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Burrito Now, Pay Later

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Re: Burrito Now, Pay Later

#311

Post by bombcar »

dani__german wrote: post #292
calmbonsai wrote: post #113

"This logic doesn’t change just because the thing being financed is a burrito." Yes, it absolutely _does_ change. One might as well go all the way and start offering Oxygen or Water bonds. The immorality masking as morality here is insulting--not related, mortgage-backed CDOs during the financial crisis and "Pay Day" loans. There are many, many fundamental individual needs and items (economic "utility") that, while f…

BMI is an excellent metric for measuring your own body. Its fantastic. Its not perfect, but considering its two numbers, its amazingly useful and a super easy way to quantify how unhealthy you are. If you are not currently using Body fat percentage, and know what yours is at this exact instant, you should use BMI instead. Here's a perfectly correct general statement: Any effort spent telling average people to not use…

This is true of so many rules of thumb. The fact that something doesn’t work in all cases does not mean that those cases that it identifies as problematic can be ignored.

Spend less than you make is another one - sure there are edge cases where that is not appropriate. But in most cases, it is, but most people arguing that it doesn’t apply to them are they very people to whom it should apply most strongly.

Re: Burrito Now, Pay Later

#312

Post by s1artibartfast »

7373737373 wrote: post #284
s1artibartfast wrote: post #114

Earlier quoted context omitted.

It isn't just about appreciation. It is about utility and production. A car loan can be a great investment if it gets you to a job you otherwise wouldn't have, even if it is going down in value. Debt for an expensive degree that gets you a good job is the same, and entirely devoid of resale value. Debt for an expensive degree with no job prospects, not so.

This - utilization of credit in a way that helps the borrower pay back the debt can be okay (e.g. cost-effective, productivity raising tractor purchase), while allowing non-productive credit use (e.g. smart tv solely for entertainment or financial asset purchase) leads to individual's debt bondage and in the large, inflationary financial market crises and asset price bubbles https://youtube.com/watch?v=8FT-zyTX2nE

Both can lead to those bad outcomes. Many crises have been centered around assets that have some sort productive or utilitarian use.

Housing bubbles obviously come to mind, where there is obvious income and utility potential. Bubbles are about the balance of these return factors with pricing, not a result of their entire absence.

Either way, there is a fundamental question about whose moral authority it is too allow or not allow certain behaviors of others, and what that threshold is.

If I want to buy a smart TV, flashy car, or a case of beer on credit because I value pleasure today over cost tomorrow, who are you to tell me it is illegal?

Re: Burrito Now, Pay Later

#313

Post by nkrisc »

tirant wrote: post #198
nkrisc wrote: post #149

Earlier quoted context omitted.

There are many, many stupid people who would benefit from being protected from themselves. How far down that path we want to walk as a society is an eternal debate.

The main issue is forcing that protection down the throat of whomever doesn’t want to be protected. Or in other words, believing that the government knows better than you on how you should live your life.

And yet in some cases there are clear societal benefits that outweigh any hindrances on personal freedom, such as seat belts in vehicles. In any society, individuals must make personal sacrifices in order to be part of that society and to receive the benefits of society as a whole.

It's not that "the government" knows better than you how you should live your life, but it sets the ground rules that we all must adhere to in order to participate in society.

And for better or worse, because our society dictates that we won't simply leave crash victims who weren't wearing a seat belt to die in the median of the highway (whether they want to be left or not) we mandate that everyone wears a seat belt.

Re: Burrito Now, Pay Later

#314

Post by thfuran »

RainyDayTmrw wrote: post #153

A lot of financial schemes sound like they could be above-board on paper, but in practice degenerate out of control. Securitization is a classic here. It's not that securitization is inherently bad or wrong, but it creates a lot more surface area for incentive misalignment and outright abuse. Consider the United States subprime mortgage crisis of 2008. I'm actually willing to accept that broadening the borrower base…

>In particular, throughout the 1990s and 2000s, home equity was a very real way for middle-class Americans to accumulate family wealth

I think that is fundamentally bad. If owning a house is a way to accumulate wealth, having shelter is becoming increasingly unaffordable.

Re: Burrito Now, Pay Later

#315

Post by nitwit005 »

This seems to be trying to convince you it's fundamentally different than credit cards. I'm not really convinced.

A credit card is a way to make getting a lot of small loans easier. This is also a way to make getting a lot of small loans easier.

Many of the differences it's pointing to, like underwriting happening at point of sale, seem more conceptual than practical. They'll almost certainly have pre-approved you up to some amount, just like a credit card company would have done.

