But its usefulness is in question.

It’s no secret that credit has been hard to come by the past few years as our economy continues to trudge through a steep downturn.  Credit scores have come down as a result of overextension, foreclosure and maxed out credit lines.

And although there’s no guarantee that it’s bouncing back anytime soon, the Federal Reserve and Federal Trade Commission are at least going to throw us all a bone next time we’re applying for our next credit line or loan.

As of January 1, there are certain circumstances (too extensive to outline) when a consumer applies for some form of credit that they’ll receive a notice with information surrounding their credit score or credit report.

Most commonly, people will receive a simple notice entailing their score and comparing it to that of the majority of consumers. (This likely applies for a mortgage, auto loan, or credit card.)

In the event that one has applied for credit under certain terms (say, an APR of 12.99%) and the source isn’t able to give you credit at these terms, you’ll receive a “risk-based pricing notice.” What this notice likely explains is (a) the reasoning why your credit wasn’t approved at the aforementioned rate and (b) what your new rate will be.  This occurs in a case when one’s credit is less than favorable but not detrimental.

Furthermore, anytime a current creditor reviews your credit (which many do on a six month basis) and determine they need to make a change, you’ll receive an Account Review Notice, which is exactly what it sounds like:  it’s the company explaining that they reviewed your account, and made a change.

Ultimately, this keeps the consumer less in the dark and it gives everyone a better feel for what their score is like.  The FTC isn’t holding your information in some dark abyss any longer, but they’re not offering it up easily.

But at the very least, it’s increasing communication flow between consumers and creditors, which is a step in the right direction for financial recovery of both the country and its citizens.

Previously all consumers could bank on was their free annual credit report (from www.annualcreditreport.com) and other credit reporting services like Experian, Equifax and TransUnion.

Now it’s less of a wild guess.  Consumers are going to see tangible feedback when they go to apply for auto loans, mortgages and credit cards, complete with references to their own credit report.

I can’t stress enough that this is a good thing overall.  And although I approve this movement, the practicality is questionable.

Let’s think—what exactly is this going to do for consumerism?  Will this make people more likely to apply for credit?

People aren’t necessarily going to rush out to their regional credit union as soon as they hear this information and apply for a card.  If they really needed one by now and couldn’t get it, this isn’t changing that.

There’s no direct correlation between this legislation and the availability of credit.

But does it have long term affects?

I think so.  I think what’s going to happen is that within the next year more people are going to become more financially stable as a result of (a) more job opportunities (hopefully) and (b) continuing to pay down current debt/climbing out of debt.  When that happens, people are going to want to get better credit cards, bigger credit lines, to refinance their mortgage, to finally get a new car, and so on.

So when they walk into a store to apply they’re still gambling, but if it doesn’t work out it’s not a complete shoot-down.

Consumers will be able to take the feedback they’re provided and make necessary adjustments to get their credit score back on track over time.

What does this mean big picture? It means that the next year might be a rebuilding year.  It means that consumers might finally be fixing or improving their credit and these helpful hints are going to push them in the right direction.

It might even mean that we’ll see a rise in consumer credit within the next few years.

That’s assuming the laws stay in play that long.

When it comes debt, people have developed some strange notions. Misconceptions about the Fair Debt Collection Practices Act can get you in trouble if you don’t inform yourself properly. I highly recommend reading the act itself by following the link above to find out what it really covers. Here are some of the misconceptions about it:

NOT TRUE: The Fair Debt Collection Act statute of limitations allows me to not pay off my debt.

If you search the Fair Debt Collection Practices Act, you will discover that the words “statute of limitations” do not actually appear in the statute. Now, that does not mean that such limitations do not exist. In fact, they do, but they are determined by the states. You can look up what the statute of limitations for your state are.

NOT TRUE: The Fair Debt Collection Act eliminates the universal default clause.

While the act does put many restrictions on creditors, it does not specifically eliminate the universal default clause. And this is one to really pay attention to. The universal default clause means that the lender can change your interest rates on the credit you have with them, if you default on a debt you have with another lender.

