August 8, 2008

UPDATED: McCainonomics

A long time ago in Chicago, I used to work with a guy named Karl Denninger, who was the company's Internet wizard -- this was around 1992, before almost anybody had heard of the Internet. Yet, Karl built us a large, reliable Internet system for managing our national network. In hindsight, it's obvious that what we should have done was give up on the product we we're trying to sell, and just gone into the nascent Internet business, utilizing Karl's expertise.

Anyway, Karl has a financial blog now called Market Ticker, with lots of good stuff on it. Here's an old one:

The following ought to raise alarms among voters - or perhaps not, given how silly we all are as Americans when it comes to personal financial management:

"Senators John McCain and Barack Obama released their Senate financial disclosure statements on Friday, revealing that Mr. McCain and his wife had at least $225,000 in credit card debt....

The bulk of the McCains’ obligations stemmed from a pair of American Express credit cards that are held in Cindy McCain’s name. According to the disclosure reports, which present information on debts in a range rather than providing a precise figure, Mrs. McCain owed $100,000 to $250,000 on each card.

Another charge card, held by what was described as a “dependent child,” had also accumulated debts of $15,000 to $50,000. In addition, a credit card held jointly by the couple was carrying $10,000 to $15,000 in debt, the filing indicated, at a stiff 25.99 percent interest rate. "

Good God.

At least $225,000 in revolving debt, with at least some of it carrying "subprime" rates? By the way, that $225,000 is the minimum - it could be as high as $565,000, but the Senate does not require exact disclosure - just ranges.

The McCains are paying 25.99% interest rate on $10,000 or more???

Unlike Karl, I'm a lousy personal financial manager, but even I know enough to do what it takes to never have a balance outstanding on my credit cards at the end of the month. But the Republican Presidential nominee doesn't seem to know that.

UPDATE: Well, I may have made some dubious assumptions here. I assumed that to run up hundreds of thousands on your credit card you'd have to roll over the few thousand you spend each month for month after month, paying interest after each month. Big mistake!

Assume, instead, that Cindy McCain spends a few hundreds thousand per month using her credit cards, which she pays off on, say, the 3rd of the month, right on time. And the form asks her for her financial situation on the first of the month. Well, then she puts down that she owes a ton of money on her credit cards, but she still pays it off right away and avoids interest fees.

I don't know what the real situation is with the McCain's, but I shouldn't analogize from the finances of people I know to the McCains, who operate in a whole different realm.

My published articles are archived at iSteve.com -- Steve Sailer

33 comments:

halfbreed said...

That does give you pause. Having McCain in charge of the economy....well, it's a little like having Jesse Jackson give counsel to Bill Clinton on his troubles after the Lewinsky affair.

Lawful Neutral said...

What a dunce. I wasn't going to vote McCain before, and this really confirms that decision.

Sure, the McCains're rich enough that that kind of debt is peanuts to them, but anyone who gives that kind of money away out of laziness and incompetence should not lead any country.

rightsaidfred said...

I've noticed that when I overpay my credit card bill, the company doesn't pay me any interest on that money, so we have a big, massive asymmetry here that should let us know that they are not our friends.

Robert said...

Wouldn't that be temptation for graft taking or bribery?

Anonymous said...

If its possible, I just got a little MORE depressed about this election. Wow! No smart person would find themselves in such a predicament. How on earth could McCain speak authoritatively of financial responsibility to anyone?

Jacob said...

Or maybe being filthy rich, he simply doesn't care. You'd think the McCains would have a personal accountant to handle those things, though.

wannabe quant said...

Well, it makes sense if he can get a better than 29.9% return on his funds elsewhere. Legislators DO beat the market by an average of 12% per year: http://blogs.wsj.com/law/2006/03/28/more-on-congress-and-insider-trading/

Truth said...

And this is the man you 'race realists' want running the economy; A man with a college freshman level interest rate on his credit card and the proud record of graduating 894th in his class. Great.

gcochran said...

The McCains have a special deal with AmEx: zero-interest. I wouldn't mind having have one of those.

Uri said...

You should really go to the source when analyzing this sort of information. I believe the data comes from their 2007 disclosure form
http://www.washingtonpost.com/wp-srv/politics/congress/fin_dis/2007/m000303.pdf

or
http://tinyurl.com/57hplr

page 27

joint charge card between $10,001 and $15,000 at 25.99%

a couple of loans (personal and business), most of which are paid off, at below the Prime Rate (*not* subprime!) At the latest rates, she is paying 4%!

Two Amex cards for Cindy, with several hundred thousand in debts--on which she pays a *whopping* 0.00%! Wow, what a dummy!

Two loans she pays somewhere in the mid 4% interest range (some of which were paid off already.)

And one other charge card for her child also paying that horrific 0.00% rate.

So Cindy, who makes something like $6 million a year, and has tens of millions in assets *might* be paying a few hundred dollars a month in interest. Also, this is apparently not their main card, since it's from Palatine, IL, which I believe (is? was?) their campaign headquarters. It's probably used for ordering in pizza and the like.

