Lib, would you be so kind as to direct your attention to the questions regarding multiple creditors posed by myself and Fear Itself?
Would you mind terribly if I elected to do something more pleasant than converse with you — such as inflicting myself from head to toe with papercuts and dousing myself with gasoline?
Pardon me for interjecting into other people’s discussion, but don’t interest rates generally include a “risk premium” that accounts for the possibility of default? The risk premium is much lower for secured debt, which is why the interest rate on my mortgage is massively lower than the interest rate on my credit card.
If all debt is secured (whether by collateral or under-penalty-of-law forced repayment), interest rates would be a lot lower, I imagine. On the other hand, it seems to me that entreprenurial borrowing would fall to nothing. Capital could still be raised by selling stock, but that seems like it would reduce the incentives for entrepreneurs, since their ownership stake in their start-up is correspondingly diluted. Would this mean the death of capitalism?
Rick
I don’t think so. Entrepreneurs typically are risk takers by nature. I don’t think they would necessarily always opt for the safest loans. (Incidentally, I might have misunderstood what you meant, but for the record, I am not advocating that all debt be secured. Note my use of the subjunctive mood in my question to Treis.)
I’ve started a thread on another aspect of life in Libertaria.
Liberal has already posted there (thank you) and anyone else is invited to share their perspectives if they like.
Regards,
Shodan
I guess that’s a “no” then.
Wake up call, you have the choices of refusing to engage another poster or declining to participate in the thread. I see no reason why you need to post ad hominems that are (just barely) inside the bounds of this Forum for no better reason than to claim that you are going to not participate.
Like others, I’m having a hard time with this statement. Not all loan defaults are due to misrepresentation. Consider a guy who own five bars in New Orleans - all are successful businesses. He goes to the lender, points out his proven track record as a successful businessman, and borrows $100,000 to open a sixth bar. He has every intent of paying back the loan on schedule, the same way he has done five previous times.
But six months later Hurricane Katrina hits. His new bar is underwater. His other five bars are underwater. His house is underwater. He cannot pay the balance of his loan. He has no income and even if he sold all his property its current value is less than the amount he owes.
Are you saying this guy was misrepresenting himself at the time he borrowed the money?
Please see Ambrosio Spinola’s excellent arguments, and my responses to him.
Ambrosio Spinola did make an excellent point. But I’d expand on what he said; by agreeing to the loan, the lender is effectively agreeing that his money has passed on from his control and, under certain unforeseen circumstances, might not return. If the borrower is agreeing that foreclosure by the lender is not a form of illegal theft or fraud, then the lender is agreeing that a genuine bankruptcy of the borrower is also not a form of illegal theft or fraud.