[PEN-L:388] Following through with my debt idea

[michael perelman <michael@xxxxxxxxxxxxxxxxx>]

I agree with what Gene said below.  Doug Henwood has been pushing the idea that
the boom side of finance yields little or (he would say) no real returns.  Why
do we get hit when finance tanks?  Because we do not make the rich eat their
own mistakes.  The downside is socializied; the upside is privatized.

Eugene P. Coyle wrote:

>         I've begun to think of a bank loan as a permission slip to use real
> assets -- like steel or wheat, or cotton, or even the labor of people or
> machines.  And when those assets  are used (up) they're gone.
>
>         The piece of paper, the IOU, is a claim to have the real things
> back.  But they're gone.  They have to be produced anew, somehow.  So what
> is a bad loan?  Just a piece of paper that no longer can deliver the
> production?  But the ability to produce -- the steel, wheat, whatever --
> exists whether the paper IOU exists or not.  So a bad loan just means the
> lender is poorer than it thought, but the society isn't -- or is it?

--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx