If there’s a single thread that connects virtually all Internet users, it is hatred for PayPal.

Seriously, even people who receive the bulk of their income via PayPal transactions and who’ve never had a single serious issue with them harbor a dark animosity.  Sometimes, a person can’t help to think that PayPal only continues marching on because it doesn’t have a major competitor.

The weird thing is that they DO have a competitor.  And it’s the biggest, nastiest rival one could have.  Google.  Google checkout was supposed to become the PayPal killer.  That didn’t happen.

Now there’s another hope for those who’d like to see PayPal die (or who would at least appreciate a widely-used alternative).  It’s Revolution Money Exchange.

RME was funded by some big names like Goldman Sachs and Citibank back before the days of TARP and recession.  It has well-known folks like Steve Case on the letterhead and it offers something that should be utterly irresistible–fee-free online transactions.

When you set up an account with RME, you’re really setting up a little checking account with an actual FDIC insured bank out of South Dakota.  We’re living the post 9/11 banking world, so that means you’re going to need to pony up identifying info, a Social Security Number, etc. to get started.  Once you have all of your ducks in a row and have gone through the account verification process, you can start buying, selling, and transfering money to other RME members online.

There’s an issue here, though.  Despite the fact that the system has been up and running for awhile, there aren’t that many people hopping aboard.  That’s the case even though Revolution Money Exchange shelled out big bucks in order to induce sign ups.  They offered free $25 credits and were paying referring affiliate $10 per new sign-up.

Why isn’t RME getting real traction?  

1.  It’s up against PayPal.  Everyone may have a grip about PayPal, but everyone also knows that they’re the real deal and won’t evaporate overnight.

2.  The eBay factor.  The biggest single online marketplace in the world is still eBay, and the auction site won’t back RME as a payment method.  It’s hard to overestimate the importance of that limitation with respect to widespread acceptance.

3.  Protection is lacking.  PayPal’s mehods of protecting buyers and sellers from deals gone sour are lousy, inconvenient and often hamfistedly applied.  But some protection is better than none.  The best I can tell, RME doesn’t have procedures in place to handle bum deals.

4.  Customer service issues.  I don’t know if anyone else is going through this kind of thing, but if they are…  Well, it doesn’t look good for RME.

So, is Revolution Money Exchange a PayPal killer?  It doesn’t look that way.  Absent finding an eBay foothold (fat chance) and taking care of some other significant issues, RME seems destined to fall far short of dethroning the big PP.  

With big names and big money behind it, however, it might find a niche in the marketplace.  I don’t know how excited RME would be to have a user roster consisting of people who’ve been banned by PayPal, but there is a definite market niche out there to service those who aren’t on good terms with the major player.  Even if only a few major sites latch on to RME as an exclusive payment service, it might be able to limp along indefinitely.

If you’re a Disney buff or if you have kids, you’re gonna eventually find yourself schlepping off to either Florida or California to do the whole “Disney vacation” thing.  Well, some folks will find other diversions, I suppose, but a lot of us realized long before the station wagon pulled into the parking lot that a Disney trip was part of our destiny.

Once upon a time, that meant you were heading toward LA and would be spending a few days at Disneyland.  Then, Roy Disney turned Walt’s big ol’ chunk of Florida land into Walt Disney World.  He undoubtedly exceeded the high expectations of his brother, creating a truly massive complex that dwarfs the original California offering.

Disney World got so big and garnered so much attention that Walt’s original creation started to recede into the shadows.  Everyone still knew about Disneyland, but everyone wanted to go to Orlando for the BIG PARK.

I’ve got nothing against Disneyworld and I’m constantly amazed at how many things they have going on in the Orlando area, but I’m going to stick up for Disnelyland.  It’s the original.  It’s more manageable.  It’s become more affordable.  And  it’s a lot of fun.

The great thing is that you can walk down Main Street USA or zip around the “It’s a Small World” ride in California for a fraction of the price you’re going to spend in Florida.  You can also build a vacation that features Disney action but that doesn’t rely exclusively upon it to fill two weeks.  The California park is so much more manageable, while Florida is a little like visiting a Smithsonian of family fun.  There’s too much to suck in quickly.

If you line up one of the many great Disneyland package deals out there, the trip west makes even more sense.  These specially-assembled deals combine everything you need during your stay in and around the original Magic Kingdom and that bundling creates some fantastic bargains.

Take this package for instance:

“A Good Neighbor Hotel vacation offers a stay at a nearby hotel, preferred seating at selected attractions in Disney’s California Adventure® Park and more. The Disneyland® Resort Good Neighbor Hotels really are “neighbors” to the Disneyland® Resort.”