This can be disastrous to your paycheck. Some of the credit cards available have stated interest rates in the 30 percent range, if you fail to make a payment on time or are otherwise considered in default. Just because you were late paying off one bill, you could find your minimum payment on your other debts going up to the point where you can no longer afford to pay them.

NOT TRUE: The Fair Debt Collection Act keeps creditors away from me.

The act restricts abusive practices by debt collection agencies, but it does not keep them from collecting a debt you owe. For example, it limits the hours during which a debt collector can contact you.

NOT TRUE: The Fair Debt Collection Act gives me the right to renegotiate my debt.

If you cannot make your payments, negotiating a new arrangement is a good idea, and most creditors are willing to work with you, but they are not obligated to do this. If you find yourself in this position, you can find some scripts as to how to approach a creditor on the telephone and in writing to negotiate different terms.

Overall, you are better off because of the consumer protections built into the Fair Debt Collection Act. It restricts many of the harassing practices debt collectors had gotten into the habit of using to collect their debts. No more excessive telephone calls, no more embarrassing information leaked to your neighbors, no more threats of violence, no more banging on your door in the middle of the night.

Your best defense, however, is to not put yourself into this position in the first place. Instead of trying to wait out the statute of limitations on debt, deal with it the moment you get in trouble. If you have a car loan and you suddenly lose your job, look for a new job immediately. If you find that your new sources of income can’t handle your debt, contact your creditor, and try to negotiate a lower payment immediately.

- Medical expenses by you, your spouse or any other dependent

- To cover the purchase of a primary residence(can’t be your summer home)

- All tuition related costs, which includes books and room and board

- To cover the cost of being evicted or to prevent foreclosure on your home

- Funeral expenses(including your own)

- Some home repair expenses(be careful here)

Under normal circumstances you can start taking withdrawals penalty free when you reach age 59 ½, however there are some additional circumstances when you can even take withdrawals penalty free as early as age 55.  Please refer to the document here for more information on that.

So you now decide that you must withdraw money and it doesn’t fit into one of the above categories then it is considered a hardship withdrawal.  Let’s look at what that will actually cost you.

The first cost is that you lose the long term compounding effect of your money and that can be significant.  Let’s say you are 35 years old and you plan to retire at 60.  You currently have $50,000 in your 401(k) and you have an issue requiring a $20,000 withdrawal.  Your current salary is $75,000 per year.  You contribute 10% to your 401(k) annually and your company matches 4%.  Finally we are assuming a 8% rate of return and 3% annual raises.  If you didn’t take the withdrawal and left your money alone you would have approximately 1.38 million available at retirement.  On the other hand if you did take the withdrawal you will have approximately 1.24 million.  That $20,000 withdrawal will actually cost you close to $140,000 in retirement money.  Unfortunately for many people they can’t fathom numbers like this and the price of doing this gets lost in our got to have it now society.   However any way you look at it that is a lot of money.  By the way this is the website I used to calculate those numbers.

Secondly there are penalties that must be paid as well.  The first penalty is an early withdrawal penalty which is equal to 10% of the amount of the withdrawal.  So in our example that penalty would equal $2000.  It doesn’t stop there because Uncle Sam needs his piece of the pie so you will pay federal income tax on the amount you withdrew.  In our example you would probably be in at least a 30% tax bracket which means additional taxes of $6000 on your withdrawal.  Finally Mr. State has to put his hand in the pot as well and you have to pay state taxes.  Let’s assume 6% which means another $1200.

So when you add up the grand total that $20,000 hardship withdrawal will actually wind up costing you about $150,000 in lost income taxes and penalties.  I know you are still thinking is it worth it.  I guess the real answer to that question is what do you need the money for?  Once you answer that question then you have to think is this really worth $150,000.

