What Happens When a Suburb Begins to Die?

Re:What Happens When a Suburb Begins to Die? by SilasX on Wednesday October 11, 2017 @01:53PM (#15451678)

That suggests an easy path to a self-funding, virtual cycle out of poverty: a charity makes such "Vimes boot" loans where they get $20 to buy two years of toilet paper (instead of paying $5/week or whatever), charges some large amount of interest that's still much lower than the 200% effective rate, and uses that to keep lifting others out of poverty.

I suspect that the reason it doesn't work is that the theory is off. Lack of the initial capital (to bootstrap the virtuous cycle) is not the real bottleneck; it's the ability to commit to a plan where there is a big long-term benefit. Such a charity would run into the same problems as for-profit lenders and CCs -- not enough people paying back the money.

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Re:What Happens When a Suburb Begins to Die? by dv_dt on Wednesday October 11, 2017 @03:07PM (#15452408)

I imagine that some time ago, a community bank might have had loan officers who would know the person or at least the community personally. That would allow the bank to feel confident in writing a loan at lower risk than what the surface financial stats might indicate. Everything is now so financialized into homogenous trade units that I suspect that the original functions of banks to beneficially work out economic inversions like this have faltered.

On the other hand, the $200-300 being charged might represent a risk level of the whole class of rentals being made... it's hard to know without on the ground information.

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