of our friends at cash4gold.com.

There must be better ways of getting money than this. What say you good readers of Clint Says? Are credit cards, cash advance loans, payday advances, pawning, or home equity lines of credit better choices than this?

-Tom Selleck

Here is the story from our friends as USA Today:

“Caught in the financial typhoon, American Express is seeking a safe harbor by becoming a bank holding company. The Federal Reserve approved AmEx’s request today, bypassing the normal 30-day waiting period to become a commercial bank.

Last week AmEx reported a 24% drop in quarterly profits, and last month it announced plans to cut 7,000 jobs, or nearly 10% of its workforce.”

Pay me, PLEASE!!!

American Express is in need of assistance because its users, primarily business and small businesses have increasingly defaulted or missed monthly payments. However, in a public statement, American Express, CEO Kenneth Chenault, stated the following:

“Given the continued volatility in the financial markets we want to be best-positioned to take advantage of the various programs the federal government has introduced or may introduce to support U.S. financial institutions.”

Given the rise in the number defaults in the housing market and its ripple effect on other credit markets, taxpayers and consumers should be somewhat leery of American Express when it states that it is moving to become a bank to simply “take advantage of various programs the federal government has introduced…”

As last week’s news about layoffs at American Express are combined with their move to garner taxpayer money, consumers and borrowers should be cautious of what American Express and other credit card lenders may do to remain solvent. Rate increases, fee assessments, and credit limit reductions are all in the works and more fees may be heading consumers’ way. Borrowers who utilize these cards may want to look to other forms of short-term credit to avoid the all but certain upcoming surprises from card issuers (i.e you pay more to utilize their plastic product).

-Tom Selleck

There has been much discussion as to the viability of short-term cash advance or payday loans in the news over the past few years. Some have even called for their outright prohibition. However, critics of the popular credit choice are quick to admit that there is a real need for these payday and personal loans. In spite of the apparent need for short-term credit (especially in this economy, which lacks abundant credit) some pundits speculate that these cash advance loans are on their way out thanks to the recent election of Mr. Obama and some liberal democrats. So what is in the wing to replace this necessary short-term product? Many familiar with the payday advance industry suggest it may be installment loans.

Installment loans are a different lending product that gives consumers even greater repayment flexibility. Demorats could hardly call these loans “predatory,” although federal officials once gave their express blessing to truly predatory loan products such as subprime mortgages, HELOC loans, and other high dollar loans tied to housing products.

With these short-term installment loans, consumers can repay in full at any time prior to their loan’s stated maturity date - which they choose at the outset of the loan - or they can make a set number of payments (typically around 20) over a period of weeks, normally bi-weekly. Costs are affordable and give the consumer much more of a safety net if they are unable to pay their loan in full on the two-week maturity date most payday loans have. Short-term lending and the fees and interest associated with it isn’t going away… it’s definitely changing, but you can be assured that consumers will pay as much or more with installment loans.

Following a study suggesting that the 18-34 age group are most at risk from the credit crunch, with many carrying significant debts, financial solutions company Think Money have advised people in this age group to take extra care with their finances as the prospect of a recession looms.

Furthermore, they added that debt problems are just as serious for people of any age, and should always be addressed as soon as they start.

The study, carried out by think tank Reform and the Chartered Insurance Institute, claimed that many 18 to 34-year-olds had so far experienced a “uniquely gilded life” which had given them a “false sense of security”.

As a result, they have “run up huge credit card bills, smashed their piggy banks and are now staring at a broken housing ladder”, the report claims.

The report dubs the age group the “IPOD (Insecure, Pressurised, Over-taxed and Debt-Ridden) generation”, and claims that one in five such people carry debts of $15,000 or more, while one in three have no savings.

The overall situation leaves the IPOD generation particularly vulnerable to the current state of the economy, with the report stating that they “have the raw skills to understand their position and the dawning sense of responsibility to do something about it (…) However they are hamstrung by a financial establishment determined to service the old and patronise the young.”

A spokesperson for Think Money said: “It may well be the case that many of the large numbers of younger people getting into debt do so because of a diminished sense of responsibility, brought on by comfortable living conditions and, until recently, relatively easy access to credit and short term loans.

“But with the credit crunch ongoing and a recession becoming a very real possibility, a lot of younger people may be about to experience the kind of struggles that instilled an “instinctive fear”, as the report puts it, into people from previous generations.

“Whatever the reason, in the current economic climate, it’s more important than ever for people to tackle their debts now. Especially with high-APR debts such as credit cards, it’s essential that those debts aren’t allowed to grow.

