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> It's classic Tragedy Of The Commons. It's not a tragedy of the commons unless something artificially prevents banks from charging a profitable rate for loans
by zeveb 8y ago
> It's classic Tragedy Of The Commons.
It's not a tragedy of the commons unless something artificially prevents banks from charging a profitable rate for loans. If no other bank is doing business there, and if any bank which does do business is allowed to make a profit, then certainly one will. Indeed, that's what the 'loan sharks' are doing: providing desired services at a market-clearing rate.
It seems to me that a public bank will end up having to be subsidised from the general fund to cover its losses, which in the case of American Samoa probably isn't very large.
- exelius 8y agoI think the risk for a business is that when the rates get too high, shadow banking just takes over. Which it will, because the rates will be really high. It’s a whole lot of work to serve 55,000 people with a GDP of $13,000 per capita. There just isn’t enough economic activity to make this work from an international bank.