In article , J. P. Gilliver (John)
wrote:
Actually, lending to people who can't pay back is not as financially
daft as it sounds - AS LONG AS you are fairly certain that the price of
what they're borrowing to buy (in this case property) is going to
continue to rise, or at least not fall. Because: when they default, you
get what they _have_ managed to pay, plus the property back to sell.
Cruel and cynical, but lending to those who can't pay is not of itself
financially unsound: it's only lending on something that suddenly
_falls_ in value that is.

Wouldn't the very fact that everybody was doing this actually *cause* the
value to fall?

In other words, you can only make a gain without doing real work if it's
at the expense of others. If they're all doing it, nobody gains, because
there's nowhere for the increase in value to come from.

Rod.
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