|
John I was particularly interested in your views as you have been on the inside and the outside so thanks for your input ..very well considered and I thank you.
Travis if only folk could follow your approach but I fear few have your ability of such rational consideration of the situation they think they face.
Many years ago there was an Act called the Money Lenders and Infant Loans Act which in effect upped the level of disclosure for loans over 12% (when it was common to have money available at 6%) ...
It seemed that the idea behind that legislation was to protect borrowers from themselves and place the burden upon the lenders to disclose all in the transaction. The main area was to describe a flat rate (the one advertized) as what it worked out as a reducible rate (the one if your worked out what you actually paid).. A flat rate when expressed as a reducible rate is roughly double...so when folk boasted a cheap 7% rate the act made them show that the borrowers were in fact paying more like 14%.
However I still think there is a preditory approach by lenders and I site as evidence the fact that I get offers from credit card folk unsolicited in the mail offerring me up to $150,000 in credit... (you could sell me up a couple of times over and not get near that cash from my meager assetts) so one wonders if I could get the cash but we hear stories about some kid who gets a card application and applies for it and gets credit...
The prime loans thing is a recurring scandel in my book and the outcome is always the same..we will see this crisis pass but it will emerge again in about 8 to 10 years I bet..and it will be the same misery for some whilst those who engineered the program make millions..
I guess I am an idealist and hope for a world where there is no difference between that "crime" and one where one holds a gun to another and takes their cash by force...trickery is worse than robbery in my view... and when I think hard about the world and history I doubt if such will ever happen.
I also am perhaps a little sensative to the credit issue because of the folk I have seen get sucked in and foolishly trusted the nice salesman that what they were getting into was "normal"
Whilst there is no restraint upon the propostion of borrowing short and lending long we will continue to see these horrible boom and bust movements in credit..I just think there must be a better way and in such an enlightened age one wonders why a better way can not be used.
The issue of personal responsiblity is a difficult one... on the one hand we must assume folk can guide their own direction in matters of credit but on the other one must recognise that someone who is in the business on a day to day basis can assure folk that all is OK when in fact all they care about is the immediate sale and their immediate commission on setting the deal up..
Lets face it a mortgage broker is simply interested in selling you a loan..which loan will be determined by the commission rate paid to the broker I feel...and there are very few (if any) who will forgo their commission and warn someone that what they are doing is madness..
I feel to take personal responsibility away from folk who can be made victims so easy would be good Government.
If not one could say well lets make all drugs legal and leave the matter to the personal responsibility of the victim to decide if they ruin their life by using the stuff or not...
anyways it is still a wonderful world....
alex
|