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Thank you for clearly and concisely articulating why this is dangerous from the securities aspect. I think the immorality of it for consumers is obvious on the

Thank you for clearly and concisely articulating why this is dangerous from the securities aspect. I think the immorality of it for consumers is obvious on the surface, but the backend financial stupidity of it is slightly less obvious. At least to me, I felt that it was risky but couldn’t clearly articulate why until reading this. The only difference may be how many people buy into these. I don’t imagine BNPL securities to have the reach of 2008 for a few reasons, but perhaps I’m being naive.

nighthawk454 1y ago
I certainly agree, I think the financial mechanisms are not very obvious. Presumably somewhat by design. And yet it also seems to be one of the main tricks in modern financial engineering - it just keeps turning up. See also: corporate buybacks, private equity, private credit, mortgage backed securities, etc. All are versions of this ‘shuffling of risk’ from debtors to “investors”. The middlemen take their cut along the way. Then if and when the bubble bursts debtors default and investors take a bath. Or the slow case, the debt inflates away and investors pay for it in lack of returns, ultimately losing money in real terms despite balances going up. While BNPL by itself may not be large enough to do the economy in, some of those other examples mentioned are. And I imagine there’s probably some joint risk from running so many instances of this scheme at once (i.e. one goes out they all go out).