Re: Burrito Now, Pay Later

#316

Post by [deleted] »

tptacek wrote: post #68
scubbo wrote: post #37

Earlier quoted context omitted.

Amen. It's been my experience that, for any innovation in financial technology, if you keep asking "and why is that beneficial?" for long enough, you will finally arrive (via tangents into "liquidity" and suchlike) at "it allows those with money to extract more money from those with less money".

I have no idea what I think about BNPL products, but those "tangents into liquidity" basically eliminated most of the costs of trading. You can't negatively polarize me into thinking there's a social good to paying $50 to place a simple buy order; not having to do that is part of what "liquidity" means.

[deleted]

Re: Burrito Now, Pay Later

#317

Post by scubbo »

tptacek wrote: post #68
scubbo wrote: post #37

Earlier quoted context omitted.

Amen. It's been my experience that, for any innovation in financial technology, if you keep asking "and why is that beneficial?" for long enough, you will finally arrive (via tangents into "liquidity" and suchlike) at "it allows those with money to extract more money from those with less money".

I have no idea what I think about BNPL products, but those "tangents into liquidity" basically eliminated most of the costs of trading. You can't negatively polarize me into thinking there's a social good to paying $50 to place a simple buy order; not having to do that is part of what "liquidity" means.

You can't positively polarize me into thinking there's a social good to placing a simple buy order. That's precisely my point.

Re: Burrito Now, Pay Later

#318

Post by cousin_it »

RainyDayTmrw wrote: post #153

A lot of financial schemes sound like they could be above-board on paper, but in practice degenerate out of control. Securitization is a classic here. It's not that securitization is inherently bad or wrong, but it creates a lot more surface area for incentive misalignment and outright abuse. Consider the United States subprime mortgage crisis of 2008. I'm actually willing to accept that broadening the borrower base…

> In particular, throughout the 1990s and 2000s, home equity was a very real way for middle-class Americans to accumulate family wealth, and expanding access to that at least had potential for positive impact.

This sounds suspicious to me. "Let's give people loans to buy houses and see their equity rise because we're giving more people loans to buy houses which raises the price." I think even with the best financial engineering, this scheme is basically trying to get something for nothing. There's no perpetual motion machine, and there's no way to make people wealthier by lending them money. Unless the money gets used to increase productivity - but in this case it doesn't, a homeowner doesn't have higher productivity than a renter, so that's a no go.

Re: Burrito Now, Pay Later

#319

Post by insane_dreamer »

> In 1983, people lamented that one had to use a “credit” card at Burger King. On some level, payments and credit are on the same spectrum of value transfer.

The key difference is that for the vast majority of people who pay with a credit card at BK it's for the sake of convenience and sometimes the incentive of credit card points, rather than because they have no money in their account to buy a burger.

There is nothing "convenient" about paying for a $12 meal in $4 installments, plus you don't have the points incentive of a credit card, so it's highly unlikely that people who do have a CC and can afford to pay for a burger now will go that route.

That leaves only those people who have so little money that they cannot afford a burger now but they hope to afford it in X time (presumably after their next paycheck). And from that perspective Door Dash x Klarna is preying on the poorest and must vulnerable in society who probably shouldn't be using Door Dash in the first place (more expensive than the food itself), or risk accruing interest if they don't make those 4 payments (Klarna is not a charity).

Re: Burrito Now, Pay Later

#320

Post by Terr_ »

catlikesshrimp wrote: post #221
lumost wrote: post #193

Earlier quoted context omitted.

Curiously, medieval societies struggled with “usury”. Effectively being a wage earner was a tough game as you might owe rent, have a bad month, or end up overly indebted. Most wage earners eventually became indentured servants or worse. This contrasts with peasants who had permanent land rights and owned everything they produced, and did not have a fixed rent. It’s not just that people don’t understand debt, it’s tha…

>"This contrasts with peasants who had permanent land rights and owned everything they produced, and did not have a fixed rent" There are places where they didn't own anything. Decades ago I read that at some point each feudal lord coined his own currency for his peasants. If a peasant escaped, he wouldn't have means to take anything with him. Same in Russia. A couple centuries ago, serfs came with the land. They cou…

> Decades ago I read that at some point each feudal lord coined his own currency for his peasants. If a peasant escaped, he wouldn't have means to take anything with him.

A modern echo of this: Several times in the gloomy AM hours, I have worried what might happen if the current US administration tries to impose capital controls [0] like China. You might flee to Canada, only to find out that most/all of your life savings are forfeit to the tender mercies of the US government.

[0] https://www.reuters.com/markets/us/investors-could-exit-tari...

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