Friday, October 10, 2008

Save The Economy

You'd have to be living under a rock at this point to be unaware of how scary the situation is with the global economy. That's right, GLOBAL. Even though we like to segment our countries into developing and developed...and give them even fancier names like 'frontier', the reality is that this current situation shows just how coupled all of the world's economies still are.

The big concern for many at this point, and many of the government officials is the fact that the credit markets are not yet flowing. Instead, all of the money is being locked up nice and tight at banks and they are not lending. In the end, I am interested in considering prosper and some of the other peer-to-peer lending sites.

In the event that these banks do not open up lending, we will be in a severe recession quite fast. But for the average person, there is a genuine concern that there might not be enough money for their boss to get enough cash to make payroll, or that there might not be money to get the new car their family needs.

What I am considering here is whether or not prosper is a good idea here. My gut feeling initially several weeks ago once this downturn was that perhaps sites like prosper would help to curb the problem of funds availability. But, what I've noticed personally is that I am not as free with my lending. And even those who are fortunate enough in this market to get loans are finding that they are much, much more expensive. The credit problems elsewhere have definitely come home to roost on that site.

Prior loans are no defense either. Three of my loans are late and it looks like there is very little hope of them being repaid. Only one or maybe two of them seemed risky to me at the time. This makes me think that some of the delinquency is due to the overall slowdown. So can prosper save the economy? I don't know. We'll see. Personally, I'm doing the same thing as the banks, paring back my prosper loans.

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