Curtis Crawford said...

It should make democrats uneasy that the country will choose between two millionaires for President, and republicans uneasy that the McCain family is so prodigal with credit card debt. In fairness to the husband, most of the debt is his wife's. Of course, she is the primary source of income.

airtommy said...

This is probably evidence of corruption, not financial incompetance. Remember, McCain was one of the "Keating Five". While he was never directly implacated in the criminal aspects of Charles Keating's business, McCain had no problem whatsoever associating with (and vouching for) the crook.

testing99 said...

Given Cindy McCain's wealth, it's likely to be fairly irrelevant. That's like criticizing Bill Gates for not getting the Early Bird Special at Denny's.

Quite likely, the bulk of the debt is used for paying campaign expenses, which will be re-imbursed later. The dependent child? It's possible it's one of their daughters.

McCain's two sons are serving in the military, one in Iraq and the other in Afghanistan, last I heard.

McCain's personal finance is irrelevant since Cindy's great wealth makes every economy simply beside the point. Michelle Obama's grasping, Lady McBeth type desire for luxury goods, status, and power are far more important IMHO.

Economic policy is made by staff, not personal economy, and McCain's is better than Obamas. Obama seems to mostly have Section 8 real estate developers and racial shakedown artists around him.

Anonymous said...

Both you and the Times are misreading the filing. There is nothing in the filings to suggest that either of the McCains has ever paid a penny in interest on any of their cards.

Anonymous said...

Both you and the Times are misreading the filings, as are some of the commenters. There is nothing in the filings to indicate that either of the McCains has ever paid a penny in credit card interest. And zero-interest credit cards are widely available from AmEx. If you get in arrears, instead of charging interest they cut off future charges, and ultimately they do charge interest.

Anonymous said...

A war mongering liberal republican with no fiscal sense...lefties have Obama so they're not interested and there is nothing appealing about mccain to true conservatives, so who would vote for this guy?

I suspect most votes will be to prevent hussian obama than put McCain in.

Sideways said...

And this is the man you 'race realists' want running the economy; A man with a college freshman level interest rate on his credit card and the proud record of graduating 894th in his class. Great.

Sometimes it's like you've never been here before. McCain looks awful unless you compare him to Obama. That doesn't mean that anyone here wants him running the country

headache said...

Testing99 sed:
"Obama seems to mostly have Section 8 real estate developers and racial shakedown artists around him."

LOL, great one. I'm beginning to like your posts more and more. THe Obama stuff is spot on. I wish you could be a little more neutral on Israel though.

headache said...

"Sometimes it's like you've never been here before. "

"Truth" is like a moronic simplistic verbal deconstruction robot. They guy just looks for some unimportant part of your argument and finds a tangential issue not even remotely related as a counter-argument. But of course the giveaway is that you only catch him here when it’s somehow about Obama.

Anonymous said...

Good mea culpa, Steve.

Truth said:
"And this is the man you 'race realists' want running the economy; A man with a college freshman level interest rate on his credit card and the proud record of graduating 894th in his class. Great."

We do? Sure, he's the better of the two choices, but the connotation of your remark suggests we're all hot and bothered for some McCainonomics. That is not the case.

Plutocrat said...

This predilection of whites of whatever political persuasion to speak of political leaders as if they're emperors with absolute power has got to end. It's a simplistic form of thought that easily enables any eighth grader to grouse about "Bush" or "Hitler" or whoever, ignoring how various forms of government actually operate.

God, to hear the proletariat babble about "Bush and (Iraq, Big Oil, Katrina, fill in the blank)" you'd think this guy was the last polymath instead of the equivalent of a Dairy Queen franchisee.

McCain is an irresponsible, dottering halfwit who won't be "in charge of the economy", but rubber stamping whatever someone else tells him to do. Ditto the more intelligent Obama. Neither will be "running the country" either, whatever that really means. That's the job of smart, cohesive groups who prefer the framework of a liberal democracy in order to operate most effectively.

Come on, would we really have been in such a different place right now if Dole had won back in the day? Dukakis?

Isn't there's anyone else out there who's just sick of all this?

Uri said...

Update on your update...

Again, you should be looking at original sources.

http://ethics.senate.gov/downloads/pdffiles/fdform08.pdf

page 31 explains that part of the form.

"The category of value which must be checked is that which indicates the highest amount owed on that liability during the reporting period, not just at the end of the period."

So we only know that at *some* point that year, there were large balances on the cards.

Also, she probably has not only not paid any interest on her Amex cards, these are presumably cards for high net worth individuals that don't charge interest at all. Remember, Amex gets something like 3% on every transaction done with that card from the merchant. It's quite worthwhile for them to have special arrangements for high spenders. Remember, there is virtually no risk of default or bankruptcy, which is the justification for the high interest rates on typical unsecured credit.

So even that small charge card with the 25.99% interest rate might only be referring to the nominal rate you pay if you are late. Chances are for the presumably sundry expenses it's used for, no interest has ever accrued.

