Another day, another bank castigation here in the world of malcontent.

Like many of you, I get paid every other Friday.  In a year and a half at this job there has never been a problem with payroll.  I recently mailed a rent check on a Thursday knowing that the cash deposited the next day for payroll would be more than enough to cover it, along with the balance already in my account.

But - of course - there was a problem with that payroll and I didn’t receive it until the following Tuesday.

Naturally I didn’t find this out until the end of the weekend, so I’d been spending money on my debit card all weekend thinking I had plenty of cash in my account.  And for those small purchases I had ample money; it was the rent check that would tip me over.  The rent check and all the weekend transactions posted on Monday, the day before my late payroll deposited.  Here’s what it looked like:

Balance = $1,280.48

Debits: $6.50 to Subway, $37.50 to Whiskey Bar, $5.58 to Subway, $34.47 to Exxon Mobil, $219.20 to American Express, $8.10 to Baja Fresh, et al.

And of course the rent check for $1,395.

Now the fair and ethical thing to do would be to pay all the smaller charges and then incur one overdraft for the $1,395.  Instead these asshats start with the $1,395, turning everything else that day (for which there was otherwise ample cash) into an overdraft.  End result: eight overdrafts at $33 each.

This is shady business conduct; banks do this on purpose to maximize their fee revenue.  It doesn’t matter than I’ve been a customer for more than a decade and almost never overdraw my account.  These greedy bastards were only able to survive their bad decisions thanks to the largesse of the American taxpayer.  And when it came to bad decisions during the boom (read: subprime loans) WaMu was one of the worst offenders.  You’re welcome for TARP.

I may not be a “nice guy” but I always start out peaceable, professional and friendly when I try to resolve a problem.  It’s only when my opponents suspend reason and do me injustice that I get angry.  (Also when I get transferred to an India call center, but that’s for another day.)

After a promotional rate on a Bank of America credit card expired a few months ago, they raised my interest rate to 17.99%.  I called and politely asked for a better rate.  They declined.

So I wrote a letter to their CEO’s office stating the facts in a cogent, logical way and asking for a better rate.  They declined.

At that point - angry, frustrated and having a chunk of my budget drained by their exorbitant rate, I realized it was time to escalate.  Where do you go after writing the CEO and being rebuffed?  Why, your fire-breathing, possibly demonically-possessed Congressman, of course.

I actually wrote three letters, one to Waxman, and one each to my Senators, Feinstein and Boxer.  But Waxman’s was the one I copied to the Bank of America CEO’s office by fax last Friday.

This morning at 8:04am I received a call from the Bank of America executive office.  I was in the shower when the call came in, but a gentleman named Matt left me a voicemail explaining that he received my letter and was happy to take care of the problem for me, and that the new rate would be reflected on my next statement.

This is how the bullshit stops.  God knows I’ve lost my share of battles against corporate America, so it feels good to win one.  The funniest part is that because I mailed the letters to my representatives and faxed the copy to Bank of America, my DC peeps their staffers haven’t even read it yet.

Alternate title for this post: We’re so screwed, part 17.

As you know, dear readers, I am not an economist.  Nor do I pretend to be one.  I am an interested observer of these challenging times, and like to point out aspects of the various twists and turns of this recession that media outlets fail to mention.

All that to say that today is a big day.  At least it will be when we look back on it in five or ten years.

Today the Fed announced that it will begin buying long-term Treasury bonds, a process known as debt monetization.  This first $300 billion probably won’t have any deleterious effects on our economy.  But considering the debt burden we face from trying to buy our way out of this crisis - to say nothing of the upcoming entitlement spending spike - I’d say this is probably the first of many such monetizations.  Excessive monetization leads to one thing: inflation.  And what happens when there’s inflation afoot?  The Fed raises interest rates.  That means any non-fixed rate debt you have (think credit cards and adjustable mortgages) will cost you more to service every month.  Unless wages inflate at an equal or greater pace than prices and interest rates (unlikely), this will be a financial tsunami for an overstretched middle class.  Last time inflation was this bad (late 1970s) household debt stood at 71% of after-tax income.  Today it’s more than 130%.  We are in debt up to our eyeballs, and the increased cost of servicing that debt will push many American households over the breaking point.

Here’s the takeaway:  in the next few years - while inflation and interest rates are still low - focus on paying off any debt that isn’t at a fixed interest rate.  Pay off all those credit cards that aren’t at a fixed (for the life of the balance) transfer rate.  Swap your adjustable-rate mortgage for a fixed rate.  And save.  Because prices will be going up.

In markets, confidence is everything.  Without it, counter-parties don’t trust one another, retailers and suppliers can’t do business, banks don’t lend, consumers don’t spend, and stocks stay in the toilet.  In my humble opinion, this Rasmussen poll puts to rest any idea of a quick recovery led by consumers:

“Most Americans (53%) now think the United States is at least somewhat likely to enter a 1930’s-like depression within the next few years.”