Here is another good article on the topic -

With the thousands of brokers out there and because it is your money choosing a broker is not only important but critical to your financial health.  If you ever watched the movie Boiler Room you see what can happen if you get tied up with a shady broker.  How do you guard against this?  One of the ways is to use FINRA Broker Check.  To best describe what they do I will take a quote right off of their website. “BrokerCheck is a free tool to help investors research the professional backgrounds of current and former FINRA-registered brokerage firms and brokers. It should be the first resource investors turn to when choosing whether to do business or continue to do business with a particular broker or brokerage firm.”

I decided to check out the brokerage firm that I currently have my IRA account with.  To begin a search all you do is put in the name of the broker or brokerage firm.  You do have to agree to the terms and conditions and then hit enter.  The first page that pops up will give you some general information about the particular firm or broker such as the profile, history and whether they are currently suspended with any regulator.  It was refreshing to know that my firm is not currently suspended with any regulator.  From there you can drill deeper and get a more detailed report so that’s what I did.

Well when they say detailed report they didn’t lie.  I now had a 108 page report in front of me all about my brokerage firm.  In this report you will get detailed listings of the owners of the company and much more information about the history and operations.  What was of particular interest to me were the sections talking about arbitration awards, disciplinary and regulatory events.  I looked closely at this section just to get an idea if there was any previous shady action going on that would concern me.  Though there were some events on the list there was nothing there that really was of great concern.  Most were very minor things that could even fall under the category of “misunderstandings” between the broker and the customer.  Overall I was satisfied and glad to know that my IRA and other investments are being housed with a reputable firm.  In a way I am glad because if they weren’t then I would have to find another brokerage house which I wasn’t really thinking about doing right now.  However if I did have to find another one at least I know where to go to get all of the information on the new firm.

“When can I take money out of my 401k?”

It’s a question that’s been asked more than usual over the past year.  Many people are watching 401k balances dwindle due to the big stock market dip while others are dealing with new financial stresses.  When times are tight and you’re looking for money, that pile of cash in your 401k looks inviting.

But can you actually start yanking money out of your retirement plan?  In some cases, you might be able to do that.  In others, you could be stuck.  It’s going to depend on your unique circumstances and the 401k policies your employer set up.

You can cash out your 401k when you retire.  At that point, you pay the standard income tax rate on the dispersals.  Obviously, though, most of the folks asking “When can I take money out of my 4o1k?” already know that they can have it once they retire.  They’re more interested in whether or not they can get fast access to that money.

Generally speaking, there are two circumstances that will allow you to actually pull money out of your 401k plan.

First, if you terminate employment, die or become disabled.  If you’re canned or finally scream “Take this job and shove it!”, you can get access to the dough.  Termination of employment, regardless of whose idea it was, qualifies you to play with your nest egg early.  If you die, the funds are available to your heirs.  That probably isn’t part of your plan, though.  If you become disabled, you can also get to the money.  We don’t want that to happen, either, though.

Second, you can often take a chunk of your 401k money if you are experiencing a serious hardship.  Many plans have caveats in them that will allow contributors to withdraw a portion of their 401k money under certain specific circumstances.  The desire for a better television set does not qualify you for a harship exception.  Nor does your bad decision to go on a spending spree with your credit cards.  These early-access opportunities are reserved for those who end up facing serious medical bill problems or who may be waiting for the sheriff to come by with that foreclosure notice.  If you can’t document a serious emergency, don’t expect to get your money out early.  Even if you do, you probably aren’t going to be able to get more than a small percentage of the total funds in the account.

So, if you’re not quitting (or getting laid off) and you’re not staring down the barrel of a financial crisis unrelated to your personal debt obligations, how can you get to your cash?

To be honest, you can’t.  Yes, it’s your money.  However, in exchange for receiving any employer matching funds and the tax advantages associated with having a 401K, you give up some of your control over the money.  It’s yours, but you can’t have it just because you’d like to hit the casinos or pay off the folks at Discover.

