Wednesday, July 15, 2009

What is $23 quadrillion amoung friends?

Good to know our credit card system can handle such large numbers just incase we have Zimbabwe like inflation.

NEW YORK (CNN) -- A technical snafu left some Visa prepaid cardholders stunned and horrified Monday to see a $23,148,855,308,184,500 charge on their statements.

Josh Muszynski noticed the 17-digit charge while making a routine balance inquiry.

Josh Muszynski noticed the 17-digit charge while making a routine balance inquiry.

That's about 2,007 times the size of the national debt.

Josh Muszynski, 22, of Manchester, New Hampshire, was one Visa customer aghast to find the 17-digit charge on his bill. Adding insult to injury, he had also been hit with a $15 overdraft fee.

He noticed that his debt exceeded the world GDP while making a routine balance inquiry on his online Bank of America account. According to his statement, he had spent the profound sum in one pop at a nearby Mobil gas station -- his regular stop for Camel cigarettes.

"Very, very panicked," he jumped in his car and sped to the station.

Had they perhaps noticed any "outrageous" charges come across their books recently, he inquired of the cashier there. She checked the records. They had not. Video Watch the story of an astounded customer in Memphis, Tennessee »

Muszynski wondered aloud what he might possibly have asked to purchase for such an astronomical price. "Can I buy Europe on pump 4?"

He next called Bank of America, the issuer of his Visa prepaid debit card. The bank kept him on hold for two hours, during which time he contemplated the impossibly bleak financial future that might await him. He also felt a stab of fear that he had saddled all his unborn grandchildren -- and their grandchildren -- with a lifetime of debt. "Down the generational line, nobody would have any money."

Finally, a bank representative told him that the $23 quadrillion charge -- and the $15 overdraft fee -- would be stricken from his account.

Muszynski compared the giant debt reprieve to receiving "an amazing Monopoly card that says, 'Bank error in your favor.' "


In a statement, Visa said the rogue charges affected "fewer than 13,000 prepaid transactions" and resulted from a "temporary programming error at Visa Debit Processing Services ... [which] caused some transactions to be inaccurately posted to a small number of Visa prepaid accounts."

The company assured customers that the problem has been fixed and that all falsely issued fees have been voided. "Erroneous postings have been removed ... this incident had no financial impact on Visa prepaid cardholders.

Sunday, July 12, 2009

Is California the next Zimbabwe?

The Daily Capitalist: We Buy and Sell California IOUs

Buyers are clamoring for discounted scrip, but the SEC tries to put the kibosh on the deal

By | Published on 07.10.2009

This is the power of capitalism. When the big banks announced that they would not accept California’s IOUs as cash deposits, it took about three minutes for a market to spring up on eBay and Craigslist for this scrip. Of course, many buyers want a discount on the paper.

Then some idiot at the Securities and Exchange Commission comes up and says the scrip is a security and no one can sell without registering them.

So, now a promise to pay is a security because some bureaucrat said so. I don’t think so. I would love to see the SEC try to get away with this. If it was a security, the state of California as the issuer would first have to register the IOUs as a security. Then the people working a secondary market on an already registered security would need a broker-dealer license to trade them. The state controller insists they aren’t securities, but rather “a form of payment.” And they are correct.

If you need cash, what’s wrong with someone buying an IOU at a discount? Willing buyer and willing seller and all that. And don’t try to argue there’s no risk to this stuff. The state just got downgraded to BBB, pretty close to junk.

The best idea I heard today is that you go out and buy these IOUs at a discount and pay your taxes with them. If you buy at 80 percent of notional value, you get a 20 percent tax break. Not bad. (more)