Sounds pretty good, right?  I bet it sounds even better when you find out that the package costs less than $300 per person.  The same site had some other exceptional deals for those who wanted to stay on-site at the Grand California or some of the other very nice Disney hotel properties.

In many cases, you can snag even better deals by hitting Disneyland during the off-season.  More bang for your buck if you’re willing to shake hands with Mickey in November (Don’t worry, it’s not like your in Duluth or anything.  No frostbite risk at all).

Whatever you do, make a point of shopping for Disneyland package deals before you start making plans and reservations on an ala carte basis.  You really can save a small fortue on your Disney experience by bundling the stuff you need into one deal.  Some of the packages can get interesting, too, with features like gift cards to the shops and meal plans for every member of the family.

If you can just feel in your bones that you will eventually be scheduling a family Disney vacation, think twice about going to the Sunshine state.  You can get all the Mickey, Minnie, Donald and Pluto you can handle in Anaheim, and Disneyland package deals make for a cheap trip.

In 1797, the English economy took a nosedive.  The Bank of England struggled mightily and its problems found their way across the Atlantic to their remaining colonial possessions and one of their former colonies, the young United State of America.  The US real estate market went on the skids.  Only twenty-one years removed for the Revolutionary War, the US was experiencing its first of many recessions.

Recessions, which are basically prolonged (more than two quarters in a fiscal year) economic contractions are an expected event.  If you look at the numbers from the folks at the National Bureau of Economic Research, you can see that the economy doesn’t always steadily climb the growth chart.

Although every recession has its own unique characteristics and impacts, there’s something almost comforting about knowing we’ve made it through these downturns in the past.  This may be the first time some of us have really felt the punch of a recession, but it doesn’t take long to realize that others have been through the fight before.

The Great Depression was the 11th (and most damaging) recession in US history.  It’s also the best-known of the bunch because of its severity.  It wasn’t, however, the longest-lasting downturn.  The so-called “Long Depression” actually spanned a whopping 23 years.  That’s right, 23 (1873–1896).

In the years following the Great Depression, the business cycle has had recessionary dips on more than eight other occasions, including our current predicament.

We’ve talked about our current economic challenges a lot lately.  Let’s take a minute to consider some of the other non-depression recessions of the last fifty-plus years.  

In 1953, the Fed clamped down on inflationary pressures subsequent to the conclusion of US involvement in the Korean War.  That was enough to spur a recession.  

Four years later, the US experienced the Recession of 1957.  Historians blame the easing of tight monetary policies and lower-than-anticipated tax revenues relative to GDP for the a downturn.

Another four year gap, another recession.  In 1961, the US experienced a brief recession.  Although I’m sure that many Americans felt the impact of this slowdown, it doesn’t get a great deal of attention in historical terms.  A Time article from the period places the blame on the fact that businesses weren’t adding to inventory, particularly in terms of durable goods and manufacturing basics.  The cause of those decisions isn’t mentioned.

1973 and 1974 weren’t great years, economically speaking.  The US was ramping up defense spending to fund the Viet Nam War (some argue this was not a factor in setting off the slowdown) and OPEC maneuvers more than tripled the price of oil.  The stock market took a tumble and a new word entered the economic lexicon:  stagflation.

In 1980, the US discovered that having Ayatollah Khomeini running Iran was bad for the US economy.  The Shah’s successor, following the revolution there, didn’t just hold US citizens hostage.  He did the same with oil.  Production and distribution were up and down affairs.  When the black gold did flow, the price was higher than ever.  Back on the homefront, the Fed was tightening monetary policy in an effort to stave off greater inflation.  Recession ensued.

In 1990/1991, we experienced another recession.  Again, people are ready to point a finger at monetary policy as a cause.  Restrictive monetary policy is considered a key contributor to this recession.

In 2001, recession made another visit to the headlines.  Although recessionary circumstances existed prior to September 11, 2001, it’s impossible not to recognize the role the tragedy had in proloning the downturn.  Enron’s shenanigans and market corrections in the previously fast-growing Internet sector didn’t help either.

That brings us up to now.  

They say that studing history is a great way to avoid the repetition of error.  There are common elements in some of the recessions we’ve experienced–tight monetary policy an global oil market instability both jump right out at you.  

It’s hard to generalize, though.  Each recession involved a unique set of circumstances and many of the policies that may have contributed to disaster on some occasions probably prevented recessions during other times.

If you can find the common thread, the underlying and correctable cause of recession, make your findings known immediately!  We could all use the information.  Until someone manages to isolate that “root cause”, I’m going to subscribe to the belief that variances due to the natural corrections inherent in a market-based economy are the real source of recessions.  

It’s cyclical.  Let’s just hope our current cycle is approaching its conclusion.

Most of us aren’t particularly keen on recessions.  We tend to thing of them as negative events, the kinds of things with which we’d rather not deal.  Sure, the repo men are loving the downturn, but everyone else seems to be suffering–or at the risk of suffering.  

The idea of examining the benefits of a recession seems a lot like marveling at the great clown performances John Waye Gacy turned in at various children’s parties, in a way.  No matter how many kids he made giggle, it couldn’t possibly make up for the corpses in the crawlspace.  So it is with a recession.  On-balance, it’s such bad news for so many people that it feels a little unsavory to talk about the upside.  There is, however, a real potential set of advantages to be gleaned from this current economic mess and we should recognize them before we become completely convinced that the we’re approaching some kind of Apocolypse.  

First, if you’re relatively insulated from the economic downturn and have sufficient security to make purchases and/or investments with some element of risk, there are real bargains to be had out there.  The stock market features a slew of undervalued issues (no, I’m not going to provide specific stock tips here) and houses are cheap at the moment.  If you’ve got a little room in your finances or have a great credit score, you might want to go shopping.

Second, the Fed’s efforts at staving off a recession have largely consisted of pushing down interest rates.  So, if you fall into the aforementioned group, you’re going to see lower price tags on major purchases and lower price tags on the money you’ll borrow to make them.  Between these two factors, you can get a whole lotta house on the cheap these days.  Just in case, though, buy something you plan on living in, okay?

Third, there’s a big picture reason to at least partially embrace the recession.  It’s going to clean house.  It will force businesses to become more efficient and will reward creativity and quality while punishing the fat and lazy.  In the U.S., everyone claims to love a free market until they see this part of the cycle.  It’s necessary, though.  It prunes out those who made poor decisions and creates openings for smarter, leaner businesses.

Fourth, sticking with the big picture theme, a recession creates an impetus to evaluate the way we’ve been doing things as a nation.  Sometimes, you can actually learn a lesson or two from the consequences of your bad behavior and this could be such a situation.  Maybe it’s not bad for us to come to grips with the fact that credit overuse/overextension and a pollyannish belief in perpetual growth weren’t the best ways to run our financial houses.  

Fifth, if you take it down to the personal level, this economic downturn can be viewed as an opportunity for a little personal development.  Even if that isn’t really part of the benefits of a recession, it is an opportunity to do something worthwhile.  Look at these lists.  Some of the alleged “benefits” aren’t too impressive, but others do offer some potetial to come out of this mess a better and smarter person than the one who entered it.

I’m sure there will be those who disagree, but I happen to think that periodic contractions of the economy are natural parts of a cycle of growth and correction.  I think that they’re inevitable when you are talking about an economy that retains at least some traits of a true market system.  When things go up, we overshoot and come back to the “right” place.  When things go down, we overshoot in the opposite direction before bouncing back.  

This recession isn’t a good thing by any stretch, but there is some good in it.  You just have to look carefully to find it.

We’re going to be discussing the recession and what it means to us as individuals and a society over the next several days.  It seemed like the best way to kick off this conversation was by positing the titular question and getting a grip on what this whole economic downturn thing really means in terms of actual impacts.

Here we are, stuck right in the midst of a recession.  Now what?  What happens during a recession, really?  Understanding the various definitions of the term “recession” (and I think we’re meeting all of them these days) let’s us know where we are, but it doesn’t really help to explain what’s going to happen to us on a real level.  The link between reductions in the GDP and what’s happening in your neck of the woods (or on TV for that matter) isn’t allows easy to spot.

Here’s a quick rundown of some of the things that happen during recessions.  

First, unemployment increases.  This is probably the most obvious impact of a prolonged economic downturn.  In recessions, we’re producing less.  That reduced output requires less labor.  Recessions also tend to put people into a “savings mode” where they spend less, reducing demand for products, which further decreases the need for workers.  Companies struggling to stay profitable and/or afloat will also look at payroll cuts in the form of layoffs or firings as one way to decrease their expenditures.  It’s a nasty little circle, with which negative consequence feeding another.  

Second, the stock market takes a dive.  It’s not hard to figure out why that happens, is it?  Companies are selling less and making less money.  That doesn’t make their stock an attractive investment.  Worries about job and income stability encourage people to become more conservative with their money.  They save instead of purchasing stock or making other, higher-risk investments.  It’s another ugly loop.  People invest less, which drives the market down.  People see the market going down and become even less likely to invest.  