You may be able to secure a loan against your 401k, though.  You’ll have to pay it back with interest, though.  And if you happen to lose your job before repaying the loan, the balance will suddenly become due in full.  It’s not a dream scenario to take out a loan this way, but it is sort of a roundabout way of getting your money in your hands.   Oh, and you’ll only be eligible for a loan representing a fraction of your total balance.

So, that’s how you can do it.  The bigger question is if you should do it at all. Generally speaking, the answer to that is a resounding “no”.  They’re going to automatically hold back a percentage to cover the income taxes on your cash out and you’ll also get hit with additional penalties for pawing that cash before hitting retirement age.  Usually, that combination of disincentives is reason enough to leave your money in place until you retire.

(NOTE:  We keep using the word “usually” for a reason–many of the answers to this post’s questions can only be determined with certainty after carefully reviewing the rules of your specific plan.)

“When can I take money out of my 401k?”  When you quit or get fired.  When you’re facing a serious economic hardship or when you retire.  That’s about it, unless you count taking out a loan.

In the end, however, you’re better off not scrambling your nest egg.  Leave your 401k money in place if you can.  As Dave Ramsey apparently said:

QUESTION: Chad and his wife have $35,000 in debt between credit cards, student loans and car loans. They bring home $150,000 a year. They also have $25,000 in their 401-K savings. He wants to (pay off his debt). Should they use that money to eliminate their debt?

I would never cash out retirement savings to pay off debt unless it is to avoid foreclosure.

Quite frankly, the answer to that question will depend upon who you ask!

David Cornish blames unrestrained capitalism and exessive greed.

Gaynor Borade sees a link between oil price spikes and the onset of recession.

Tejvan Pettinger argues that tight fiscal policy and fast, unsustainable growth have both led to recession in the past.

Stormy Brain explains why so many people are happy to blame the Fed for recessions.

A Washington University news article maintains that experts blame excessive consumer debt for our current economic downturn.

Love a Recession has three lists of potential causes.  The “mainstream” outlook, the authors personal opinion and other potential causes.  The range from speculation to underwhelming consumer confidence to Satan.  Take your pick, right?

Love to Know has an article with the title, “Causes of Economic Recession” that doesn’t even bother to list a single potential cause of recession.  Instead, it maintains that it’s “difficult to predict the causes of economic recession”. 

Another vote for high oil prices in this video.

How about government spending overseas, inflation and the fear of a recession.  Maybe FDR was onto something with that “the only thing we have to fear…” thing, huh?

Those crazy kids who don’t mind being associated with Lew Rockwell blame excessive government regulation.  No.  Really.

Are you getting the gist of this yet?  NO ONE REALLY KNOWS WHAT CAUSES A RECESSION.

That doesn’t stop them, however, from pretending as if they do have an answer.  Not so coincidentally, the causes they uncover are often linked to specific governmental programs of which they don’t approve on other grounds, too.  

In other words, if someone tells you that George Bush caused the recession, that someone probably doesn’t have a “W” bumper sticker.  

If someone tells you that the recession is a direct results of government policies designed to promote minority home ownership via subprime lending, you can probably guess how they’d feel about that policy even if we weren’t in a recession.

For every so many people who blame deregulation for the recession, there is at least one person out there who will take the contrarian view that regulation caused it.  

As far as I’m concerned, you can spin the wheel and embrace whichever pet “cause” it stops on, because your causal analysis isn’t going to amount to a hill of beans anyway.  

The more important consideration at the moment is the fact that we’re in a recession and we might wanna think about how to get out of it before too many more people end up losing their jobs and/or homes.

Which is why I’m proposing the Big Omnibus Recession Elimination Solution (BORES).  Basically, it boils down to developing alternate energy sources to reduce the price of foreign oil and our exposure to price spikes while we engage in less restrictive monetary policy and encourage increased consumer spending (but not debt).  We do this while cutting foreign aid to our allies and banning speculative stock trading.  We’ll deregulate all business by drafting better regulations that will make us more recession-resistant, even though we’ll recognize the inevitability of recessions as part of the business cycle.  Oh, we also need to find a way to defeat Satan.

