Sunday, April 17, 2011

BloggeRhythms 4/17/2011

For most of my business life, I've been involved in equipment financing and leasing. And throughout that time, if I've learned nothing else, when working with any borrower of any kind, needing funds for any reason, when all is said and done, the question that matters most is...how are you going to pay us back?

There's nothing invasive or intrusive about the question, and it certainly isn't asked simply to fill in a spot on a form, because as any lender can tell you, if borrowers don't pay them back, the lender's themselves will soon be gone. In fact, you don't have to know a thing about finance at all to realize that non-repayment of debt has recently caused a worldwide disaster that won't be resolved for years to come.

So, now our country is in debt up to its eyeballs, and has no visible means to pay it back, yet the government's insisting that more be borrowed. In terms of fundamental financial prudence the premise is insane. Even the banks, who've never been very good at lending at all -that's why outside financial providers exist- now understand that you can't keep shoveling money down a bottomless well and hope somebody pays you back.

A large part of the problem is that the whole arena of lending and borrowing funds isn't a familiar subject for the general public. That's because, except for mortgages which individuals don't need too often, vehicle financing and credit cards, there's very little need to learn the subject, and consumer financing's become so cut and dried it almost takes care of itself.

So, when the government goes out to borrow a few trillion dollars (that's with a T) very few who aren't finance or news junkies likely even notice what's going on. But, as a practical matter, if the majority of the public really understood the risk involved in the government's borrowing funds they have no current way to pay back, my guess is they'd object. What's worse is, if they really looked at what it was going to be spent on, they'd likely revolt.

That's it for today folks.

Adios

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