I think the fairest definition of my opinions on economics is liberalism. I see the benefits of Capitalism but I have the gut feeling that it drives us to work too hard and to treat the world as nothing more than raw materials. I can see that Socialism lacks a mechanism for accountability and can lead industry to become so incompetent that it cannot perform it’s function.
I saw part of the documentary on the collapse of Lehman Brothers recently and it seems that all the rich and powerful bankers were hoping for a bailout by the American tax payer. There was a clip of some high falutin banker complaining that Lehmans only needed 30 or so billion to keep it afloat and billions of dollars worth of value was wiped out across the world because the money was not forthcoming.
Government Bailout
I think the guy misunderstood the nature of capitalism. That value wasn’t wiped out by the collapse of Lehmans. That value didn’t exist in the first place. The list price of various financial instrument was driven up and up by irresponsible lending and the collapse of Lehmans was a market indicator that the value was illusory.
If the U.S. Government had bailed out Lehmans that illusion may have continued for longer but it could not prevail indefinitely.
To paraphrase Withnail and I, the market is like a balloon that you are hanging onto which is going higher and higher and the only question is: how long can you hold on?
The U.S. Government were right to allow Lehmans to go to the wall. Though I do not know which is better Capitalism or Socialism I do know that what is worse than both is to pretend to have capitalism while insisting that the tax payer picks up the bill for failed companies.
Nationalised companies have no dividends to pay and so should be able to operate at a lower cost than private companies but they become inefficient. Private companies, by contrast, have market pressure to drive them to be efficient but they must pay dividends to share holders and that extra cost could wipe out any efficiency gains. You pay your money and you take your pick.
Worse than either are private companies that are bailed out by the government because they have no market pressure to make them efficient and yet they must pay dividends.
The worst of all possible worlds to misquote Doctor Pangloss.
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Wonga – greedy and irresponsible lending
Tags: Accel Partners, Balderton Capital, Dawn Capital, Greylock Partners, irresponsible lending, loan, payday loan, same day, scam, wonga, wonga scam, Wonga.com, wongascam.com
Wonga
Remember when it used to take five days to transfer money from one account to the other? Remember all the irritated letters to TV and radio consumer programs? In 2009, the banks finally got their act together and it is now possible to transfer money on the same day. A good idea? I’d say so. However the law of unintended consequence has now kicked in with the arrival of Wonga.com.
I heard about Wonga on the radio yesterday and later saw their advert on the London Underground. Wonga are a company who will give you a short term loan and provide the money in around 15 minutes. The application is handled using the Internet via your PC or mobile phone. The customer uses a simple “slider” to select how much money they want to borrow and how long they want it for. Presumably credit checks are performed automatically and, if approved, the money is squirted into the customers bank account within minutes. A good idea? I’d say not.
The world has only just gone through a financial crisis which broke all sorts of records in all sorts of ways. The blame has been placed firmly on cheap and overly available credit. The result has been to put the western world in massive debt to a totalitarian and undemocratic Chinese regime.
While the experts rake over the details the public are disgusted by the greed of the banks and the incompetence of the organisations responsible for monitoring and controlling credit risk. Even Gordon Brown, the British chancellor on whose watch Britain’s economy was flushed down the toilet, claimed that he knew nothing of what was going on. While the world and his wife knew that anyone could get a “self certified” mortgage by lying on their application form Gordon Brown knew nothing. One wonders whether Brown knows about Wonga. Does he know that Wonga are targeting young people? Check them out on facebook and twitter.
British young people have a reputation for liking their booze. Now we have a company which is allowing them to buy credit when they’re drunk. You’re out with your mates, you’ve been in the pub all evening and now everyone is off clubbing but you’ve run out of cash. No problem, pull out your mobile and click, click, click you have £200 dumped in your bank account. What’s not to like?
Well how about a typical APR of 2,689%
Wonga is the epitome of greedy and irresponsible lending and one has to ask: Are our regulators asleep or simply stupid?
Let’s be clear who is behind these greedy, irresponsible people. Wonga list the following Joint Venture partnerships amongst their investors:
Balderton Capital
Greylock Partners
Accel Partners
Dawn Capital
Here are the people behind each partnership. I encourage you to click on the link, view the thumbnail pictures and then Email these greedy and irresponsible people and tell them in, polite but firm terms, what you think about loan sharks. If you know them then disown them.
Balderton Capital
Barry Maloney
Mark Evans
Bernard Liautaud
Tim Bunting
Dharmash Mistry
Jerome Misso
Roberto Bonanzinga
Andrew Nutter
Harry Briggs
Rob Moffat
http://www.balderton.com/our-team/
Greylock Partners
Arvin Babu
Aneel Bhusri
Tom Bogan
Asheem Chandna
Charles Chi
Roger Evans
Isaac Fehrenbach
Donald Fischer
Bill Helman
Reid Hoffman
Bill Kaiser
Ivy Li
James Slavet
David Strohm
David Sze
David Thacker
http://www.greylock.com/team/team/
Accel Partners
Kevin Comolli
Sonali De Rycker
Bruce Golden
Harry Nelis
Jeremiah Daly
Spencer Lazar
http://www.accel.com/people/index.php?group_id=122000
Dawn Capital
Josh Bell
Norman Fiore
Haakon Overli
Chad Raube
Glen Drury
Dr. Arjang Zadeh
http://www.dawncapital.co.uk/welcome/our-team/the-dawn-team.aspx
P.S. – I heard a guy on the radio from an organisation named Debt Wizard who seemed pretty knowledgable about all aspects of debt.
P.P.S – Here’s an interesting blog about Wonga targeting students and then lying about it.
02-04-2012 – Guardian article: Stella Creasy: ‘You can see a perfect storm coming’
01-03-2012 – Guardian article: Wonga: the real cost of a payday loan
Poppies
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