“There are a number of debt solutions designed to help people in different financial situations.

“For people with a number of smaller debts, a debt consolidation or cash advance loan could help. A debt consolidation loan involves taking out a new loan to pay off all your existing debts, meaning you only have to repay one creditor instead of many. The interest rate is often smaller than your original debts, especially if you are paying off high-APR debts such as credit cards – although if you choose to lower your monthly payments by spreading them out over a longer period, this will incur more interest which could cancel out the benefit of a lower overall rate of interest.

“If you have a number of debts that you are struggling to repay, a debt management plan might be a better option. This involves speaking to a debt adviser, who will discuss your financial situation in confidence, and will then negotiate with your creditors to agree repayments based on how much you can afford each month. In many cases, interest and other charges can be frozen, reducing the total amount you have to pay.

“If you have more serious debts of over $23,000, an IVA (Individual Voluntary Arrangement) could get you debt-free in five years. An IVA involves making regular monthly payments to your creditors based on the amount you can afford to repay, and after the five-year period your remaining debt will be considered settled.

“However, be aware that an IVA requires approval from creditors holding a total of at least 75% of your debts before it can go ahead, and you may be required to withdraw some of the equity in your home in the fourth year of your IVA.

“Debt affects people of all ages, so we urge anybody struggling with debt to seek expert debt advice as soon as possible.”

Article Courtesy of Think Money

Here is a great response to a recently released study by the Center for Responsible Lending.

-TS
=============================
The Center for Irresponsible Payday Loan Studies
by Lawrence Meyers

They’re at it again. The Center for Responsible Lending, the corrupt “charity” that consistently and fraudulently attempts to ban payday loans to fill their own coffers with competing products, has released the results of another “Study”. This time, in an attempt to remove consumer choice from Ohio and Arizona, they trot out a study from the University of Michigan. Out of one side of their mouth, they proclaim, “The survey by University of Michigan law professor Michael S. Barr found that respondents using payday loans were more likely to file for bankruptcy, be evicted, or face utility shut-offs than respondents who had not taken a payday loan.” Ah, but just a few lines down, they bury the lead: “While the Michigan survey does not establish a causal relationship…”! Well, this is typical of the CRL’s thuggish tactics.

They parade around ridiculous studies that have flawed data collection techniques, draw false conclusions from this flawed data, then try to snooker unsuspecting readers that this smoke-and-mirrors job supports their assertion. Just to reiterate, the CRL has its own loan product. They want to drive payday lenders out of business so they can have a monopoly. They are entirely funded by government grants and George Soros – the man who wants to raise taxes on everyone but himself, while he secrets his wealth off-shore.

The facts are, and always have been, on the side of payday lenders. They are sources of short-term credit that 93% of consumers use responsibly. If they could get a free loan from a friend or relative, they would. They are smart enough not to bounce checks, which cost more than a payday loan. Don’t buy the rotten fruit that the CRL is trying to pass off as freshly harvested. It’s rotten to the core, just like they are.

This is a great article. I remember the layaway counter from my childhood
-TS
________________________________________________________

Before there was VISA, Mastercard, or any credit card there was layaway. Consumers who didn’t have quite enough cash on hand to make a large purchase could put the item “on layaway.”

That meant the merchant would set the item aside for the consumer until they came in and paid for it. Often the consumer would come in weekly and put down small amounts until the item was paid for.

In this new era of tight credit, retailers like Kmart and TJ Maxx have experienced a sharp increase in customer demand for their layaway programs, according to a report in the Wall Street Journal. Holiday consumers see layaway as a payment alternative at a time when credit card companies are reducing purchase limits and access to loans is tightening amid the country’s ongoing financial crisis.

“People are shying away from credit cards, because maybe their limits have been reduced or they simply don’t want to carry any debt
ahead of an economic recession,” said Bob Robicheaux, Ph.D., chairman of the UAB Department of Marketing and Industrial Distribution. “And if a purchase can’t be put on credit because it’s restricted, then the best option is to use layaway and put $10 dollars down then make equal payments toward the purchase in the weeks before the holidays.”

Robicheaux said smaller retailers are more likely to offer layaway programs because those businesses know their customer personally, leading to a degree of trust between buyer and seller. Companies offering layaway this holiday season could see a competitive advantage over larger retailers that have done away with the service.

“Companies with layaway programs are essentially offering their customers free credit, and many consumers are likely to take advantage of that in these economic times,” Robicheaux said. “So I see a distinct advantage for some retailers to capitalize on.”

Layaway, as a practice, was mostly abandoned by many retailers as the popularity of credit cards surged in the 1990s.