Remember, we are being acclimated by TPTB to accept the idea of a depression.   Things. are. getting. ugly.

So, as I ranted recently, our friends at Bank of America (Federal) recently raised my interest rate to 17.99%, a level previously reserved for cardholders who made late payments or went overlimit.  I haven’t done either - with B of A or any other creditor - and felt it was unfair to be punished with such a steep interest rate.  And I wasn’t going to sit around and take it in the shorts, especially when the cost of doing so is more than $100 a month.

I wrote a professional, well-reasoned letter to Bank of America’s executive office making some key points, to wit:

1. Gouging me with this high rate now - when I’m already stretched in the middle of a severe recession - pushes me toward default, therefore harming Bank of America’s interest.  With a more sane rate I can continue to pay down the card without any problems.

2. I’m not asking for new credit.  Close the card for all I care.  I want to pay back the money I borrowed at a reasonable rate of interest.  I define reasonable as under 10%.

So what did those pig fuckers at B of A say in response?  A further review of my account led them to maintain the 17.99% rate.  They place my account in a higher risk category because I have high debt levels.  But don’t they consider the impact that the additional interest charge will have on my personal balance sheet?  Their ass-backward logic might just push me over the edge.  If that happens, they get nothing.

It’s time for a change of policy.  As a wise investor remarked to me recently, you should never send good money after bad.  Yet that’s exactly what we’re doing by endlessly pumping taxpayer money into Citibank, Bank of America, GM, Chrysler, et al.  The corporate trough-feeding has to stop until consumers start receiving a bailout.  I understand the argument that banks and credit are critical to our economic system, and that they should be saved at nearly any cost.  I used to accept this line of reasoning, but am starting to see it another way.  Banks aren’t keeping up their end of the bargain; they take public money but refuse to make credit more freely available to consumers.

It’s time to bail out the middle class.  Here’s what that looks like: Congress amends the tax code to allow taxpayers to deduct credit card interest, just like we currently dedect mortgage and student loan interest.  This wouldn’t be a permanent feature in the tax code, but for the next two or three years this provision would serve two purposes: to help Americans safely deflate record household debt and to minimize loan defaults.

I’ve been a fiscal conservative for a long time, so it pains me to propose that we line up for a government handout.  But if supposed champions of capitalism like banks and automakers gladly burn through federal cash during these “exceptional times”, I see no reason why the middle class shouldn’t see a piece of the action.

Has something similar happened to you?  Do you like the idea of deducting credit card interest on your taxes?  Please comment below or get in touch with me.  I’ll be contacting members of Congress about this in the next few days.

No, not douchebaggery.  Or diphtheria.

I’m talking “depression”.  The economic kind, so put your DSM-IVs away.

Have you noticed the increasing use of this word lately?  I remember the naive (read: pre-Lehman collapse) time when the commentariat refused to use the word “recession” definitively.  Instead, the word would crop up here and there, always tentatively and speculatively, as if TPTB were trying to acclimate us to its use.  You know, get us accustomed to it nice and slowly-like.  Think of the proverbial frog in the pot of water that gradually progresses from room temperature to boiling while the frog scarcely takes notice.

That was all of six months ago.  And then data came out at the end of 2008 that indicated we’d been in recession the entire year.  And suddenly it was vogue to acknowledge it.  Is the same thing happening now?  In recent weeks the word has been tossed around, ever more casually:

* Gordon Brown, the prime minister of the UK, recently suggested during PMQs that we’re headed that way.

* The head of the International Monetary Fund says we’re already there.

* This is no surprise, but doomsayer Nouriel Roubini freely uses the term as well.

These are just three instances that come to mind, and I can recall half a dozen others in news stories and prominent blogs.  If we are in fact in a depression - or headed there shortly - what does that mean?  There’s no universally-agreed definition, but a decent rule-of-thumb is four consecutive quarters of declining GDP and 10% unemployment.  If you accept this definition, we’re there on the first count and fast approaching on the second (especially if you live in California).

And now for today’s terrifying economic reality check, mainly courtesy of the brilliant reporter Ambrose Evans-Pritchard at the Telegraph:

#1:  “The US Treasury alone needs to raise $2 trillion in 2009.”  Yes, that’s trillion, not a typo.  On this course we will borrow ourselves to ruin, either by an eventual default or having to inflate our way out of one.  See: Argentina.

#2:  The Asian tigers- you know, the people buying our massive debt this last decade, became a net seller of US bonds over the last fifteen weeks, to the tune of $190 billion.  Why?  Their exports have collapsed, because we’ve stopped buying stuff.  Trade and political issues aside, if we aren’t buying their goods, they won’t be able to afford to buy more of our debt.  So who will?  The Fed.  See point 1 about inflation.