Third, interest rates sink.  The Fed tries to abbreviate the downturn by making capital more readily available to those who could use it to make purchases and longer-term investments.  The hope is that the lower rates will encourage the kind of spending that might begin to right the lilting economic ship.

Fourth, people go absolutely nuts.  During a recession, one may wonder if the doors to a million asylums were kicked open or if some enemy of the state dumped some mind-altering substance into the drinking water.  

Politicians seem to manifest the symptoms of recession looniness first.  They use the downturn as an excuse to pont the finger at rivals for power.  They leverage fear and concern to support their own agendas.  They take bizarre positions on the farthest ends of both political poles.  

The craziness extends to the rest of the population.  Encouraged by media personalities and the above-referenced politicos who have a twisted need to whip people into a frenzy, millions begin to quickly smell conspiracy and develop a thirst for the blood of anyone they can even link remotely to the overall state of the economy.

 Throughout the whirlwind of rants, polemics and fabrications, no one seems to take even a modicum of personal responsibility for the situation.

Okay, the last one is my take on the situation.  The first three, on the other hand are accepted widely as results common to most recessions.

I can think of some very bad decisions a person might make.  Right up there on the list, somewhere between drinking a 32 oz. bottle of bleach and telling your mother-in-law what you really think of her is taking out a payday loan.

Those mega-interest short-term loans are a Faustian bargain for people who have their backs against the wall.  In order to secure a few portraits of Ben Franklin to meet some kind of emergency expense, borrowers often end up creating even tougher circumstances when the balance comes due.  The only way out?  Extending the loan (which costs a bundle) or taking out another one.  

Look, I understand why people take out those loans in some circumstances.  When the only thing standing between you and a jail sentence, the repossession of your only means of transportation or having empty shelves and hungry kids is shaking hands with a shark, taking out a payday loan makes a twisted kind of sense.  You know it’s a horrible deal, but it’s a little less horrible than receiving a massive immediate butt-kicking.

My remaining libertarian instincts leave me a little bit cold on the issue of regulating payday lenders out of business.  I believe that people should have as much freedom as possible–even when that opens the door to stupidity.  There’s no law against telling your mother-in-law off, and I can tell you for a fact that isn’t the best course of action.  Who thinks it’s a good idea to serve cocktails at a Thanksgiving dinner, anyway?

In any case, recent events in the state of West Virginia provide a great object lesson in the motivations others have in trying rein in the practice of payday lending.  Whether you think it’s sticking up for the little guy and protecting his interests or an example of the worst kind of state paternalism, the arguments being leveled by the West Virginia Attorney General’s office perfectly encapsulate the “let’s regulate it  to death” perspective.

Here’s the scoop.  Payday loans are illegal in West Virginia.  You won’t find those storefront lenders anywhere in West Virginia.  That should give you a good idea of how the state government feels about the practice.  It also makes me wonder what kind of businesses are operating in those little strip mall spaces between the discount cigarette joints and the “car insurance for people with a history of DUI convictions” places.  What goes into those spots when payday lenders are illegal?

Desperate souls in the state pulled an end-around on the law.  Instead of walking up to a storefront lender, they’ve gone straight to the Internet, securing online payday loans.  Those Internet operations, which aren’t located within WV, extended credit to the least creditworthy among us.  The state is a little irate over that.

They’re so irate, in fact, that the AG is going after 12 online lenders.  They maintain that it’s illegal to make the loans to West Virginians or to market them within the state.  Following non-compliance on the part of the lenders to investigative subpoenas, the AG is asking for a court order to force the companies to pony up the information about their potentially illegal activities.

This series of events has led to some interesting comments from West Virginia officials.  

“It’s a very very shadowy industry, and it operates very much off the grid. The only answer to payday lending is to ban it,” said Assistant AG Norman Googel.  In a nice overview of the situation in the The Times, a WV paper, you can get a clear picture of how the government feels about these loans.

They see people making bad decisions with serious repercussions.  They don’t like the fact that people suffer as a result of their own poor decisions and they want to protect them accordingly.  They’re willing to tear up the notes on these loans, allowing the borrowers to walk away from their agreements without owing a dime.  They’re actually encouraging people who’ve agreed to pay back money to lenders to report to the AG’s office so that they can escape their poor decisions.

I’m no fan of payday loans and I don’t question the good intentions of those who’d like to ban them.  I do question the wisdom of that.  Can we really protect ourselves at every turn?  And even if we can, wouldn’t it make a lot more sense of the government of the fine state of West Virginia to focus on ways to improve the economy so that people might be able to afford to make ends meet without feeling like usury is a way out?

