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BSAM
Registered: Sep 1999
Posts: 8392 |
04-22-12 01:30 AM
Quote from trefoil:
Credit rating agencies exist precisely to prevent folks who do stuff like this. Most people don't run up debt because they are trying to scam the system. I'm sure there's a percentage...
Private credit rating agencies should be outlawed, but that's a whole other story.
True, most people don't run up debt because they are trying to scam the system, but desperate people do desperate things.
At that point, the individual should understand that there is a price for abuse.
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logic_man
Registered: Oct 2010
Posts: 1489 |
04-22-12 01:34 AM
Quote from oldtime:
you crack me up. Now not only does your house get forclosed on, but you also go to jail. So the so called housing crisis becomes the so called incarceration crisis.
this just in, "Not only are millions of people losing their homes, but the government is running out of jail space to imprison them all. Some say we should just let them off Scott free, but others say that would only encourage more defaults. In the meantime, the banks that made these loans are incurring a loss, and that's just not fair."
Sorry I'm not some pussified wimp with a soft spot for every sob story that comes down the pike and that I'm actually the kind of man who built this thing we call "Western civilization", starting in ancient Greece, which losers and parasites are now tearing down all around me. So, even though you'll never win my approval, rejoice in the fact that people of your type have won. The fact that your victory is hollow and that within a few generations without people like me around you'll be back to living in grass huts is my only consolation. At the rate you scum are devolving, it wouldn't surprise me if apes had a more advanced civilization than homo sapiens within a few millennia.
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trefoil
Registered: Mar 2007
Posts: 3385 |
04-22-12 01:36 AM
Quote from BSAM:
Private credit rating agencies should be outlawed, but that's a whole other story.
True, most people don't run up debt because they are trying to scam the system, but desperate people do desperate things.
At that point, the individual should understand that there is a price for abuse.
The price is understood on both sides to be either repossession of the property if it's a secured loan, or attempts to collect that still have to stay, under present law, on the legal side of harassment. Credit rating agencies exist to tell potential creditors about who's good and who's not good for the money they get lent. It of course is based on history, so it can, just like that thing called technical analysis, wind up being unable to predict the future terribly accurately. But on the whole, it works as intended.
Financial and non-financial businesses both have an accounting line on their books for bad debts. Somehow the capitalist system has managed not just to survive, but to thrive with the idea that a certain amount of risk is inherent in the process of giving credit.
Once again, something that I would have thought would be blindingly obvious. On ET, apparently not.
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BSAM
Registered: Sep 1999
Posts: 8392 |
04-22-12 01:38 AM
Quote from logic_man:
Sorry I'm not some pussified wimp with a soft spot for every sob story that comes down the pike and that I'm actually the kind of man who built this thing we call "Western civilization", starting in ancient Greece, which losers and parasites are now tearing down all around me. So, even though you'll never win my approval, rejoice in the fact that people of your type have won. The fact that your victory is hollow and that within a few generations without people like me around you'll be back to living in grass huts is my only consolation. At the rate you scum are devolving, it wouldn't surprise me if apes had a more advanced civilization than homo sapiens within a few millennia.
(Apes are laughing at us when we're not looking.)
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BSAM
Registered: Sep 1999
Posts: 8392 |
04-22-12 01:41 AM
Quote from trefoil:
The price is understood on both sides to be either repossession of the property if it's a secured loan, or attempts to collect that still have to stay, under present law, on the legal side of harassment....
Jail time offers a bit more of an incentive for certain cases.
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logic_man
Registered: Oct 2010
Posts: 1489 |
04-22-12 01:42 AM
Quote from clacy:
If you're not bright enough to understand that if you disincentivize risk taking and entrepreneurship, that there will be strongly negative economic consequences, then you should enroll in a finance or econ class.
How would jail time be a disincentive to an entrepreneur who actually was bringing something of value to the market? It would only be a disincentive to the marginal (as I said in my original response) entrepreneur who was unlikely to succeed.
Those entrepreneurs would self-select against taking out loans, which would mean that banks would never have to even decide whether to give them a loan or not.
The fact that those marginal entrepreneurs, who ultimately fail, get loans now only confirms what economists have been saying for a long time about information asymmetries, i.e. the entrepreneurs likely know they are going to fail, but want to try anyway, and are able to put forth a convincing enough story to get the loan. If the entrepreneur knew that the penalty for exploiting this asymmetry was jail, they'd be less likely to indulge in it.
Sorry that the Econ 101 class you took didn't delve deep enough into these issues. Maybe next semester...
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