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← 2022-09-13 | 2022-09-15 →
asciilifeform: mats: lulzy, had nfi re the variable-rate loans thing ( utter nuttery imho )
mats: asciilifeform: thats just how loans are supposed to work
mats: it is the 30 year fixed rate mortgage that is an abomination of usg policy from the 1930s that has resulted in monetisation
mats: the market would never have invented a stupid long loan duration, with attendant interest rate risks, default risk, and very high illiquidity
asciilifeform: mats: in what universe is a loan 'supposed to be' potentially unlimited liability for the borrower? ('hey you borrowed at 1%, but how about this year it'll be 500%, haha')
asciilifeform: even mafia loan not worx like this
mats: that's exactly how mafia loan works
asciilifeform: they can have 3figure interest% but afaik traditionally agreed in advance
mats: it doesn't feel fair, but finance isn't fair
mats: more broadly, nations other than usa don't really have monetary policy, because usa's monetary policy is global
asciilifeform: mats: wasn't re 'fair' but re the claim that variable-rate loan somehow 'sane'. arbitrary increase of interest % somehow ~not~ default risk ?
mats: it is
asciilifeform: orthogonally, how does 'usa policy is global' explain why variable % loan uncommon there, but pestilential elsewhere ?
asciilifeform: ... for that matter, how is the 30y loan a product of anyffin other than usurers' desire to enable typical plebe house to be 'worth' 1e6$+ ? (picture if loan ~had~ to be e.g. 5y.)
asciilifeform: if typical borrower could be expected to live 100y, would expect to see 60y loans in usa
mats: who do you think eats the default risk
mats: feels like you didn't read the line where i told you that a 30y instrument is idiotic
asciilifeform: mats: hm so since '48, not '30s
asciilifeform: from linked piece, not clear precisely who pushed to elongate the terms
asciilifeform: aint a mystery who wins from it tho imho
asciilifeform also not knows what % of market was covered by FHAism (then or nao)
asciilifeform: 'in a seller’s market, when choice is restricted and the seller virtually dictates sales terms, more liberal credit is likely to be absorbed in price with probably a reduction in housing standards' << noshit
← 2022-09-13 | 2022-09-15 →