Scott - do you think that bankers are exempt from personal responsibility? Would you care to respond with something other than blanket judgments and boilerplate talking points?
That would be more interesting to read in any case.
It's not a matter of transferring responsibility. It is acknowledging that there are multiple parties at fault. Yes, of course irresponsible borrowers are at fault. That isn't in dispute. And the idea that this is a shift in cultural norms (see Jaybird and Mark up-thread) is right on the money. My point is that the lenders are also responsible, and that a system has been erected whereby these lenders actively seek out borrowers who will default on payments, pay late, pay lots of fines, and get in over their heads. This is simply irresponsible. It's essentially loan-sharking. Can this be easily fixed? Of course not. Nor can the moral problems of the big spenders be fixed - certainly not by the government.
So the question becomes - are there ways that people can be nudged? Are there simple ways to change incentives so that lenders don't seek out high risks to purposefully profit from them?
This isn't a free-market vs regulation question necessarily. It's too complicated for that.
That tangled mess is why simply deregulating won't ever work. And I'm honestly not sure how to properly deregulate in order to make it a smooth transition, nor have I seen a plan that I find convincing in that regard.
North, that's true. Regulation can only do so much. And of course, since our government is so hopelessly captured by the financial industry it can probably do very little in this area. However, do you really think that we can't in any way change the incentive structure for bankers to make them less likely to issue very large credit limits to high risk consumers?
See, that makes sense to me. Maybe do away with some of the more egregious policies (like being able to change rates for basically any reason, etc.) Credit retracting isn't the end of the world, after all. If it's unsustainable and simply turns into bad debt (on macro and micro levels) which people can't get out of, then I'm pretty sure we'd be better off with lower limits across the board. People will still use those limits in poor ways but they'll have less dirt to dig themselves under.
Sam - all good points. The main thrust of my argument, however, is that the companies who are lending should not be extending such long lines of credit to people who they know are high risk. That is irresponsible. The rest - high fees, etc. - is all icing on the cake.
The difficulty comes in when people believe that they can make payments - say the minimum payment - but don't realize how this will crush them under accrued interest. The problem comes when people have a hard time understanding how hard it is to pay back a great deal of money and are still given limits that are far too high for them. The problem comes when people who are young and irresponsible are still given enormous loans for no rational or sane reason.
I mean, you could just be lazy and simplify everything, or you could actually think about how real people act in the real world.
Jaybird - this is a thought on my mind too (which I briefly mentioned toward the end). But I think that assuming an extreme and writing off a middle ground is just one way to look at it. Perhaps the problem is not that high risk people receive credit lines, but that the limits are too high. If the most debt you can accrue as a high risk borrower is $1000 then you can't get yourself in too deep. You can still get a little credit to help out between paychecks/for emergencies/etc. but you won't find yourself under so much water you'll never get out. I'm not saying there is a perfect answer here, but I do think that lenders have more responsibility to make sure they're lending appropriately and that may require a rethinking of incentives. If they can't gain so much by lending to high risk people they might scale that back - not necessarily all the way, but to reasonably lower levels with reasonably lower fines, etc.
Well I guess it's a question of where the buck stops, isn't it? Is it easier to reform the actions of millions upon millions of borrowers? (How would we do that, by the way?) Or is it easier to change the lending behavior of banks? I guess it seems more practical to change the actions at the tap - where the money comes from - then on the receiving end, since the whole "fool and his money" thing is really a question of human nature....
Scott - it would be nice if you would actually read the post before commenting. My point is that there are more than one irresponsible party in this picture. Surely you can read the post and come up with better ripostes than this? I mean - this can't be the best response you can muster, can it?
I agree. In that respect, Bakker does an excellent job. However, I would simply say that within the stories there still could have been a handful of characters with whom we could sympathize or enjoy reading about a tiny bit more.
Well I joke, of course, but I don't want to hear too much about the rest of the series (not that you said too much, mind you.) And the image was a flickr image.
North - the series is being written but it's like ten books long or something already. Really long, and being written at a hefty clip. Not at all like Martin.
Heh. No, True/Slant is buggy at times and changes my name to Erik from E.D. on its own. I'm "Erik" in real life. I write under my initials for fun. People can use them however they like, interchangeably, etc.
Susannah Clarke’s Jonathan Strange and Mr. Norrell, which for my money is the bset fantasy novel written in a long, long time. If that book would have just gone on forever, I think I would have been totally happy with that.
No - not a fault necessarily. I mean, up to a point I think it's too impulsive at times. I can get carried away and then it comes back to haunt me (or annoy me). But I do think people should be open to new ideas and not stuck in their ideas. Hence the Emerson quote in the footer.
On “Evil Rorty, loan sharks, and Bastiat’s Broken Window”
Scott - do you think that bankers are exempt from personal responsibility? Would you care to respond with something other than blanket judgments and boilerplate talking points?
That would be more interesting to read in any case.
"
It's not a matter of transferring responsibility. It is acknowledging that there are multiple parties at fault. Yes, of course irresponsible borrowers are at fault. That isn't in dispute. And the idea that this is a shift in cultural norms (see Jaybird and Mark up-thread) is right on the money. My point is that the lenders are also responsible, and that a system has been erected whereby these lenders actively seek out borrowers who will default on payments, pay late, pay lots of fines, and get in over their heads. This is simply irresponsible. It's essentially loan-sharking. Can this be easily fixed? Of course not. Nor can the moral problems of the big spenders be fixed - certainly not by the government.
So the question becomes - are there ways that people can be nudged? Are there simple ways to change incentives so that lenders don't seek out high risks to purposefully profit from them?
This isn't a free-market vs regulation question necessarily. It's too complicated for that.
"
That tangled mess is why simply deregulating won't ever work. And I'm honestly not sure how to properly deregulate in order to make it a smooth transition, nor have I seen a plan that I find convincing in that regard.
"
North, that's true. Regulation can only do so much. And of course, since our government is so hopelessly captured by the financial industry it can probably do very little in this area. However, do you really think that we can't in any way change the incentive structure for bankers to make them less likely to issue very large credit limits to high risk consumers?
"
So you think that lenders have absolutely no responsibility to choose appropriate borrowers by evaluating risk and then issuing credit accordingly?
"
See, that makes sense to me. Maybe do away with some of the more egregious policies (like being able to change rates for basically any reason, etc.) Credit retracting isn't the end of the world, after all. If it's unsustainable and simply turns into bad debt (on macro and micro levels) which people can't get out of, then I'm pretty sure we'd be better off with lower limits across the board. People will still use those limits in poor ways but they'll have less dirt to dig themselves under.
On ““The West is Choked by Fear””
Good lord, what have I done? I've awakened Jaybird's evil alter-ego! And I thought he was an evil alter ego already!
On “Evil Rorty, loan sharks, and Bastiat’s Broken Window”
Sam - all good points. The main thrust of my argument, however, is that the companies who are lending should not be extending such long lines of credit to people who they know are high risk. That is irresponsible. The rest - high fees, etc. - is all icing on the cake.
"
Well yeah. Low-income, high-risk people who can't pay are very profitable. That's the whole problem.
"
The difficulty comes in when people believe that they can make payments - say the minimum payment - but don't realize how this will crush them under accrued interest. The problem comes when people have a hard time understanding how hard it is to pay back a great deal of money and are still given limits that are far too high for them. The problem comes when people who are young and irresponsible are still given enormous loans for no rational or sane reason.
I mean, you could just be lazy and simplify everything, or you could actually think about how real people act in the real world.
"
Jaybird - this is a thought on my mind too (which I briefly mentioned toward the end). But I think that assuming an extreme and writing off a middle ground is just one way to look at it. Perhaps the problem is not that high risk people receive credit lines, but that the limits are too high. If the most debt you can accrue as a high risk borrower is $1000 then you can't get yourself in too deep. You can still get a little credit to help out between paychecks/for emergencies/etc. but you won't find yourself under so much water you'll never get out. I'm not saying there is a perfect answer here, but I do think that lenders have more responsibility to make sure they're lending appropriately and that may require a rethinking of incentives. If they can't gain so much by lending to high risk people they might scale that back - not necessarily all the way, but to reasonably lower levels with reasonably lower fines, etc.
"
P.S. - I mentioned this more than once. If you did, in fact, read the post then you didn't read it very closely...
"
Well I guess it's a question of where the buck stops, isn't it? Is it easier to reform the actions of millions upon millions of borrowers? (How would we do that, by the way?) Or is it easier to change the lending behavior of banks? I guess it seems more practical to change the actions at the tap - where the money comes from - then on the receiving end, since the whole "fool and his money" thing is really a question of human nature....
"
Scott - it would be nice if you would actually read the post before commenting. My point is that there are more than one irresponsible party in this picture. Surely you can read the post and come up with better ripostes than this? I mean - this can't be the best response you can muster, can it?
"
Thanks, Michael.
On “Steven Erikson vs. R. Scott Bakker”
Zach -
I agree. In that respect, Bakker does an excellent job. However, I would simply say that within the stories there still could have been a handful of characters with whom we could sympathize or enjoy reading about a tiny bit more.
"
E.D. Kain would read those books, and has intended to as well, except for some reason his library does not have them!
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Well I joke, of course, but I don't want to hear too much about the rest of the series (not that you said too much, mind you.) And the image was a flickr image.
http://farm3.static.flickr.com/2103/2283468968_ea1be59bb7.jpg
"
Oh - and I haven't read Weaveworld. Will add it to the list.
"
North - the series is being written but it's like ten books long or something already. Really long, and being written at a hefty clip. Not at all like Martin.
On “writing as conversation”
Heh. No, True/Slant is buggy at times and changes my name to Erik from E.D. on its own. I'm "Erik" in real life. I write under my initials for fun. People can use them however they like, interchangeably, etc.
On “Steven Erikson vs. R. Scott Bakker”
Damnit Zeke. I'm already excited enough about this series and you have to go say things like that!
"
That sounds just about right to me....
On “writing as conversation”
No - not a fault necessarily. I mean, up to a point I think it's too impulsive at times. I can get carried away and then it comes back to haunt me (or annoy me). But I do think people should be open to new ideas and not stuck in their ideas. Hence the Emerson quote in the footer.
"
Totally.
*Comment archive for non-registered commenters assembled by email address as provided.