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It seems like you are trying to portray the lenders as the bad guys here. If that’s the case there is one thing I don’t understand. I had no money to fund my e

by tucaz 7y ago

It seems like you are trying to portray the lenders as the bad guys here. If that’s the case there is one thing I don’t understand. I had no money to fund my enterprise venture. Found someone that believed in it enough to lend me money with the promise I would pay it back. I couldn’t pay it back so they “took” my company. How are the lenders the bad guys? What are they supposed to do?

gbear605 7y ago
As a society, we want your enterprise to exist and be owned by you, an individual, not a lending company. We need a different system that can fund you and keep you funded as long as it’s a good business, which means even through events like this one. I’m not sure exactly what that looks like, but it’s not our current system.
- lotsofpulp 7y ago
  It looks like the government depositing sufficient cash into your bank account to prevent defaulting on debts.
- xyzzyz 7y ago
  If it was easy, someone would have figured it by now, after hundreds of years of shareholder capitalism. At the end of the day, real world business is risky, and someone must be taking that risk. If lending companies are asked to both front the money and take the risk, there will be no lending companies and no financing.
  - gbear605 7y ago
    In that case perhaps the solution involves no lending companies.
PaulDavisThe1st 7y ago
People love to talk about how lenders take a risk by lending, and that's why contemporary "capitalism" tends to limit the distribution of profits back to lenders/shareholders. But you take a risk simply by deciding to "invest" your labor in a venture too. And if the venture fails, in almost all cases, those who chose to provide labor instead of capital find themselves much worse off, practically speaking, than those who can spread their investments around and amortize risk. It's not that the lenders are bad guys, it's that they are participants in a bad system that provides preferential treatment to capital versus labor.
- charlesdm 7y ago
  But lenders take a different risk. They don't share in the upside. I can borrow $100m against assets for next to nothing. You can't raise the same amount of equity for next to nothing -- equity investors are generally looking for much higher returns, for the risk they are taking.
  - PaulDavisThe1st 7y ago
    The interest rate is itself a reflection of the broader equity situation. The price of a loan right now is ... very low. It will go up and down, though I agree that it rarely matches expected equity returns. The thing is, lenders are free to decide on terms, and whether to issue a loan at all. Part of their actuarial calculation must include some rate of default, because otherwise there would now downside to lending anyone anything. We may end up in an unprecedented time thanks to the virus and our policy decisions about it, but that's all part of the risk lenders take, and they (are supposed to) factor that into the rates they offer. I will bad for them, I suppose, if there is mass scale defaulting, but I see no reason to preference them over anybody else who makes the choice to participate in a loan-driven venture.

by tucaz 7y ago

gbear605 7y ago

As a society, we want your enterprise to exist and be owned by you, an individual, not a lending company. We need a different system that can fund you and keep you funded as long as it’s a good business, which means even through events like this one. I’m not sure exactly what that looks like, but it’s not our current system.

lotsofpulp 7y ago
It looks like the government depositing sufficient cash into your bank account to prevent defaulting on debts.
xyzzyz 7y ago
If it was easy, someone would have figured it by now, after hundreds of years of shareholder capitalism. At the end of the day, real world business is risky, and someone must be taking that risk. If lending companies are asked to both front the money and take the risk, there will be no lending companies and no financing.
- gbear605 7y ago
  In that case perhaps the solution involves no lending companies.

PaulDavisThe1st 7y ago

People love to talk about how lenders take a risk by lending, and that's why contemporary "capitalism" tends to limit the distribution of profits back to lenders/shareholders. But you take a risk simply by deciding to "invest" your labor in a venture too. And if the venture fails, in almost all cases, those who chose to provide labor instead of capital find themselves much worse off, practically speaking, than those who can spread their investments around and amortize risk. It's not that the lenders are bad guys, it's that they are participants in a bad system that provides preferential treatment to capital versus labor.

charlesdm 7y ago
But lenders take a different risk. They don't share in the upside. I can borrow $100m against assets for next to nothing. You can't raise the same amount of equity for next to nothing -- equity investors are generally looking for much higher returns, for the risk they are taking.
- PaulDavisThe1st 7y ago
  The interest rate is itself a reflection of the broader equity situation. The price of a loan right now is ... very low. It will go up and down, though I agree that it rarely matches expected equity returns. The thing is, lenders are free to decide on terms, and whether to issue a loan at all. Part of their actuarial calculation must include some rate of default, because otherwise there would now downside to lending anyone anything. We may end up in an unprecedented time thanks to the virus and our policy decisions about it, but that's all part of the risk lenders take, and they (are supposed to) factor that into the rates they offer. I will bad for them, I suppose, if there is mass scale defaulting, but I see no reason to preference them over anybody else who makes the choice to participate in a loan-driven venture.