I don’t think this is necessarily a situation that requires babysitting.  It calls more for a look at why the economy makes these bad deals so attractive.  It justifies consideration of why people are willing to make these lousy bargains in the first place.  

Then again, it might be time for the legislature of West Virgina to consider a bill banning critical comments to mothers-in-law.  Let’s put a rider on there to punish the Clorox every time someone downs a cool glass of bleach, too.

I contribute posts here about how you can save money and improve your personal finances.  If you’re a regular reader, you’ll know that I stop short of being a total “frugalista”, though.  I certainly believe in following through with simple actions that can save you money and hate the idea of overpaying as much as the next guy, but there are certain things that I wouldn’t cut and items on which I won’t compromise.

Example:  Creamed corn.  The name brand stuff costs twice as much as the store brand, but I’ll always reach for the Jolly Green Giant’s stuff.  Why?  I think the store brand is gross, runny and of such inferior quality that I’m willing to spend an extra fifty cents for the good stuff.

Another:  Cable TV.  I could save over $1200 per year by killing off my cable package.  I won’t do it.  I like having it.  I like it a lot.  I’ve lived with it and I’ve lived without it.  I’ve made the personal judgment to keep it.  

You see, I believe there is a fine line separating smart spending and frugality from self-imposed deprivation and a decreased quality of life.  You might not agree.  You might agree, but would isolate different “must haves” than me.  I’m sticking with my opinion either way.

When someone critical of the “brown bag it to save money on lunch” idea explained that those small changes weren’t going to rectify major errors and that big picture planning was more important, the blogger over at Simple Dollar jumped on the remark.  They noticed, and accurately so, that the comment seemed to link consumer spending with the quality of life.  Although the reply stopped short of calling the comment shallow, it certainly did seem to imply that we should look for our happiness outside of the consumer economy.  I agree with that on some level, but not to the extreme.

At times, some act as if we’re supposed to be ashamed that we take pleasure in the things we buy.  I don’t.  

Are possessions and consumption the key to a happy life, of course not.  Not even close.  Money can’t buy happiness.  Money can buy some neat stuff sometimes, though, and there’s nothing inherently evil about enjoying those things–even when they aren’t the most frugal option out there.

I found an interesting blog post that talked about the ways frugality improved the quality of one’s life.  There were a few good points, but most of the items on the list weren’t really about the charms of austerity.  Most were merely explanations of how you could almost replace “the real deal” while spending less money.  It makes me wonder if some of those who are committed to being as frugal as possible are really as enlightened as some would like to believe.  

It doesn’t seem like they’re “above” spending money on a movie and popcorn.  They want to do that.  They just don’t want to spend for the experience so they pop up their own corn after grabbing a year-old flick from the library.  There’s nothing wrong with that.  I do it.  But sometimes, I like the red velvet curtain, the feeling of participating in a social tradition, the slimy butter substitute the theater uses and sitting through the credits.  Don’t hate me for loving new releases, okay?  

The first commenter on that post made my head spin a little.  The remark explained that frugality was a quality of life enhancer because it gave the commenter “something to think about”.  They liked thinking about how to save money at every turn.  Me?  I’d prefer to let my idle thoughts wander into other territory.  The world is full of exciting ideas to explore and creative opportunities.  A constant focus on buck-stretching doesn’t seem all that enjoyable–or as productive.

That’s one reason I like the spending formula that divvies up your resources in a way that stops short of Draconian austerity measures.  It seems a little more reasonable to me.

I’m not attacking those who want to save as much as possible.  I just don’t buy into the idea that hardcore frugalism is the only way to go.  I understand how the scalability of frugal measures can make a huge difference in one’s life and I really do respect the commitment and level of responsibility shown by those who fully embrace a frugal lifestyle.

That being said, I think there’s a middle ground that works best for me.  It’s somewhere between allowing the idea of money (and how not to spend it) to dominate my every thought and thoughtless spending.  It’s the place where I will cut a coupon to save $10 on a big brisket but doesn’t extend to the point where I give up cable television.

As I was thinking about the interplay between frugality and the quality of life, I stumbled upon something Andy Hough wrote at Tight Fisted Miser.  

The difference to me is that I will be choosing to give up those indulgences. I won’t be forced to give them up. This goes to my underlying philosophy of frugality which is that frugality is about choosing to do less expensive things not depriving yourself of things.

Choice vs. deprivation.  That makes sense to me.  It’s important to make informed choices, aware of both the opportunities and opportunity costs involved with them.  If you’re making those choices in a way that’s designed to improve the quality of your life, full speed ahead.  If you’re making them because you’ve set up an arbitrary set of limiting rules or out of a compulsion to save every penny…  That’s a different story.