off topic economy question

[dagrimreefah]

Lending and borrowning money isn't just theoretically good, it's good. Rich people who don't need to use their money immediately lend money indirectly to poorer people who need it. This way they can afford a house, or start a business, which will make them richer in turn. Obviously there's risk involved for the lender's money, which is why it's completely normal for the lender to demand certain qualifications of the borrower.

I completely agree.

[teengames]

@Endora; I don't see what you mean by 'probing developing countries of wealth'?

Much of this is due to economic growth, in which a major part is played by lending and borrowing money. The countries that are 'starving' or poor or often like this due to lacking governmental structure or stability, which makes lending money to these countries a risk.

By probing I mean that the IMF and the World Bank has used loans as an unequal bargaining leverage to implement a whole bunch of draconian neoliberal economic policies and austerity measures to the benefit of the west. Many of these policies have opened up the developing world to easy manipulation by multinational corporations, whilst simultaneously enforcing economic 'liberalization' of nascent industries which has allowed subsidised western markets to flood the market, kill those industries and eliminate potential competition. Certainly many of these unstable governments and corrupt politicians have played a role in their own states demise, but international financial systems have been quick to jump at the chance to exploit this as well. I think whilst theoretically the act of lending and borrowing money might be a good thing, in reality having such an unequal bargaining power can force states to do things that are incredibly unbeneficial. (see Malawi where the IMF forced them to sell a large portion of their grain reserves to repay a debt, under threat of cutting off desparately needed future aid payments: the result a famine in the months following leading to seven out of eleven million people incredibly low on food, and many resultant deaths). There are too many 'human' factors at play especially in a lending system where creditors are theoretically required to be responsible but are able to inflict gross moral hazards. (See the global financial crisis and the Latin American Debt crisis) It's an incredibly multi faceted problem, something really needs to be done to make global lending responsible and accountable.

First off I'd like to point out that paragraphs were invented for a reason. The way you write your wall of texts is horrible.
Secondly it's completely normal to make demands of someone before lending them money. Just like insurance companies make sure you aren't about to die before giving you a life insurance.
Lending and borrowning money isn't just theoretically good, it's good. Rich people who don't need to use their money immediately lend money indirectly to poorer people who need it. This way they can afford a house, or start a business, which will make them richer in turn. Obviously there's risk involved for the lender's money, which is why it's completely normal for the lender to demand certain qualifications of the borrower.
The crisis is caused because the people that lent money indirectly, did so without requiring high enough expectations of the borrowers, but using the crisis as an excuse to stop lending money is incredibly stupid. It's easy to point out the cases where the money lending system has failed, countries in africa, or people in the US, but these shouldn't even have been lent money in the first place. But all the billions of people whom have benefited of borrowing money at some point in their, you seem to have forgotten about.

Don't complain about paragraphs if you can't indent

[Endora]

There's a lot to reply to here so uhh, prepare your anus.

First off I'd like to point out that paragraphs were invented for a reason.

Sorry about this, it didn't look like such a wall of text in the reply screen

Secondly it's completely normal to make demands of someone before lending them money. Just like insurance companies make sure you aren't about to die before giving you a life insurance.

This I agree is normal to make value judgments about your borrower before you lend them money, and prior to the 1970's OPEC oil shocks and other attempts by developing nations to gain some form of recognition in the global stage the World Bank under McNamara was doing a stellar job offering developing countries long term, low interest loans i.e. being responsible lenders. Your initial argument was that lending has been beneficial to the world at large, and quite simply it's not anymore. It's not merely making demands, but it's backing those demands up with threats of "rethinking aid strategies."
The problem is that you're looking at the lending as a purely economic act, and it's not. You can't pull it out of focus of the larger political and sociological factors at play.

A structural adjustment loan isn't just a loan with demands. The aim of the loan is to lock out developing countries from western markets, to protect subsidized industries like agriculture (hurrdurr political brownie points) and formerly textiles, whilst protecting economic areas that Western countries are strong in such as intellectual property (See TRIPS and generic label AIDS medicines.) The loans are also used to privatise the economy, as I said previously this can have devastating effects on nascent industries. (See Joseph Stiglitz http://www.youtube.com/watch?v=5EEJdFoFQXI) Moreover these states are opened up to multi national corporations who swoop in to make use of a poor states "comparative advantage" (read slave labour) where union activity is thwarted and threats of offshoring are made. In short there are larger economic gains to be made from fucking with a poor states economy than the pathetic interest off the debt itself.

Lending and borrowning money isn't just theoretically good, it's good. Rich people who don't need to use their money immediately lend money indirectly to poorer people who need it. This way they can afford a house, or start a business, which will make them richer in turn.The crisis is caused because the people that lent money indirectly, did so without requiring high enough expectations of the borrowers, but using the crisis as an excuse to stop lending money is incredibly stupid.

