Millions of Americans live on the margins of the American economy, depending on the likes of payday lenders and pawnshops, who charge excessive interest rates and superhigh fees for their services.

Living In America’s Fringe Economy
By Howard Karger

Ron Cook is a department manager at a Wal-Mart store in Atlanta. Maria Guzman is an undocumented worker from Mexico; she lives in Houston with her three children and cleans office buildings at night. Marty Lawson works for a large Minneapolis corporation. (The names have been changed to protect the privacy of the individuals.) What do these three people have in common? They are all regular fringe economy customers.

The term “fringe economy” refers to a range of businesses that engage in financially predatory relationships with low-income or heavily indebted consumers by charging excessive interest rates, superhigh fees, or exorbitant prices for goods or services. Some examples of fringe economy businesses include payday lenders, pawnshops, check-cashers, tax refund lenders, rent-to-own stores, and “buy-here/pay-here” used car lots. The fringe economy also includes credit card companies that charge excessive late payment or over-the-creditlimit penalties; cell phone providers that force less creditworthy customers into expensive prepaid plans; and subprime mortgage lenders that gouge prospective homeowners.

The fringe economy is hardly new. Pawnshops and informal high-interest lenders have been around forever. What we see today, however, is a fringe-economy sector that is growing fast, taking advantage of the ever-larger part of the U.S. population whose economic lives are becoming less secure. Moreover, in an important sense the sector is no longer “fringe” at all: more and more, large mainstream financial corporations are behind the high-rate loans that anxious customers in run-down storefronts sign for on the dotted line.

The Payday Lending Trap

Ron and Deanna Cook have two children and a combined family income of $48,000 — more than twice the federal poverty line but still $10,000 below Georgia’s median income. They are the working poor.

To make ends meet, the Cooks borrow from payday lenders. When Ron and Deanna borrow $300 for 14 days they pay $60 in interest — an annual interest rate of 520%! If they can’t pay the full $360, they pay just the $60 interest fee and roll over the loan for another two weeks. The original $300 loan now costs $120 in interest for 30 days. If they roll over the loan for another two-week cycle, they pay $180 in interest on a $300 loan for 45 days. If the payday lender permits only four rollovers, the Cooks sometimes take out a payday loan from another lender to repay the original loan. This costly cycle can be devastating. The Center for Responsible Lending tells the tale of one borrower who entered into 35 back-to-back payday loans over 17 months, paying $1,254 in fees on a $300 loan.

For the rest of the story, click here.

Mike Tyson was arrested early Friday on suspicion of driving under the influence and possession of cocaine after police stopped him shortly after he left a Scottsdale nightclub. According to police, Tyson’s car nearly struck a sheriff’s vehicle after he left the nightclub around 1:45 a.m. After failing the field sobriety tests, to which he voluntarily submitted, Tyson was placed under arrest. Soon afterward, police found cocaine on Tyson’s person and in his car.

If the police allegations are true, this could spell serious trouble for the former heavyweight champion. In addition to the legal issues, which are likely surmountable due to Tyson’s relative wealth and fame, a developing drug dependency will only expedite his self-destruction. Earlier this year, there were numerous rumors that Tyson checked himself into drug rehab for cocaine abuse. Today’s arrest suggests that the rumors were not only true, but that Tyson has not managed to overcome his addiction.

While drug addiction is always a serious issue, it is particularly problematic for Mike Tyson. With a history of depression, bi-polarism, rage, and reckless living, Tyson is a virtual textbook case of a self-medicating drug addict. Also, given his precarious financial position, a serious drug addiction only increases the likelihood that Tyson will lose every cent of the half-billion dollars that he earned during his career.

Let us all hope and pray for Mike Tyson’s quick and sustained recovery.

Comedian Roy Wood Jr. is known for his hilarious prank calls. In the following clip, an older Black woman is told that her Social Security check is being taken away to help Katrina victims. This is one of my favorites because it reminds me just how quick, clever, and funny everyday Black people are when they’re playing the “dozens.”

To hear the call, click here.

When keeping it real goes too far…

You little niggaz ain't deep you dumb
You niggaz ain't gangsta, you gum, I chew lil' niggaz
Hock-too, spew lil' niggaz
I can only view lil'niggaz like lil' niggaz
But in lieu of lil' niggaz trying to play that boy
I *pew, pew* lil' niggaz with the latest toy
Unlike you lil' nigga, I'm a grown ass man
Big shoes to fill nigga, grown ass pants
Probably hustled with your pops, go ask your parents
It's apparent you're staring at a legend who
Put a few lil' niggaz in their place before
Trying to eat without saying their grace before
Blasphemous bastard get your faith restored
You're viewing your version of the Lord
God--MC lil' nigga, applaud, or
Forever burn in the fire that I spit at y'all
I rebuke you lil' nigga, the meek shall perish
I'll roof you lil' nigga, I'm a project terrorist
Cute, you lil' niggaz think you in my class
Substitute lil' niggaz soon feel my wrath
I mute you lil' nigga, you a lil' nigga
I shall abuse you lil' nigga, I'm a ill nigga
Now shoo you lil' niggaz, go somewhere and play
Cause the day I lose to you lil niggaz, no day