4 ms·
>"car companies could just as easily operate by directly leasing the cars" ...which is finance. So why don't they do that, if it's just as easy? And where do
by tatsuke95 14y ago
>"car companies could just as easily operate by directly leasing the cars"
...which is finance. So why don't they do that, if it's just as easy? And where does the money come from to front the cost of building the car that is to be leased? Because the lessee won't cover the cost for quite some time. Yep, finance.
I realize there's a populist movement, especially among the younger crowds that frequent the interwebs, that influences people to hate everything Wall Street. But I don't think people realize what a fascinating and, more importantly fundamental, role finance has played in history. Present day Silicon Valley does not exist without it. It does, in fact, create capital.
- Retric 14y agoIt does, in fact, create capital. No, it allocates capital. VC's don't directly create capital they take money from investors, take their cut, invest the rest and then you get Silicon Valley. It might seem like a semantic argument, but what your suggesting would be the same thing as arguing that Walmart manufactures TV's. They are involved in the process, but a lot of bad policy shows up when people confuse bank balances with actual capital. PS: 'So why don't they do that, if it's just as easy?' A lot of car companies do that ex: http://www.hondafinancialservices.com/ http://www.hondafinancialservices.com/. Whenever they advertise 0% interest that's the car company handling the loan. However, car companies often resell these loans to third party's to get their capital back. There is a lot of capital out there that's looking for safe investments and repackaged loans fit the bill.
- tatsuke95 14y ago>" It might seem like a semantic argument" I guess it is semantics: http://en.wikipedia.org/wiki/Financial_capital http://en.wikipedia.org/wiki/Financial_capital