Josh Reich explains how overdrafts work, in the real world:
It is pretty easy for a bank to clearly communicate your available current balance. But look at the language that banks use to describe available balance, with additional complexity from pending bills that have yet to be posted, checks that have been authorized but not cleared and temporary holds placed on the account. These are not difficult concepts to understand if you take the time, but banks go out of their way to make it as hard as possible to really understand what is going on with your own money. They have no incentive to help you understand, as a confused customer is a profitable customer. We’ve joked that one of the greatest innovations in banking is ever-decreasing font sizes.
Do you find the latest news from Greece a mite confusing? After saying that Greece “cannot sustain the deficit reduction that these hard measures aim to achieve” if its borrowing costs remain in the 6.3% range (which doesn’t seem so high to me), Greece’s prime minister went on to say that he had not asked for any money from the IMF or anybody else.
There was another panel today on the iPad and the future of magazines, this one featuring my friends Rachel Sklar and Jacob Lewis. Jacob was pretty downbeat about the ability of the iPad to rescue the economics of the magazine industry, for two reasons; one, I think, is much better than the other. The good reason is that Apple jealously guards the demographic information of the people who download any given app from the iTunes music store, and publishers are hobbled if they don’t have a lot of detail on the demographics of their readers.
The ultimatum game has shown repeatedly that people aren’t profit maximizers if they think that the profit-maximizing outcome is fundamentally unfair. And it turns out that the same is true of mortgage companies. Here’s Dean Jens, telling the story of a short sale of a house with two liens: