[quote=briansd1]
It’s better to bailout Greece and make them pay back the debts over time, than to let them default and only get 50c now.
[/quote]
I’m going to break this down in a very small example.
Say I loan 500k to two people (A & B) so they can each buy a condo. I don’t bother to check their incomes. One of them (B) stops paying.
Do I take a little loss on that one, maybe foreclose and sell the house to someone else for less, like say 300k and then get monthly payments from someone qualified? I lose 200k. But I make sure to check people’s income from now on, b/c ouch that 200k loss hurt. Owner A sees what happens and thinks twice about not paying.
Instead of that happening, I go to taxpayers who bail me out for greater than 200k b/c otherwise I’ll never lend again. I let the owner B live for free for an indefinite period of time b/c who cares. No loss to me. In the interim, owner A sees what’s happening and wants a piece of it. Owner A stops paying and wants to live for free also
Now I have two loans, A & B, both not paying. I’ve multiplied my losses and nonperforming assets. I’ve in effect doubled my losses. Well, doubled the losses to the taxpayers.
Which is cheaper, again? Maybe I need to go back to school to learn my math.
As a result of the generosity of the government now in the future, I know the taxpayers will give me money for my bad in not checking who I lend to. Well, since I suffered no loss, what have I learned? In fact, I somehow through the magic of accounting even have a profit and gave myself a bonus.
Sorry, brian. I do not have anything against you at all, in fact, appreciate your posts. But we do disagree on this issue.
