Burrito Now, Pay Later
enterprisevalue.substack.com
Burrito Now, Pay Later
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Re: Burrito Now, Pay Later
#2He brushes over ethical concerns of BNPL but draws the line at sports betting.
But BNPL by design encourages you to buy things you can't afford and complicates your finances with more timed bills to pay. It makes it more likely people don't budget well and form buffers.
A PNBL would be better, add 10% tithe to every purchase that goes to a checking account. Once that reaches $1k it overflows to an index fund.
He says it won't be like 2008 bundling this stuff up and that might be right or wrong. To be 2008 you need 2 ingredients: combined gambling and banking operations at the banks (a legalised FTX of sorts) and some liars in the system misrepresenting the risk. Maybe a 3rd ingredient is a crazy/frenzy driving up the gambling into the bubbled asset.
Re: Burrito Now, Pay Later
#3This treatise, from someone obviously in the industry, is merely another payday loan shark attempting to justify the existence of their clearly predatory products. How many of the consumers of this product are even remotely able to comprehend the piece as-is described? The article describes a "complete market". Yes, a market that is completely able to extract as much money from an exploited, uneducated populace as possible. Is that the kind of market efficiency we should be advocating for?
The part of the "free market" that these fat cats always gloss over is that a cornerstone of a free market is that the consumers of the market are able to make educated decisions about the products that are available to them. If the populace is incapable of doing so in the way the products are presented to them, is that really a free market?
Re: Burrito Now, Pay Later
#4> Picture Alice, who forgets a $25 installment on her $100 DoorDash transaction. She’s hit with a $7 late fee, tacked onto her next payment. Annoying, but it probably won’t push her down a debt spiral.
This is so disconnected from reality that it's not just worrisome but despicable. Why did Alice missed a 25$? Maybe, just maybe, because she struggles to make ends meet, so if she had problems paying 25$, now she will have MORE problem paying 32$. Yes, she could have not chosen to use Klarna and she could have not chosen to buy something at all, but hey, who is gonna pay that IPO now?
Re: Burrito Now, Pay Later
#5> If you think the price of oil will be $120 after a year, you can use futures or options on futures to make this bet. If you think the S&P 500 will be over 6,500 within 2 years and the yield on 10Y Treasury bonds will be 4.25%, investment bankers will help you express this view for a fee.
I’m sorry but I think the either the author or I have entirely lost the plot. Finance is a game we play to make humans better off, not to “express their views” - if you think that being able to bet on everything makes society better off, that’s an argument you can make, but it is not self evidently good to me and it is not an argument the article seems to make.
Re: Burrito Now, Pay Later
#6A well-written, if cringey and uncritical article. Obviously a “complete market” assumes that risk can be fully accounted for, and that our world is not full of inherent contingencies and things which escape our immediate perception.
Re: Burrito Now, Pay Later
#7Absolutely unhinged content from someone who needs to touch grass. Payday loans are scams that prey on the poorest, most uneducated people. This industry is actively harmful to society.
But hey, I'm sure writing this helps you sleep at night.
Re: Burrito Now, Pay Later
#8> Picture Alice, who forgets a $25 installment on her $100 DoorDash transaction. She’s hit with a $7 late fee, tacked onto her next payment. Annoying, but it probably won’t push her down a debt spiral. This is so disconnected from reality that it's not just worrisome but despicable. Why did Alice missed a 25$? Maybe, just maybe, because she struggles to make ends meet, so if she had problems paying 25$, now she will…
Alice missed the $25 payment because her balance was zero, triggering a $7 late payment fee, $30 failed payment fee and $30 overdraft protection fee. Alice used the service more than once, so she missed not just this payment, but 20 simultaneous payments, having $1340 taken from her in total, eating her whole next two paychecks. During the time of those next two paychecks, it will be time to pay the next two instalments, triggering the same fees each time.
Re: Burrito Now, Pay Later
#9I really wish I could downvote it, but then I again I would prefer people see it, get appalled and decide that BNPL is even worse than they previously thought. Is there a "begrudgingly upvote" option?
Re: Burrito Now, Pay Later
#10This treatise, from someone obviously in the industry, is merely another payday loan shark attempting to justify the existence of their clearly predatory products. How many of the consumers of this product are even remotely able to comprehend the piece as-is described? The article describes a "complete market". Yes, a market that is completely able to extract as much money from an exploited, uneducated populace as po…
The product (from the perspective of the consumer) _is_ relatively straightforward IMO. What isn't straightforward is accurately modelling the credit risk of the bonds when this class of debt is securitized (the meat of this article). Thus I don't think understanding this article is a prerequisite for making educated decisions re: BNPL.