Tuesday, March 04, 2008

Sub-Prime Lending

Check out this article: Moral Hazard

2 comments:

Anonymous said...

So, this article is saying that people will behave differently if they know they will be forgiven...behave more badly in fact.
I would disagree with that assumption. Granted people could in theory take that kind of advantage. But most human beings don't work like that. To most, a house is a home and to lose your home is traumatic.
Also, how does the assumption square with the Holy Father's prayer intention?

kieron said...

I think there is a difference between forgiveness of the heart and forgiving a debt. If I'm an investor, buying a rental home, I am being encouraged artificially to try and leverage my down payment more than I otherwise should.

I do agree with you that if it's a HOME we are talking about, then it's not so much an INVESTMENT, it's about living there.

You want to be very careful when you shift risk in this way...there could be unintended side effects.

As far as the forgiveness I'm praying for in the month of March: If someone hurts me, I should still wish the best for them anyway (this is best for both of us). But I shouldn't necessarily TRUST them. I can love someone, but not trust them to do the loving thing.