#3:  Exports and output have crashed worldwide, especially in Germany, yet the European Central Bank decided to hold rates at current levels at its last meeting.  This. is. a. mistake.

The “d word” is looking more and more like reality every day.

Check please!

I swear these people must actually be trying to push Americans into default.

Following in the footsteps of American Express, Bank of America recently lowered my credit line, albeit only by about $500 (out of $12,000).  I found it mildly insulting, but didn’t dwell.  Then a promotional rate on my account expired, and the geniuses saw fit to stick it to me with a 17.99% APR.  This means the $10,000 in debt I parked on the card a year ago will now cost $150 per month in interest compared to about $25 before.

I’m not looking for a free ride.  Like many other Americans, I racked up too much debt in the credit-fueled excesses of the last decade.  Unlike most other Americans, however, I have managed it very well and have never paid a creditor late.  The irony that B of A is clearly missing is that gouging me with a near-usurious interest rate will push me right to the edge of illiquidity.  This logic didn’t register with them, however, and they denied me a lower rate when I called to inquire.  Even the clowns at American Express give me prime plus 3%.  With the federal funds rate near zero, B of A’s cost of funds is next to nothing.

I’m also incensed that Bank of America has taken tens of billions of taxpayer dollars – money that is meant to get credit flowing again – and continues to pull these shenanigans with its cardholders.  As President Obama said recently, companies on the public dole have a greater responsibility.

If B of A would work with me on the interest rate I would pay them back 100% of what they lent me.  But oddly, they don’t seem to care.  If 17.99% is the best they can do, they might just find themselves in the position of having to settle for 30 or 40% of my account balance instead of all of it.  The kicker is that B of A would incur no actual cost to meet me halfway.  It’s not as if I’m asking them to charge me less than they pay for the money.

So where do I go from here?  A letter to the CEO’s office, of course.  If they don’t come back with a favorable response, I’ll have to consider all my options, including screwing them on the debt.  I’ve been a good cardholder and have a perfect payment record.  I’d like to keep it that way.  But Bank of America isn’t making it easy.

Three thoughts to start off the-day-of-the-week-that-rides-bitch:

1.  Yesterday someone came to this blog via the following search: “ca state taxes delay is bull shit” (in reference to this post).  Priceless.

2. President Obama put the smack down on bailed-out banks last night: “If taxpayers are helping you, then you’ve got certain responsibilities to not be living high on the hog.”  Fucking right.  And I’d like to add that if you’re on the state dole, you shouldn’t be slashing the credit lines of worthy borrowers.

3. Standard & Poors recently reaffirmed Britain’s AAA credit rating for its sovereign debt, so for now a national default is looking less likely.  As The Economist says, “for all the market jitters, the government retains the capacity to finance more bail-outs”.  The problem is that - unlike the United States - Britain does not print a global reserve currency and therefore can’t continue to print money and borrow like the US can.  Britain has bought itself some time, but its structural problems remain.

Headline says it all, just had to gloat a bit.  Maybe if they didn’t fuck over their prime cardholders they wouldn’t lose quite so much money.  Just a thought, Ken.

We interrupt the week of Obamamania to return to the pressing issue of the financial crisis.  Despite the hope resounding amid inaugural parties and balls, the rest of the world has gotten on with the business of economic meltdown.

I try not to be an alarmist, but it’s difficult to read so many respected and experienced financial columnists and experts today and not feel a bit, well… alarmed.  The question of the day is this:  can Britain - which has guaranteed its banks’ liabilities - survive debt default on a scale that now looks very likely?  Here are some highlights from Telegraph financial reporter Ambrose Evans-Pritchard from his blog post “SERIOUSLY ALARMED”:

* The slide in the value of the sterling has turned “disorderly”.  It fell 5 cents to 1.39 against the dollar yesterday.  This tests a key support level last seen in 2001 and 1992.

* UK banks have amassed $4.4 trillion in liabilities.  This is twice the size of the British economy and dwarfs its foreign reserves.  Of course there are assets to offset these liabilities, but we all know what forced asset sales do to asset prices.

* The budget deficit at the top of the cycle (i.e. during the height of the boom) was 3 percent of GDP.  If you can’t surplus during a boom, you are seriously mismanaging your finances.

Also today, perpetual doom-monger Nouriel Roubini is predicting that losses in the US will reach $3.6 trillion.  Calculated Risk disputes his numbers, but even its own revisions are huge numbers that will wreak havoc on our economy for years to come.

I can’t even begin to prescribe a solution for this mess.  What I’m sure of is that it will get worse before it gets better, and that living through it has changed the way I will approach personal finance for the rest of my life.