Date: June 7th, 2005

Hard debt: Archimedes’ thumb (Part 1)

7 June, 2005 (14:15) | Uncategorized |

“Hard debt, one of the four kinds of money, is an essential element in affordable housing,” said Holmes abruptly, “though the very affordability instincts that induce policymakers to offer favorable terms also substantially increase its potential to do harm.”

Watson tossed down the Foreclosure Notices section of the Times

“Harmful?” asked Watson. “But are […]

Hard debt: Archimedes’ thumb (Part 2)

7 June, 2005 (10:56) | Essential posts |

(Return to Part 1)
 
Reducing WACC: decreasing lender risk
 
How then can policymakers reduce WACC?  Only by decreasing lender risk, which means that somebody else has to pick up a risk normally taken by the lender.  There are four obvious ways, two that change the borrower’s risk profile, two that change the government’s.
 
Option 1: Increase the borrower’s […]