That’s BORES.  And that’s what you end up with if you start believing the various single (or even “one or two”) issue explanations of the underlying causes of economic recession.

What product is often compared to insurance by experts even though other experts make a point of saying it shouldn’t be confused with insurance?

What product’s market is said to be worth seventy trillion (yes, trillion with a “t”) dollars even though no one knows how much the product is actually worth?

What product’s market has been completely devoid of regulation even though experts had been cautioning that its crash was impending–and that said crash would have massive repercussions?

Give up?  The answer is the credit default swap.

If you’re like me and virtually everyone else in the world, you may have heard this term once or twice in passing over the past several years only to see it in the headlines almost every day for the last several months.

And, if you’re like me, you could probably use a hand making sense of the discussion surrounding credit default swaps.  Let’s see if we can break down this complicated financial instrument so it all make a little more sense…

Defining a credit default swap isn’t that tough.  Lil’ ol’ Wikipedia actually does a good job of laying it out:

A credit default swap (CDS) is a credit derivative contract between two counterparties. The buyer makes periodic payments (premium leg) to the seller, and in return receives a payoff (protection or default leg) if an underlying financial instrument defaults CDS contracts have been mistakenly compared with insurance, because the buyer pays a premium and, in return, receives a sum of money if a specified event occurs. However, there are a number of differences between CDS and insurance; the buyer of a CDS does not need to own the underlying security; in fact the buyer does not even have to suffer a loss from the default event.

That gives you an idea of what a “CDS” is, but it doesn’t really explain why they exist.  We can turn to Investopedia (that’s two “pedias” in one post, kids!) for a little context:

The buyer of a credit swap receives credit protection, whereas the seller of the swap guarantees the credit worthiness of the product. By doing this, the risk of default is transferred from the holder of the fixed income security to the seller of the swap.

Which brings us to a more pragmatic consideration.  Who, specifically, has been using credit default swaps and why have they been doing it?  Time Magazine explains it rather nicely, even though it does tread on the wrong side of the Wikipedia definition’s admonition against making a comparison with insurance:

Credit default swaps are insurance-like contracts that promise to cover losses on certain securities in the event of a default. They typically apply to municipal bonds, corporate debt and mortgage securities and are sold by banks, hedge funds and others. The buyer of the credit default insurance pays premiums over a period of time in return for peace of mind, knowing that losses will be covered if a default happens. It’s supposed to work similarly to someone taking out home insurance to protect against losses from fire and theft.

Now that might not seem like the biggest deal in the world when you consider the scope of the overall economy, but it actually is one of the biggest things out there.  The CDS market was a seventy trillion dollar business.  And almost 40% of it is in the hands of major financial institutions.

So, why is that a bad thing?  Sure, there’s a lot of money in the CDS market.  That, in and of itself, isn’t a problem.  What’s the problem?

There are several.

First, a lack of regulation/oversight/rule-making/whatever led to a very serious problem in the credit default swap biz.  Namely, people started trading these instruments back and forth with no one really bothering to consider whether the people taking on the risks associated with the swaps actually had the means to make good on them in the event of a default.  That wasn’t a well-known problem until…

Second, (you guessed it)  defaults started happening.  You can blame that on the subprime mortgage crisis or any of the other potential explanations for our journey into the land of recession.  The fact of the matter, however, is that defaults started springing up and the folks who were supposed to be able to cover the associated costs have been coming up short.

Third, these defaults and the failure of credit default swaps is giving banks a good reason to reconsider some of the bond lending and other investments they were willing to make earlier.  All of that talk about a credit freeze is starting to make sense, isn’t it?  As the aforementioned Time article noted, ” this could impact everyone from mortgage-seekers to municipalities that need money to fix roads and build schools.”