That's a strawman, I never said anything about stopping lending completely, as if such a thing would even be feasible. Rather the entire concept of lending and borrowing needs to be regulated. We live in a world of corporations, this much is true and the corporate veil has sought to limit the liability of anyone who seeks to start a business, this is fine in that it shifts the onus of responsibility upon the creditor. The real prolems start happening when the creditor can afford to start acting irresponsibly in this framework and still make a profit in the situation. Take for example the recent GFC, where banks were bailed out for their lack of scrutiny in assessing loans. Rather we ought to have bailed out the home owners, to send a message to the banks that there really is no error for fucking up. Instead we've sent the opposite message, screw up all you want, we'll bail you out. The person that had to pay or the fiasco was the average taxpayer. Again, people need to be made accountable and loans need to be regulated and scrutinised carefully.

It's easy to point out the cases where the money lending system has failed, countries in africa, or people in the US, but these shouldn't even have been lent money in the first place.

Toxic loans that are generated by failed businesses, excessive risks, and excessive debt are what end up hurting both the economy and the banking industry. As long as banks don't loan too much money to people who produce toxic loans then life is beautiful.

And this here is the problem, in theory land lending and borrowing works well when you have responsible creditors, and responsible borrowers who can meet loan repayments. What actually happened in reality is that these credit organizations were lending irresponsibly and those that had to bear the brunt of their recklessness, in bailing them out were innocent parties, and the result is a moral hazard. You're absolutely right, these shouldn't have been lent money in the first place, or should have been lent money at lowered rates.

But all the billions of people whom have benefited of borrowing money at some point in their, you seem to have forgotten about.

Haha, wow I'm not even going to go there. I'd say your number was closer to maybe a couple hundred million if that. It seems that you have forgotten about the overwhelming majority, actual 'billions' living on less than $2 a day. But hey next time I'm overseas I'll ask them how they're going on their loan repayments on your behalf .

Marxism and Communism have shown, historically and theoretically, to be very poor at actual allocation of resources so they do not qualify as superior.

I guess my counter to this is two-fold. The first being that historically speaking, all the relatively functioning Communist states, China, Russia, Cuba, Venezuela etc. were formed out of agrarian and/or feudal states lacking in even basic communication and transport infrastructure, and that today given our technology and ability to micromanage with computers, resource allocation would be far more efficient than in the early 20th century. This however is only my opinion and I have no evidence to back up any such fact so it can only be taken with a grain of salt. My second point would be that that our current Capitalist system has also proven to have been a poor system for an effective allocation of resources unless one can justify a centralization of the wealth in hands of such a few.

I guess you and I are on completely different wavelengths with regards to how we believe an economy and consequently society might be structured, and that's completely fine. I'm not going to try and dissuade you from your position. Anyone that has sat around a dinner table knows the rigmarole of political discussion

/rant

[Wolfang]

Overal it seems you've decided lending money is not a thing of evil. I don't feel like ending in a forum post-war because I don't have the time (if I did I would nit pick every part of your posts as well )

You agree lending money is good. But bad when not correctly regulated, which is something I've posted since post 1, you can't have missed it. Throwing my own statements at me can be a bit confusing for me because it's hard for me to tell whether you didn't read my posts and reinforcing my point or are agreeing with me.

You're initial argument was that lending money to poorer countries was a way in which we could steal (probing? :p ) from these countries. You say you should look at the sociological blablabla perspective. No, I'm sorry, that's not how it works. People will ONLY lend money if they WIN money out of lending them money. This is essential. If you want to talk about 'social' money lending, you're talking charity or governmental loans. Money lending is money making, it IS purely economical and it IS selfish and selfless at the same time.

I said billions because, yes, almost everyone has borrowed or lent money at one point in their lives. Even in poor countries, money is borrowed and lent, to the poorest and richest, at higher interest rates and lower interest rates. Sometimes they might not even benefit of this directly. For example, an indian man wants to start up a business, he borrows money, starts up his business, and as he grows, and pays of his debts, he will hire other indians, enz enz..

And as a final argument, look at society today, and compare it to the society we lived in before it was possible to send your wealth to the best and brightest so easily and at the same time win some money yourself.

Don't forget that I do, fully support, stricter control over whom is allowed a loan and who isnt. I don't like the fact that my money would be sent to an american who is incapable of paying off his debts, buy his house, and spends his money on things far above a responsible level. At a young age I'd say I've lost an large amount of money due to the crisis so I feeel this man, but without money lending, young people who want to go to college, want to start up a business anywhere in the world will be fucked right back into the middle ages.

[teengames]

intense...

[MagicManICT]

Yeah, banks give you +25% city gold output and 2 merchant slots.

In what civilization is this, sir? I'd like to live there.

[TeckXKnight]

Yeah, banks give you +25% city gold output and 2 merchant slots.

In what civilization is this, sir? I'd like to live there. :P

Civilization 4.

[jorb]

Get with the program.

[teengames]

Get with the program.

A dev posted on my thread <3 I feel so special

[dagrimreefah]

You agree lending money is good. But bad when not correctly regulated, which is something I've posted since post 1, you can't have missed it.

Its bad when the government or central banks regulate it. The free market needs to regulate it; that's what interest rates are for.