tag:blogger.com,1999:blog-7291287351469784668.post4046005884463756869..comments2023-10-14T09:10:22.357-07:00Comments on Shearer Insanity: Ruthless defaultJames B. Shearerhttp://www.blogger.com/profile/13452342984383895221noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-7291287351469784668.post-47958079208877997172009-12-23T04:47:35.347-08:002009-12-23T04:47:35.347-08:00What does matter is the law. You may agonize over ...What does matter is the law. You may agonize over a moral imperative regarding a certain act, but the law is what counts. Making something moral and legal is the goal, but they don't always jive with each other.Maryhttps://www.blogger.com/profile/14830629701752556960noreply@blogger.comtag:blogger.com,1999:blog-7291287351469784668.post-87836174548340853632009-12-22T21:17:43.751-08:002009-12-22T21:17:43.751-08:00I think the difference is default is legal while d...I think the difference is default is legal while defrauding the bank is illegal. One way society expresses its collective decisions about what is moral and what isn't moral is by what it makes legal and illegal.James B. Shearerhttps://www.blogger.com/profile/13452342984383895221noreply@blogger.comtag:blogger.com,1999:blog-7291287351469784668.post-46480498480533098072009-12-22T08:22:08.269-08:002009-12-22T08:22:08.269-08:00The mere fact that we pay the bank because we migh...The mere fact that we pay the bank because we might default does not mean it is moral to default. Besides the portion of the interest rate that compensates the bank for potential default, another (smaller) portion compenstates the bank for the possibility that we are defrauding the bank. Does the fact that we must compensate the bank for potential fraud mean fraud is moral? There are many other cases where we pay for a potential service but where we would in many cases be acting immorally be enlisting that service (e.g. the police force).<br /><br />I'm not saying defaulting is immoral, just that the fact that we pay for it has no bearing. It is up to us as a society to decide whether or not defaulting is immoral. Even if we were to go to the extreme and put defaulters in debtors prison, we'd still need borrowers to pay more than the risk-free rate.Jonathannoreply@blogger.comtag:blogger.com,1999:blog-7291287351469784668.post-74002685158256980292009-12-22T05:29:40.206-08:002009-12-22T05:29:40.206-08:00Putting an option into the loan agreement for a no...Putting an option into the loan agreement for a nonrecourse loan sounds a bit like mortgage insurance used when an owner who dies. The banker is in a bad way, as he cannot know if the property owner is going to die, default, whatever, in the thirty years of the loan. One would think the banks pay someone very well to assess those risks and then to increase the loan rates correspondingly.Maryhttps://www.blogger.com/profile/14830629701752556960noreply@blogger.com