Fourth, there’s this even bigger problem of a potential domino effect.  You see, all of that crazed CDS trading, in hindsight, seems a little divorced from reality.  Consider that one expert explained that those who own default swaps don’t even know what they’re worth.  No one does.  No one has any good idea to figure that out, either. That led him to ask a very important question:

How does a global financial system work when you don’t know how to value assets?

The answer is scary because a global finance system may not be able to work at all under those circumstances.  Remember, we’re talking about seventy trillion in investments.  Thus, one columnist stated:

It could take years of litigation to figure out who owes whom what. The fear is that once the system starts failing, there will be “cascading defaults” and because the CDS market is so huge, its failure threatens the whole global economy.

I know this post is a little heavy on the doom and gloom.  It’s worth noting that not everyone shares the perspective that the CDS market’s unraveling will lead to all of us living like Man and Boy in The Road.  Whether they believe that letting the market run its course or appropriate interventions can stop the “cascade”, there are people from all economic and political persuasions who do see a way out.

Let’s hope one of them is right.

And that we follow his or her advice.

Our apparent recession is bringing out the best in many people, but it’s also providing hucksters and other nefarious souls with a platform from which to conduct some pretty unscrupulous business.  Consumerist recently outlined five scams that seem to have traction during recessionary times.  I found one of them particularly interesting–the “hidden bankruptcy”.

An advertisement trumpets, “consolidate your bills into one monthly payment without borrowing” or something similar.  That’s the come on.  What isn’t mentioned in any of the promotional materials is the actual methodology they advocate to accomplish that goal.  They’re doing their best to dance around using the “B” word–”bankruptcy“.

In some cases, businesses (and I use that term loosely) may offer debt consolidation services that will involve the customer filing for bankruptcy.  These “bankruptcy mills”, as U.S. Representative James Moran (D-VA) terms them, do their best to drag customers into the filing process, touting its advantages without necessarily explaining alternatives and the negative consequences of a bankruptcy.  Put simply, it’s sleazy.

In other cases, you might encounter someone trying to sell you a guide to debt consolidation.  You won’t realize it until you receive the “guide” (thanks to some careful marketing) but it will be little more than some cobbled together information about how to file for a bankruptcy.

These ugly tricks are common enough that the Federal Trade Commission has issued a special consumer alert in which it “cautions consumers to read between the lines when faced with ads in newspapers, magazines, or even telephone directories” that offer debt reduction services or techniques.

Bankruptcies aren’t always a bad idea.  There are cases in which filing for a Chapter 7 or 13 bankruptcy can make a great deal of sense.  However, most people can find ways out of their debt problems that won’t involve filing for a bankruptcy.  These alternatives will also allow them to avoid the negative repercussions that inevitably follow a filing.  A bankruptcy might allow you to escape the burden of some debts, but it will also saddle your credit reports with a scarlet “B”, making it exceedingly difficult to obtain credit for legitimate uses.  A bankruptcy may even prevent you from obtaining some kinds of jobs.

In other words, bankruptcy is a serious decision.  It shouldn’t be done on a whim and it certainly shouldn’t be encouraged absent the consideration of other options.  Companies who advocate bankruptcy, particularly those who do so while trying to hide their real intentions, should be viewed suspiciously, to say the least.

The FTC and other sources recommend looking for ways to resolve debt problems that don’t involve the “nuclear solution” of a bankruptcy.  These include trying to work out arrangements with creditors, changing personal money management approaches, considering legitimate debt consolidation alternatives and working with reputable credit counseling services.

Those who find the “bankruptcy mill” advertising campaigns too disingenuous may also want to consider discussing the matter with their legislators.  Moran, for instance, supported an amendment to the 1999 bankruptcy bill that would’ve required:

“debt relief organizations to disclose the nature of the services they offer, explain to consumers the alternatives to filing bankruptcy, disclose the rights and obligations of a debtor who files for bankruptcy and the consequences of a bankruptcy filing. The purpose of the amendment is to educate the consumer about bankruptcy and bankruptcy mills before it is too late; in other words, before the debtor has made an uninformed decision.”

Although my personal predilection is to favor free speech whenever possible, including commercial speech, some may want to reconsider that idea if companies are acting in an intentionally misleading fashion and are clearly victimizing consumers in the process.

As someone with an interest in personal finance, I’m a massive fan of consumer education. Smart consumers spend more wisely and make better decisions.

I want you to avoid bad deals and bad companies. I strongly support online research as a means of protecting your interests as a consumer. Knowledge really is power and individual consumer self-empowerment is great.

So, it would stand to reason that I’m also a fan of websites dedicated to revealing scams and rip-offs, right?

Wrong.

At least I’m not a big fan of the most successful online “pro consumer” site and I’m actually very suspicious of many others.

The reigning champ among sites that purport to give consumers the low-down on bad businesses is Ed Magdeson’s Rip Off Report. For reasons that defy both logic and Google’s stated preferences, Rip Off Report is often one of the top results when you query search engines with company names.  It’s a busy place, frequented by thousands upon thousands of Internet users looking for information about businesses.

If you aren’t familiar with the way Rip Off Report works, here it is in a nutshell:  Anyone can sign up with the site and then submit a warning or complaint about a business that consumers engaged in pre-purchase research can then find.

That sounds good, but the reality is a little stickier.  Although I’m sure there have been many people who have avoided bad deals because they read a post on Rip Off Report, there are big problems with relying upon it for smart guidance.

Many of these reasons to be wary of Rip Off Report apply to other similar sites, where user-generated content or reviews serve as foundational material, by the way.

Here’s why you need to take those negative reviews with a grain of salt (and then some).

The customer isn’t always right. I know that people love to say that the customer is always right, but that doesn’t make it true.  Anyone who’s ever worked in a retail environment knows that a hefty percentage of customers are very wrong.  They’ll also tell you that the ones who are the most wrong are also the ones who are most likely to complain.  The folks who are willing to take the time and effort to unload on someone via Rip Off Report may not be your best source of entirely accurate and sane assessments of situations and transactions.

There’s zero editorial control. There’s very, very little exercise of editorial control at Rip Off Report. That isn’t an accident, either.  The lack of editorial meddling is one of the reasons why its ownership can deftly avoid losing defamation lawsuits via the safe harbor provisions of existing laws.  In any case, though, no one is actually monitoring or investigating the often wild complaints lodged by site users.  These entries could’ve come from a perfectly reasonable person who wants to warn others of bad business tactics.  They could also come from a frustrated fiction writer on a two-week whiskey bender who has a series of psych diagnoses and has opted not refill necessary prescriptions.  The comments can be 100% accurate or complete fabrications and no one is testing them before publication at the site.

Where there’s a lot of smoke… Rip Off Report is a fairly frequent target of lawsuits.  Some are tossed out, some are settled and others end up resulting in uncontested judgments against the site’s ownership. We can argue about the legal and overall merit of individual cases, but when you start hearing the same accusations from a variety of seemingly reputable people, you might reasonably assume that something might be wrong.

Following the money. If you run a business and someone unleashes on you with a scathing review, you can get the folks at Rip Off Report to intervene on your behalf.  You’ll just need to pay them.  Alot.  Charging companies to battle negative reviews appears to be a key component of the ROR business strategy.  That’s alarming, to say the least.

There are other reasons to question the veracity of the complaints lodged at sites like Rip Off Report. Some contributors are obviously disturbed and/or of limited intelligence.  You’ll notice a variety of obviously baseless reports and a tendency amongst those “squeaky wheels” to wedge any inconvenience into the “evil conspiracy” category.

Being a smart consumer is great.  Self-education can be one of the best ways to protect your money.  Sites like Rip Off Report, however, aren’t the best place to get an education.

In our next post, we’ll discuss a few ways to get better information about the quality and legitimacy of those with whom your considering doing business and a few other consumer education tips.

NOTE:  By the way, if you’re interested in learning more about ROR and its founder, I strongly recommend a rather lengthy article that originally appeared in the Phoenix New Times.  I think it’s at least somewhat fair to the site and its operator, Ed Magdeson, and it’s a lot more comprehensive than other criticisms of the site.  Let me add that whether you love or hate the site, it’s certainly a very interesting story.

If anyone was expecting the one-day conference to become a “Bretton Woods II”, they were certainly over-optimistic. We didn’t witness a complete reinvention of international monetary management rules and no one walked away believing that a new framework for global cooperation had been set in place.

G-20 Summit Shortcomings

The limits of the summit’s significance are readily apparent. For instance, although those gathered pledged to do whatever might be necessary to stabilize the financial system, no one seemed willing to divulge any specific numbers with respect to individual nation members’ stimulus plans.

The G-20 was basically silent on the hot topic of re-examining and re-calibrating exchange rates, too. Sometimes silence is significant and the failure to address this topic in a meaningful way definitely cut against the significance of the session.

It’s no surprise that the group will need to gather again in April. Some analysts argue that this production of “Hamlet without a prince” was doomed to fall short of major change due to the absence of the next U.S. President, Barack Obama. Although globalization is slowly but surely rendering the U.S. a significant player instead of the player in the field, the presence of a lame duck certainly curtailed the drive for members to try to iron out future plans.

A recent BBC News story from Bridget Kendall wondered if a second version of Bretton Woods, the 1944 agreement between allied nations on the management of international financial and monetary affairs, might be on the way. The article noted the possibility of a major power shift on the immediate horizon and the potential to see substantial changes in the way the world approaches an increasingly globalized economy.

The G-20 Summit didn’t measure up to those lofty standards. However, a closer examination of the summit reveals that it’s limitations didn’t prevent it from planting seeds that could result in significant changes for the global economy.

A Departure from Old Models

The most important part about a G-20 gathering may be the simple fact that it is not another G-8 meeting. The expansion of participating voices represents a significant departure from a system dominated by the U.S. and Europe.

The G-20 may very well represent a crumbling of the “old guard” and it certainly creates previously non-existent opportunities for other nations to add their perspective to international economic questions. That recognition of increasing globalization could set the stage for even bigger changes in the nature of international agreements.

Although we may be a long way from the G-125 some advocate, there is no question that the days of trying to manage a world economy from a handful of western capitals are numbered. The meeting involved a great deal of discussion of how emerging economies should have an increased role in a variety of functions, particularly with respect to the International Monetary Fund.

Put simply, the very fact that a G-20 assembled is meaningful, regardless of the actual policy decisions that did or did not emerge.

That’s not to say that the sole value of the summit was symbolic, though. There actually were some interesting and potentially significant decisions to come out of the meeting.

G-20 Accomplishments

One of the most staggering things to come out of the meeting was the expression of the sentiment that global financial markets are not sufficiently self-regulating and that governmental interventions would be a necessity if the global economy is to be stabilized. Although it would be a stretch to argue that international policy since Bretton Woods has never been truly “laissez faire” in nature, this up-front support of active intervention represents a significant change in overall expression and may be evidence that those with a more market-oriented approach are losing influence.

The pledge of G-20 nations to stabilize international markets came with some specific policy proposals, too. There was a strong call to increase the regulation of hedge funds and advocacy for heightened oversight of credit rating agencies in recognition of stubborn credit problems.

Trade issues also made it to the table. Notably, the membership agreed to a 12-month prohibition on new protectionist measures. Calls for the re-initiation of the Doha trade talks were also well-received. Those who had wondered if recent global events would lead to more cooperation or increased isolation seemed to have received an answer in support of cooperative trade and engagement.

It would be premature to argue that we’re on the brink of a massive structural change in international monetary and trade policy. The G-20 conference clearly didn’t yield a sea change. However, despite its limitations, it does appear as if the foundation for a different approach to world economic issues may be in place.