Subject:
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Re: A hypothetical economics question...
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Newsgroups:
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lugnet.off-topic.debate
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Date:
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Thu, 28 Feb 2002 12:01:15 GMT
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Viewed:
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341 times
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In lugnet.off-topic.debate, Richard Marchetti writes:
> In lugnet.off-topic.debate, Pedro Silva writes:
> > I believe he's referring to railroads and such. Roads are funded a bit
> > differently, but may use loans.
> > Phone lines, gas pipes, electric plants and transport lines... they are all
> > usually funded with loans - it is unfrequent one or ones have the money to
> > build such works paying up front.
>
> Eh? These are usually public projects, how is it that there is not enough
> money collected from taxes to accomplish these things? Don't even get me
> started on how Californians have already paid for their power plants.
These *were* usually public projects. The present trend is to make
everything dependant on private initiative, with State subsidies according
to the strategic interest. At least it is happening in my country: the state
wants to establish a guideline for private initiative, but then on it's only
at investors discretion what to actually do. There are obviously pros and cons.
I admit ignorance about the full Californian problem; I understand there is
some sort of Energy crisis... and little else. But when you mention the
payment has been made, do you include maintenance costs, and indirect costs
(environmental, for instance)? What about savings for future developments?
The population is increasing, so is the consumption, and this is bound to
cause the same thing to happen again and again unless a continuous
development program is established.
And there is another solution... see Brazil, where something similar
happened, and the population achieved a semi-volunteer rationment of Energy.
They bought time to build a number of powerplants! So far, they succeeded.
> Anyway, it's the interest captilized on the original debts that proves
> difficult to pay off -- ultimately we are talking about usury, and not just
> debt exclusively. Paying X to settle for X on loan is not really the issue,
> not at all. Something for something does not create arguments. Something
> for something (x 4) can be the source of a dispute; and that's probably as
> it should be.
Well, that I agree with. Interest is the problem. One can, however,
negotiate rates; and if you contract a loan in Japan, there is a fair chance
the interest is close to nil (or so I think).
Two examples to illustrate my agreement with that statement:
I was reading the other day about Florentine bankers in the Renaissance, and
was quite amazed to see they were considered "fair" when interest was as low
as 50%! Consequently, there was no chance for mistake in any enterprise
attempted with a loan - and so, few were attempted at all.
When I was born, a loan to buy a house had interest up to 25%; 20 years
later, it was down to 4% or less. And the economy thrived, boosted by credit
(the comparison between these two different times is fresh in my mind). The
housing market benefited a lot from such low rates, and dragged the whole
economy behind it.
Now, the real question is: What is "fair"? Is it a fixed rate of "x"? Should
it depend or not on the risk of the enterprise? Should it be adjusted in
time to suit the contractor's possibility to pay?
And this leads us back to the begining: what would happen if the debts were
to be cancelled *at all*? It might be preferable to leave everything just
the way it is, otherwise banks might collapse and drag the whole economy
behind (too much of it depends on credit anyway). Future credit would
dfinately become compromised, and we'd be back to the days of "Cash" payment.
Pedro
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Message is in Reply To:
 | | Re: A hypothetical economics question...
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| (...) Eh? These are usually public projects, how is it that there is not enough money collected from taxes to accomplish these things? Don't even get me started on how Californians have already paid for their power plants. Anyway, it's the interest (...) (23 years ago, 28-Feb-02, to lugnet.off-topic.debate)
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