61–70 of 73 posts
He did this by truly understanding his target customer and their risk/expense threshold.
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That explains why they do it, not why it's fair.
I'm not sure exactly how to demonstrate the fairness to you if you don't see it in the above hypothetical case, esp if you agree that you wouldn't "lend" your entire retirement to a poor credit risk individual. I'll take one more shot at it: In order to attract prudent capital to a riskier investment, the projected rate of return must be higher than that of any available safe, or safer, investment. IOW, to lend to "h…
That has nothing to do with fair. At least not a definition of the term outside of the rules of the market. If you define fair as 'legal' or 'in keeping with free market economics' then sure, it's fair.
Earlier quoted context omitted.
I'm not sure exactly how to demonstrate the fairness to you if you don't see it in the above hypothetical case, esp if you agree that you wouldn't "lend" your entire retirement to a poor credit risk individual. I'll take one more shot at it: In order to attract prudent capital to a riskier investment, the projected rate of return must be higher than that of any available safe, or safer, investment. IOW, to lend to "h…
You are explaining why the lender makes more money by doing X or why they cannot possibly survive without doing X or why it is financially prudent or their fiduciary responsibility.... That has nothing to do with fair. At least not a definition of the term outside of the rules of the market. If you define fair as 'legal' or 'in keeping with free market economics' then sure, it's fair.
Earlier quoted context omitted.
I'm not sure exactly how to demonstrate the fairness to you if you don't see it in the above hypothetical case, esp if you agree that you wouldn't "lend" your entire retirement to a poor credit risk individual. I'll take one more shot at it: In order to attract prudent capital to a riskier investment, the projected rate of return must be higher than that of any available safe, or safer, investment. IOW, to lend to "h…
You are explaining why the lender makes more money by doing X or why they cannot possibly survive without doing X or why it is financially prudent or their fiduciary responsibility.... That has nothing to do with fair. At least not a definition of the term outside of the rules of the market. If you define fair as 'legal' or 'in keeping with free market economics' then sure, it's fair.
In a free market of lenders and borrowers, "fair" is whatever each party agrees to enter into acting in their own best interest. If the lender thinks the terms are "unfair" to them, they don't lend. If the borrower thinks the terms are "unfair" to them, they do not borrow. Therefore, if a lender lends to a borrower, both parties have agreed that the deal is "fair".
If a borrower finds that no one will lend to them on terms the borrower likes and then freely decides to loosen their standards and borrow anyway, I don't see any unfairness at work, rather that the borrower has updated their own concept of what a "fair deal" is, in order to borrow the money they want.
Earlier quoted context omitted.
"Free markets dissolve the concept [of fairness]." Some would say that free markets implement the concept of fairness. Of course, there are no free markets in the world today, to a first approximation, since all the prices and outcomes are distorted by external agencies, so whether free markets are fair is a bit academic.
That is irrelevant really. You may think that the result is fair, but fair is not the reason that is the result. The free market comes to a result based on a series of self interested decisions. At the core are the buy/sell decisions. I price in a way that maximises my profit, you buy in a way that maximises your utility. Fair (I admit an ambiguous term) represents something external to this.
Earlier quoted context omitted.
Though credit cards can be replaced by less dangerous debit cards for most of their functions.
Actually, debit cards are significantly more dangerous (when talking about external events, not accountability). The amount of liability you have + paperwork in the event of fraud is exponential compared to credit cards.
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Actually, debit cards are significantly more dangerous (when talking about external events, not accountability). The amount of liability you have + paperwork in the event of fraud is exponential compared to credit cards.
I do not know if we are talking about the same thing. But I configured my debit card not to be able overdraw my bank account and I make sure that there is always not too much money in it.
http://www.consumer-action.org/english/articles/understandin...
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Except, when you get credit cards, you get screwed. When you don't get insurance, everyone else is screwed. That's why credit cards are a classical case for information, not regulation. It's a sad sad slope that regulation is incresingly used to protect people from themselves, rather than each other.
What other product can you purchase, and have the price change after you purchase the product? What other form of loans/credit can you purchase and then have the interest rate changed without your knowledge and without informing you because of a missed or late payment on a different loan? What other form of loan can increase your interest rate (cost) based on an increase in the balances on accounts with completely di…
Housing, stocks, commodities, pokemon cards, electronics.
It's not a matter of education, IMHO.
You're right, it's a matter of discipline. We can tell people to not play the lottery as your expectancy will never be positive, but they'll still be there, scratching the foil off with car keys.
Note that the deceptive business practices don't help with enforcing discipline.
Earlier quoted context omitted.
I do not know if we are talking about the same thing. But I configured my debit card not to be able overdraw my bank account and I make sure that there is always not too much money in it.
You're talking about money management; I'm talking about fraud and liability. http://www.consumer-action.org/english/articles/understandin...
(Edit: I have read the linked article. The debit card system is somewhat different in Germany, where debit cards are much more widespread that credit cards. In fact credit cards are still somewhat of a rarity while everyone seems to have a debit card.)
Earlier quoted context omitted.
You are explaining why the lender makes more money by doing X or why they cannot possibly survive without doing X or why it is financially prudent or their fiduciary responsibility.... That has nothing to do with fair. At least not a definition of the term outside of the rules of the market. If you define fair as 'legal' or 'in keeping with free market economics' then sure, it's fair.
All right then -- fair to whom, and by what standard?