4 ms·
Not at all, my point is to avoid fancy words like "solvency" and "liquidity", they blind you to the basic fact that if you need cash today and you can't get it
by Edmond 4y ago
Not at all, my point is to avoid fancy words like "solvency" and "liquidity", they blind you to the basic fact that if you need cash today and you can't get it then you're broke.
Whether you have assets that *you* believe you could draw on in the future doesn't matter when your need is immediate.
- bloppe 4y agoYou say blindingly fancy words. I say important difference. You say basic fact. I say oversimplification. We can argue about the semantics of the word "broke", but the difference here is between losing all your money vs. having to take out a loan now that you're pretty much guaranteed to be able to repay when your bonds mature and only losing the interest payments on that loan.
- orangesite 4y agoBut here's the the bugger: Folk don't give you loans when you're insolvent.
- bloppe 4y agoThat's why it's so much better to be illiquid! :)