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Debt is coming to the tech industry

alexdanco.com

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Re: Debt is coming to the tech industry

#11

Post by Yetanfou »

Debt is like medicine: useful to cure certain conditions but nothing to be burdened with your entire life. Once the condition is cured the medicine is no longer needed.

It is also like medicine in that it has a tendency of ending up being worse than the condition it was meant to cure when taken irresponsibly or in too large a dose.

There's another way in which debt resembles medicine: those who sell it are wont to sell it as widely and at as high a price as possible, no matter whether it is the right medicine for the condition at hand.

When used responsibly debt can be a net positive. When allowed to run amok it is a burden upon society. Maybe debt, like medicine, should only be allowed to be taken with a prescription?

Re: Debt is coming to the tech industry

#12

Post by axegon_ »

ghastmaster wrote: post #2

Debt is dumb. The childish glee coming from this author should be ignored. 2008 is coming again soon and debt holders will suffer. Please get/keep your financial house in order. Business debt is just as dangerous as personal debt.

> 2008 is coming again soon

I have no idea why people __LOVE__ making these statements. 2008 was something that affected mostly the US and while it affected the rest of the world to a certain degree, overall very little changed.

Before jumping on my throat, hear me out: There have been several significant financial events since then: the European debt crisis, then Portugal(which is relatively small on a global scale), same with Ukraine and Venezuela, Russia(still going 5 years later), Brazil and those are just off the top of my head. What I'm trying to say is that financial crisis occur almost every year. Keeping your finances tidy is a good life advise but prophecies shouldn't be the motivation for it.

Re: Debt is coming to the tech industry

#14

Post by onetimemanytime »

axegon_ wrote: post #12
ghastmaster wrote: post #2

Debt is dumb. The childish glee coming from this author should be ignored. 2008 is coming again soon and debt holders will suffer. Please get/keep your financial house in order. Business debt is just as dangerous as personal debt.

> 2008 is coming again soon I have no idea why people __LOVE__ making these statements. 2008 was something that affected mostly the US and while it affected the rest of the world to a certain degree, overall very little changed. Before jumping on my throat, hear me out: There have been several significant financial events since then: the European debt crisis, then Portugal(which is relatively small on a global scale)…

>>I have no idea why people __LOVE__ making these statements. 2008 was something that affected mostly the US and while it affected the rest of the world to a certain degree, overall very little changed.

US is back on top. How's Italy, Greece, Spain etc doing?

Re: Debt is coming to the tech industry

#15

Post by zepto »

kevingadd wrote: post #8
ghastmaster wrote: post #2

Debt is dumb. The childish glee coming from this author should be ignored. 2008 is coming again soon and debt holders will suffer. Please get/keep your financial house in order. Business debt is just as dangerous as personal debt.

How do you propose solving problems like "buy a house" and "buy a car" without debt? The average person who needs to drive to work has no way to buy a car in cash, at least not early on. If you drop all your savings on a new car and suddenly end up with a hospital bill, that car isn't going to pay for it. I say this as someone who had enough saved to buy a car in cash: Buying it via a loan was the right choice. It bo…

Agree with you - although the part about boosting your credit rating, although true, is a scam.

Re: Debt is coming to the tech industry

#16

Post by juped »

Debt financing would be wonderful (note to non-business-savvy readers: this is not even remotely the same kind of thing as personal credit card debt or whatever other completely unrelated thing is making you sanctimoniously kneejerk that "debt is bad". Can we please have an informed discussion of debt as a part of a business capital structure?) for software businesses, which have very predictable capex costs.

The issue was always that bankers don't want to lend for, basically, cultural reasons. When it actually starts becoming possible and there start being standard diligence scripts, etc., it will be much more favorable than equity financing for basically anyone who can get it.

Re: Debt is coming to the tech industry

#17

Post by hobs »

onetimemanytime wrote: post #14
axegon_ wrote: post #12

Earlier quoted context omitted.

> 2008 is coming again soon I have no idea why people __LOVE__ making these statements. 2008 was something that affected mostly the US and while it affected the rest of the world to a certain degree, overall very little changed. Before jumping on my throat, hear me out: There have been several significant financial events since then: the European debt crisis, then Portugal(which is relatively small on a global scale)…

>> I have no idea why people __LOVE__ making these statements. 2008 was something that affected mostly the US and while it affected the rest of the world to a certain degree, overall very little changed. US is back on top. How's Italy, Greece, Spain etc doing?

I dont know why this is downvoted - the EU implemented austerity and it took a gigantic chunk out of its economy in the last ten years - why is this controversial?

Spain's growth rate has been what, 0%? Greece is totally screwed, and there's a strong set of evidence to say Brexit was a direct result of the 2008 crisis (because they pushed back so hard on austerity.)

Re: Debt is coming to the tech industry

#18

Post by katzgrau »

axegon_ wrote: post #12
ghastmaster wrote: post #2

Debt is dumb. The childish glee coming from this author should be ignored. 2008 is coming again soon and debt holders will suffer. Please get/keep your financial house in order. Business debt is just as dangerous as personal debt.

> 2008 is coming again soon I have no idea why people __LOVE__ making these statements. 2008 was something that affected mostly the US and while it affected the rest of the world to a certain degree, overall very little changed. Before jumping on my throat, hear me out: There have been several significant financial events since then: the European debt crisis, then Portugal(which is relatively small on a global scale)…

I'm equally perplexed as to why people always seem to think a big downturn is right around the corner. Maybe there are always enough warning signs that someone with a sufficient penchant for confirmation bias will latch on to.

Regardless, nobody can tell the future - there are simply too many unknowns to consider. We will certainly have more good times and bad times. As to when they come, predict all you want, but historically analyst predictions have an awful track record (historically, expert predictions are wrong most of the time https://www.cxoadvisory.com/gurus/ ). The occasional person who guessed right previously (there will always be some) are then raised up as oracles.

Re: Debt is coming to the tech industry

#19

Post by kaliali »

ghastmaster wrote: post #2

Debt is dumb. The childish glee coming from this author should be ignored. 2008 is coming again soon and debt holders will suffer. Please get/keep your financial house in order. Business debt is just as dangerous as personal debt.

Debt can be useful to quickly get capital to grow a business. The problem is that everyone is competing to grow their business faster and so the amount of debt steadily climbs faster and faster than being able to pay the interest. New businesses who gather debt in a more controlled way will look like they aren't growing as fast (if loans were the primary source of funding) and they are quickly left for the companies that grow fast. Luckily, VCs take responsibility with their investments and make it possible for a new business to not need to go into crazy amounts of debt.

Eventually, so much debt will be accumulated that companies will not be able to pay off the interest and the bubble pops. If everyone is always in debt, there will always be a periodic crash.

Re: Debt is coming to the tech industry

#20

Post by sbmthakur »

ghastmaster wrote: post #2

Debt is dumb. The childish glee coming from this author should be ignored. 2008 is coming again soon and debt holders will suffer. Please get/keep your financial house in order. Business debt is just as dangerous as personal debt.

Debt is not dumb. Managing your debt in a bad way is dumb.

You may want to see the following illustration by Ray Dalio about how debt complements the economy:

https://www.youtube.com/watch?v=PHe0bXAIuk0

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