Credit counseling organizations provide valuable services to the public. They educate consumers about better money management techniques, promote debt reduction strategies, and help their clients avoid bankruptcy and its financial consequences. However, some credit counseling organizations prey on the vulnerability of the clients they are supposed to be helping.
The purpose of this article is to raise awareness that there is a potential for abuse by credit counseling organizations that have received or are requesting classification as organizations described in IRC 501(c)(3).
Economic development is unavoidably a series of wagers. Investments in physical, human and knowledge capital (R&D) are made with an expectation of return, but with cognizance of the accompanying risk. A recent literature (Acemoglu and Zilibotti 1997) has moved the inability of poor countries to diversify this risk combined with the indivisibility of many projects, as the central explanation for the perverse phenomenon of both low growth and high volatility.1 However, the issue remains germane for advanced countries: ongoing growth is thought to depend on investments in supplying specialized, hence inherently risky production inputs (see, for example Romer 1990 and Grossman and Helpman 1991).
Rocketing of stock prices in the late 1990s has captured special attention of economists. The traditional present value model (PVM), which claims that stock prices are the present value of future dividends, cannot explain the high level and volatility of stock prices. LeRoy and Porter (1981) and Shiller (1981) made the first rejections of the model, followed by West (1988). Even though considerable progress has been made since then, yet each theory or empirical test only partly explains the bubble-like pattern in stock prices. Debate on explanations of stock prices deviating from fundamental prices is still ongoing.
