tag:blogger.com,1999:blog-648884752216444797.post8639286008839482162..comments2024-03-28T09:59:13.754-07:00Comments on bionic mosquito: Bankruptcybionic mosquitohttp://www.blogger.com/profile/12002548958078731031noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-648884752216444797.post-58685661471431817072015-08-14T06:07:52.808-07:002015-08-14T06:07:52.808-07:00This is a thoughtful article. In addition, not on...This is a thoughtful article. In addition, not only is bankruptcy implied by many contractual relationships such as with lending and debt financing, but that the bankruptcy provisions are explicitly mentioned in the contracts. Most sophisticated market participants address the legal and regulatory considerations explicitly within their contracts. I have not read the contracts associated with the defaults and bankruptcies of the respective Trump enterprises, but I wouldn't be surprised to see in the Trump debt contracts language addressing the US Federal bankruptcy code. john gradyhttp://www.jgrady2015.comnoreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-1780865905208263682015-08-11T11:37:36.421-07:002015-08-11T11:37:36.421-07:00Igor, I disregard nothing; loans are made conditio...Igor, I disregard nothing; loans are made conditioned to terms of a contract. <br /><br />Without treating contracts seriously, there is no chance for a libertarian society.<br /><br />Why are so many libertarians in favor of being baby sitters? bionic mosquitohttps://www.blogger.com/profile/12002548958078731031noreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-33358023849484788502015-08-11T11:10:24.838-07:002015-08-11T11:10:24.838-07:00It seems to me that there are two parts here, one ...It seems to me that there are two parts here, one of which you are disregarding. A default is both a breach of contract, and exchange of property. The contract does, indeed, provide for what may happen in the event of default - late fees, accrued interest, collection charges, etc. But there's a second part to it: the property. As I mentioned before, there is in fact a transfer of property rights which takes place and has to be protected.<br /><br />I borrow money from you. The loan is nonrecourse. I then go on a bender in Europe and spend it all, then default on the loan. Practically speaking, you're right, and there's nothing you can do since our contract does not stipulate any collateral. But morally speaking, I maintain, you are still the rightful owner of that money. I can't just shrug and declare bankruptcy and thumb my nose at you. That's a violation of NAP, in my book.<br /><br />Mind you, an equity investment (which of course is also a contract) is different from a loan in just this: a loan *entitles* the lender to recover his money. That's why lenders are senior to equity holders, and get paid first when the firm is liquidated. Same for estates: inheritors get what's left after lenders are made whole. So it's not just a matter of making a foolish investment decision. <br /><br />Igor KarbinovskiyAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-42672512144716686502015-08-10T12:22:33.729-07:002015-08-10T12:22:33.729-07:00Igor, the lender loaned the money under terms of a...Igor, the lender loaned the money under terms of a contract. The contract stipulates what happens if the borrower is unable to pay. In the case of inability to pay, the stipulations in the contract control.<br /><br />This is not theft. It is the deal that was agreed by both parties.<br /><br />If the terms of the deal were against the lender's will, the lender should not have agreed to the deal.<br /><br />You think the agreement was merely an exchange of property. It isn't; it is an exchange of property governed by certain terms.bionic mosquitohttps://www.blogger.com/profile/12002548958078731031noreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-47886463088659956982015-08-10T11:51:41.457-07:002015-08-10T11:51:41.457-07:00Can you kindly stop putting words in my mouth plea...Can you kindly stop putting words in my mouth please?!? No one said anything about guaranteeing success. Thank you very much.<br /><br />I still haven't seen you explain how it is possible to keep another person's property against their will, and not be a thief. Looking forward to it.<br /><br />Igor KarbinovskiyAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-81584450309855997782015-08-10T11:05:43.262-07:002015-08-10T11:05:43.262-07:00Every transaction is guaranteed to be a success? ...Every transaction is guaranteed to be a success? On what planet?<br /><br />Remove the word "refuses." What if the entrepreneurial possibility was misjudged? What if my future cash flow is not enough to pay the mortgage - I got laid off. In other words, honest failures. These happen daily.<br /><br />Does only one party to the transaction take risk? Of course not. <br /><br />Beyond this, is it possible to distinguish a dishonest refusal from a failed entrepreneurial estimation? Unless an examination of the books reveals this (perhaps misappropriation of finds or whatever, in which case different issues are raised), we are left with mind-reading.<br /><br />Big boys make deals. If they don't like the terms of the deal, they need not sign on the dotted line. No one forced the creditor to give the debtor the money.