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Say a dry land farmer needs rain at the end of June/beginning of july and he be buys drought insurance to offset possible losses. Is this ethical?
Say the farmer's friend hears of this purchase and thinks that global warming will produce the drought. Is it ethical for the insurance company to sell him an identical policy?
Say a carnival company plans to put on a humongus event on July 4th. The company wishes to buy rain insurance for that weekend. Is it ethical for the insurance company to sell this policy?
Say the carnival company's janitor thinks it will rain on July 4th. Is it ethical for the insurance company to sell him the policy?
How do the above described transactions differ from what Goldman-Sachs did?
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In your hypothetical the insurance company doesn't control the rain.
In the case of Goldman Sachs they picked what went into the securitized mortgages that they were selling.
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Do you think the odds of the Goldman Sachs portfolio failing were less than the odds of a state lottery ticket failing?
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Who bought what they sold and why?
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A person who buys a lotto ticket is spending a small sum to take a chance on big winnings.
A person who spends 10 million investing in a complicated product is supposed to know what he is doing.
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Which makes both buyer and seller responsible for the transaction.
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Well said!!!
At times we forget about that.
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Then it should not be legal to sell used cars "as is?"
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Why not?
The buyer can either agree to buying the car "as is" or not buy it.
The seller can either agree to sell the car "as is" or sell it with a warranty.
What is your point?
You are all over the place on this.
Is your particpation on the board representative of your communication skills in general?
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OK - let's use your used car example.
The analogy would be that Goldman Sachs is the mechanic that sells a used car "as is" right after disconnecting the brakes and buying life insurance on the guy he sold the car to.
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Wrong!
It is perfectly legal to sell something "as is".
It's a transaction between a willing buyer and willing seller.
A contract is bidding if the parties agree to the terms without coercion, are qualified to enter in to a contract, and the terms violate no laws.
That's a great principle of our economic system that is the duty of government to enforce if the parties break the terms.
On the contrary a contract is not bidding on a buyer or seller if either party deceives the other in some matter of significant consequence.
For example, selling a car with the odometer rolled back, or buying a car with a bogus payment, or selling a car that's had collision repairs but lying to the buyer that it has not when you know it has, etc.
It's really just being fair about the transactions but also about being responsible for the transactions.
You can't just go in used car lot, pick one out, pay for it, drive it around, and then bring it back because the engine and transmission are worn our, the paint is peeling, or you decided you didn't like the color.
You, as a buyer, have a responsibility to check out what you're buying, get an inspection done if you can't do it yourself, ask questions and require statements, etc.
Then, if what you bought isn't what you paid for you've got a case.
We live in a world or risk free purchasing these days because most retailers have generous return policies.
That's great - I certainly like it - but we need to understand that's the result of market competition and not the result of a legal obligation upon the seller.
We've now taken this same business practice to be almost a right and demand it on all our transactions.
A large retailer perhaps can afford that including some allowance for the cheating associated with it but individuals and smaller retailers cannot normally afford such a policy.
If you buy my second hand vehicle I'll tell you the truth about it but if it breaks down on the way to your work next month it's going to be your responsibility to fix it.
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That's my point. A hustler is a hustler. Doesn't matter if he is selling used cars or used mortgages or used stocks. As long as the mortgages or the stocks existed the salesman doesn't have to like the product.