3 ms·

I don't think this needs to be such a simple chicken and egg problem. Because, even if black landowners are say 50% more likely to go bankrupt, they could at t

by rocqua 6y ago

I don't think this needs to be such a simple chicken and egg problem. Because, even if black landowners are say 50% more likely to go bankrupt, they could at the very least, still get some loans. Just maybe not as high a loan. It's not like banks have to say 'yes/no' to customers. They have variously strong variants of 'yes' when someone asks for credit. I think there are many other cases (e.g. affluent people choosing a public school / area to live in) where this problem is much more prevalent, because the only options in the decision are 'yes / no'. And since there is a correlation between black neighborhoods / public schools and crime / worse results, it makes sense for these people to avoid the mentioned downsides. Thing is, those correlations aren't causal. It's just that being black is correlated to being poor for historic reasons, being poor causes the downsides. And the above chicken / egg problem exacerbates the problem.

throwaway0a5e 6y ago
An interest rate that makes whatever you're doing with the loan not worth doing is effectively a "no" If you're gonna develop properties and the up front investment looks like it will take 10yr to pay off vs 5yr to pay off then that severely constrains the kind of development you can justify doing. You'll have to pick something safer which isn't necessarily the kind of development you want do to do. It's not banks and interest rates that are at fault here. All sorts of local permitting BS, laws about professional certifications, etc, etc, add up and compound each other to create a business environment where two development options are "tear down historic building and build spec luxury condos" or "tear down historic buildings and build a big box store". And this business environment feeds itself as developers, banks, regulators, construction firms, etc, etc. get well practiced at it making them more hesitant to do business with people who want to do any other kind of development thereby raising costs (supply and demand). Frankly I think this is all BS that could largely be solved if government got out of (or at least less involved in) the business of infringing on people's property rights.

by rocqua 6y ago

throwaway0a5e 6y ago

An interest rate that makes whatever you're doing with the loan not worth doing is effectively a "no" If you're gonna develop properties and the up front investment looks like it will take 10yr to pay off vs 5yr to pay off then that severely constrains the kind of development you can justify doing. You'll have to pick something safer which isn't necessarily the kind of development you want do to do. It's not banks and interest rates that are at fault here. All sorts of local permitting BS, laws about professional certifications, etc, etc, add up and compound each other to create a business environment where two development options are "tear down historic building and build spec luxury condos" or "tear down historic buildings and build a big box store". And this business environment feeds itself as developers, banks, regulators, construction firms, etc, etc. get well practiced at it making them more hesitant to do business with people who want to do any other kind of development thereby raising costs (supply and demand). Frankly I think this is all BS that could largely be solved if government got out of (or at least less involved in) the business of infringing on people's property rights.