Mind Scalpel

So you’d like a new car, but you’re in really bad financial shape.  You’ve borrowed way too much money, you’ve made some really bad business deals you can’t get out of, and your old car, which is critical for maintaining what little cash flow you have — even though your ongoing debt payments exceed whatever money you’ve got coming in and whatever you’re likely to make in the next twenty years — is about to permanently break down.

So you run into GM, pick out a shiny new SUV, and ask for 100% financing.  The sales guy runs a credit check, and his computer almost bursts into flames from trying to process a negative number.

“But I need this SUV!” you protest.  “Otherwise I won’t be able to pay off my debts and feed myself and my family!”

“But you won’t be able to pay us back for the SUV,” the sales guy points out.  “Are you expecting to triple your income in the next few years?  Because that’s the only way you’d be able to even think about making your payments to us.”

“Well, no,” you reply.  “In fact, my income has been on a steady downward spiral for the last 25 years.  But I don’t want to change the way I do things!  I think blacksmithing is really going to make a comeback!  I promise I’ll come up with a plan after you’ve lent me the money.”

“I don’t think so,” he says.  “Everything you’ve done and said indicates you’re an incredibly bad risk.  We’re not really responsible for your bad judgment.”

“But if you don’t give me the loan, my creditors will get hurt, and my blacksmith apprentices will lose their jobs, and I’ll bet they’d blame you for it.  You don’t want that, do you?” you cajole.

Think they’d give you the loan?

No way.

So why should we give them one?

——

Follow-up: Keep an eye on them…

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