I expect this type of reporting from the New York Times, but I expect better from you Steve...

Anonymous said...

re: " airtommy said... the criminal aspects of Charles Keating's business... [Keating] the crook. 8/08/2008"

Keating was no crook. He was the victim as were millions during the 1980s ( Reagan's presidency ) to changes in the tax laws that crushed the savings and loans. Revisions in the laws on depreciation of real estate made multitudes of investments no longer workable so that fortunes were lost at the time and thus scapegoats were needed, hence Keating in an orange jump suit and the Keating Five ( four democrats and McCain ). Keating was playing by the rules but Congress changed the rules in mid stream.

Dan Kurt

Truth said...

"McCain looks awful unless you compare him to Obama."

And then how does he look? You only get one vote for president of the United States, and the man you vote for is the one you want running the country. It's as simple as that.

Eric said...

This rates as a big "so what?" The woman has more money than Carter's has liver pills. I seriously doubt she carries a balance on her cards, and if she does it's all still lost in the noise.

The only reason this would be interesting from a corruption standpoint is if the McCains had lots of debt they couldn't handle, and that doesn't seem to be the case.

For people worried about a spendthrift "running the economy", remember all spending bills originate in the House of Representatives, and Congress makes all the rules when it comes to reporting. The president doesn't have any direct power beyond his veto. If the economics are your worry, you'd rather have either man out of the Senate where he can do more damage.

SaintMiddens said...

And then how does he look? You only get one vote for president of the United States, and the man you vote for is the one you want running the country. It's as simple as that.
No it isn't. In fact that is a rediculous oversimplification, analagous to saying that because one is compelled to choose between two turds one is therefore a coprophile. For real conservatives voting is a choice between a hardcore leftist (Obama), a raving neocon (McCain), and not voting. Voting in this election, for conservatives, is a purely strategic matter.

J. said...

Banks love and treat differently wealthy individuals and I presume the nominal rate quoted is not the one charged to McCain. His personal finances seem quite well managed, which does not mean he does it. The issue is meaningless.

Truth said...

""Truth" is like a moronic simplistic verbal deconstruction robot."

Yeah, but I'm good at it.

"This rates as a big "so what?" The woman has more money than Carter's has liver pills."

The McCains may have a capital surplus, but the nation doesn't, therefore the scrutiny of their personal fiscal responsibility is warranted.

"For real conservatives voting is a choice between a hardcore leftist (Obama), a raving neocon (McCain), and not voting."

Wrong, there are other candidates voting, and you may write in your grandmother if you think she would make the best president of the US. I for one have never voted for a Demokin or a Republicrat for president and I was first eligible to vote in 1984.

The problem here is that the brainwashed sheeple electorate always falls back upon the old simple-minded fall back position; 'well I don't want to throw my vote away' as if the next president of the US will be decided by one vote.

I have news for you: If all of you people who didn't 'want to throw your vote away' actually voted for a third party candidate, guess what; that candidate would probably win at which point we'd have CHANGE YOU CAN BELIEVE IN.

Does that qualify as a 'rediculous oversimplification?

Martin said...

"Truth said...

And this is the man you 'race realists' want running the economy; A man with a college freshman level interest rate on his credit card and the proud record of graduating 894th in his class. Great.

And then how does he look? You only get one vote for president of the United States, and the man you vote for is the one you want running the country. It's as simple as that."

You really don't read many of these posts before answering, do you? Virtually nobody who posts here is enthusiastic about McCain. In fact, many of us (myself included) refuse to vote for him, ever.

By the way, the President does not "run the country". It is not now, nor has it ever been his job. he doesn't manage the economy, neither is he my commander in chief. But your error is not uncommon, nowadays, sad to say. Many people betray, by their choice of words, an imperfect understanding of what this country is supposed to be. The President is not an elected king or dictator.

Truth said...

What do you consider the president's job desription, Martin? By the way my friend, excuse my prior arrogance and rudeness, I'm just a crass guy by nature.

headache said...

Martin,
Like I said. “Truth” will always be the last one to respond. I guess he thinks he has won an argument by default if he answers last. Kinda explains the Obama mindset.

SaintMiddens said...

By the way, the President does not "run the country". It is not now, nor has it ever been his job. he doesn't manage the economy, neither is he my commander in chief. But your error is not uncommon, nowadays, sad to say. Many people betray, by their choice of words, an imperfect understanding of what this country is supposed to be. The President is not an elected king or dictator.

You aren't distinguishing between reality and constitutional theory. To give Truth his due he may not have been talking about "what this country is supposed to be". Besides I'm not sure that the founders thought things through. When the president threatens his veto he thereby influences the direction of legislation *considerably*. I wonder if some genius could model all of this mathematically and give us a real picture of how Washington works free of the fatuities taught in civics class.

Truth said...

"Like I said. “Truth” will always be the last one to respond. I guess he thinks he has won an argument by default if he answers last. Kinda explains the Obama mindset."

Am I now the last one on this thread? Great, I was getting nervous there!