<br /><br />Unless you can demonstrate that the world is made up of creditors who don’t take and price risk (only possible on a planet where risk doesn’t exist), this isn’t theft. And even if you can demonstrate this (you cannot, but I will play along), I say shame on the creditor. <br /><br />Finally, are you saying that if a clause that mimics today's bankruptcy law was voluntarily inserted in a contract, the bankruptcy would still be considered theft? Impossible to label it theft, I say.<br /><br />Guess what, the clause - even though it is by law - is part of the contract. Don't like it, don't sign.<br />bionic mosquitohttps://www.blogger.com/profile/12002548958078731031noreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-46330106722225126782015-08-10T09:53:12.576-07:002015-08-10T09:53:12.576-07:00BM, please consider what it means to transfer prop...BM, please consider what it means to transfer property rights via a contract. You agree to give me money, and I agree to give it back to you at a later date. We have a contract. I gain ownership of that money at this time, and you simultaneously gain ownership of the money at the later time when the note matures. Yes? Then, at maturity, I refuse to pay. I refuse, in other words, to deliver to you your own property. How is this not theft?<br /><br />You can say that de facto, this is part of life and an entrepreneur should plan for it. I agree, stuff happens. But I just cannot see how you could consider this anything but theft.<br /><br />Igor KarbinovskiyAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-19390989042918137512015-08-09T16:30:28.340-07:002015-08-09T16:30:28.340-07:00“This is where tradition and custom comes into eff...“This is where tradition and custom comes into effect. Certain prevailing norms set what is acceptable contracting and what is not.”<br /><br />I think this is true, and applicable in many areas where libertarianism – by its very nature by its very nature of what it does not address – offers little if any guidance.<br /><br />“…landlords making daily spot checks on the renters.”<br /><br />This is where the market will likely help set the terms as well as the price (and in virtually every transaction, the two are not fully separable).<br /><br />“Should someone be able to contract for their first born, like in fairy tales?”<br /><br />To me, a violation of the NAP.<br /><br />“Since we speak of debt, what of variable interest rates?”<br /><br />The debtor should probably understand how often, how high, and based on what index will the interest rate be adjusted before he signs on the dotted line.<br />bionic mosquitohttps://www.blogger.com/profile/12002548958078731031noreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-69063709902717131032015-08-09T15:01:31.433-07:002015-08-09T15:01:31.433-07:00One more thing - Rothbard endorsed bankruptcy in o...One more thing - Rothbard endorsed bankruptcy in other contexts. He recommended repudiation of the national debt for example. Matt@Occidentalism.orghttps://www.blogger.com/profile/02395220402283030311noreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-29466389748065801012015-08-09T14:55:15.350-07:002015-08-09T14:55:15.350-07:00Agreed. Libertarians are usually good at following...Agreed. Libertarians are usually good at following ideas to their logical conclusion, but this is one instance where enough thought has not been applied to the matter. <br /><br />There was a time when people could not discharge debt. At those times it resulted in debt being handed down to children (despicable and unjustifiable), indentured servitude, or slavery. <br /><br />This is where tradition and custom comes into effect. Certain prevailing norms set what is acceptable contracting and what is not. For example no libertarian as far as I know thinks that a renter of a property should not have the peace and quiet of the premises that they are renting. This is the custom and tradition of our culture. However in a libertarian world I suppose you could have easily landlords making daily spot checks on the renters. This line if thinking makes libertarianism intolerable to any reasonable person. <br /><br />Even in a libertarianism society there needs to be a baseline for what is an acceptable contract. Should someone be able to contract for their first born, like in fairy tales? I say no. <br /><br />Since we speak of debt, what of variable interest rates? If you borrowed $100 from me at 5% a year, then I tell you that the interest rate is now 10,000% daily, are you stealing from me when you default? <br /><br />This is one area that I think that libertarianism does not speak to at all. Such matters are best handled by custom and traditional, and different cultures may have different methods of discharging debt. It's also worth recognizing that you can't have reckless borrowers without reckless lenders. Matt@Occidentalism.orghttps://www.blogger.com/profile/02395220402283030311noreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-41694065010538186012015-08-09T08:44:37.356-07:002015-08-09T08:44:37.356-07:00Thank you, gpond.Thank you, gpond.bionic mosquitohttps://www.blogger.com/profile/12002548958078731031noreply@blogger.comtag:blogger.com,1999:blog-648884752216444797.post-81163944535059866542015-08-09T08:23:00.945-07:002015-08-09T08:23:00.945-07:00BM, looks like you are 2 for 2 on Saturday. Two g...BM, looks like you are 2 for 2 on Saturday. Two great thoughtful articles. Your logic is tight. gpondhttps://www.blogger.com/profile/01013837189187920036noreply@blogger.com