The lender generally has a positive EV, but variability is high. The interest rates on leveraged buyouts are high, and the lender has priority over everything but taxes. If the company can stay afloat for a while, the lender probably got made whole and then some, even if the full loan never got paid back.
It’s the same as buying a house. I want to buy a house for $1.2m. I put down $200k and borrow $1m. The bank determines the value of the house. My equity absorbs a 20% drop in prices, so the bank is fairly protected. Businesses are different because they really can go to $0. Banks will need more collateral and/or make many different types of loans to dilute the risk.
Any one loan may be risky, but in aggregate the rates compensate for it.
They pay you 0-4% for the money in your checking account and lend it at 1-3% points higher. As long as they have a big enough uncorrelated portfolio, they make easy money.
And if the whole portfolio tanks all at once, the whole industry gets bailed out.
The latter. Big Banks lend to private equity because the profit is good and they are large enough to absorb the variability.
The public hates it because they see highly visible bankruptcies. They don't see the success stories, or the businesses successfully carved up for more value than the sum of their parts
> I immediately stopped considering them as options. If you can’t be bothered to have a human respond to my email when I’m trying to give you my money, what level of service can I expect once I’m already obligated to pay rent?
I will go out on a limb and suggest that they are probably happy that you’ve self-selected out of the process.
I’m not saying your expectations are unreasonable, but you have higher expectations than most consumers, and that ultimately becomes a pain in their ass.
I feel like it's not higher than most consumers, if I have a problem that is serious enough then that's the benefit and direct trade-off of renting - it shouldn't be my problem and my landlord should take it seriously. If everyone self-selects out we are just making the rental market even more hostile.
> I sense that when expectations are clear they'll often surprise you with diligence.
Data does not support your sense.
Most students do not have good time management skills, usually because they have no models and/or have not been taught these skills.
Furthermore, continuous feedback, whether graded or not, has been found to be more effective than one-shot feedback.
Evaluation and assessment is a complex topic towards which many people (not necessarily you) want to take an overly simplified approach.
There are trade offs for any system that is chosen. The organizations providing the grades have to decide what their priorities are (e.g., time, accuracy, etc.).
> For some reason people keep telling you that you will get a better education if you pay a ridiculous amount of money for it and even if it's not better and you can't figure out how to pay the student loan off, you should still go for it, because education is it's own goal, as if it was a consumer product.
Only rubes think this.
The formal education at most elite universities trends towards quite bad, with a few exceptional classes.
The access to resources (academic, social, professional, etc.) at universities is phenomenal, but this only matters if the student uses those resources (most don’t).
Elite colleges typically have a great education, but they are usually just as expensive as elite universities, but with much less prestige — they are only “worth it” (if you’re looking for value) as a stepping stone to something else.
> This obviously doesn't make sense from an educational perspective. If education is good for you, why make it unaffordable and out of reach?
If someone chooses to go to an elite school while not understanding the value prop (or lack thereof), that’s on the applicant rather than the school.
> Low cost colleges are supposedly inferior and not everyone gets to become "an educated well rounded individual".
Low cost colleges serve an important function, and imho it’s just as easy to be “an educated well rounded individual” at one of these schools. They may not be as prestigious, but the value of most average or better universities and colleges is largely based on the efforts made by any given student (which trends towards being very low effort).
> get mixed together so that when they finish university, these groups become (mostly) indistinguishable
Sort of.
1. It’s a place where capital can make friends with capable people who will be willing to work for them later.
2. It gives the smart and ambitious “commoners” enough exposure to elite social circles such that they can learn and adapt some/most of the social standards (if they choose to do so, which most don’t). This is important, as all the brains in the world won’t do you much good if you don’t fit in, especially when it comes to the bigger money positions.
3. The social shibboleths between the two groups are very real, and it usually takes less than 5 minutes hanging around someone to know which group they are in. There can be some false signals about being higher status, but those are hard to sustain for very long.
Note that many “commoners” who go to elite schools end up hitting a glass ceiling in their 30s or so due to focusing on being smart and a skill person rather than being a socially savvy person. The social people will be able to make it rain later in life, and the skill people just get shifted around as needed.
> The rules are simple and ancient: noble blood breeds nobles; common blood breeds commoners.
This is a great narrative for folks who want to be fatalistic.
From my view:
- Much of what you call “nobles” and “commoners” are more about values than blood. Yes, “noble” values are difficult to develop if you’re not born in that class. That said, these values are easier to learn and develop today for a wider group of people than has ever been true in the past.
- Some people think the “noble” side is all rainbows and unicorns. The noble class is shedding its weak non-stop. It may take a generation or two before a branch of a noble family becomes common, but it happens often, and it’s a source of great consternation to that branch when it does.
> What’s sophisticated are the layers of ideology and falsehood that made people believe that aristocracy was dead.
Did anyone actually think the aristocracy was dead?
The relative power of the aristocracy dipped a bit mid-20th century, but what they may have temporarily lost in economic power was gained in social and political power.
And if it's so cheap and bespoke, why buying it and not making it in house?
What about access to people with know-how of that product? You use a product that only 4 other companies use, you can be sure you won't find any new hire that knows how to use it.
To me it seems the reality works in the opposite way. Among the many products built, some will be successful and will swallow the whole market, like now with basically any software or SaaS product.
> And if it's so cheap and bespoke, why buying it and not making it in house?
0. Sure, some products will be made in house. That said, being able to spec a product well is a skill that is not as common as some folks seem to think. It also assumes that an org is large enough to have a good internal dev team, which is both rare and relatively expensive.
1. It sloughs responsibility, which many folks want to do.
2. It allows for creation to be done not by committee and/or with less impact from internal politics.
3. It facilitates JIT product/tool development while minimizing costs.
That’s off the top of my head.
The realities of business often point to internal development not being ideal.
> No? I dont see any indication that this would be a good idea. Or even looked for.
Do you spec software for a variety of businesses?
I do.
It’s rare that one SaaS or software package does what the people paying want it to do. Either they have to customize internally (expensive and limited to larger orgs with a tech department) or Frankenstein a solution like Salesforce or WordPress with a lot of add ons. And even then, it’s not hitting all pain points.
Being able to spin up or modify an app cheaply and easily will be a massive boon for businesses.
> nobody understanding what is going on underneath
I think many developers, especially ones who come from EE backgrounds, grossly overestimate the number of people needed who understand what is going on underneath.
“Going on underneath” is a lot of interesting and hard problems, ones that true hackers are attracted to, but I personally don’t think that it’s a good use of talented people to have 10s or 100s of thousands of people working on those problems.
Let the tech geniuses do genius work.
Meanwhile, there is a massive need for many millions of people who can solve business problems with tech abstractions. As an economy (national or global), supply is nowhere close to meeting demand in this category.
The point is that LLMs can only replicate what existed somewhere, they aren't able to invent new things. Once humans lose their edge, there won't be any AI-driven progress, just a remix of existing stuff. That was the hollowing out I mentioned. Obviously, even these days there is tech that looks like magic (EUV lito etc.) but there are at least some people that understand how it all works.
Could you please explain the how and why of the mechanics of this process (edit: from the perspective of the lender)?
It seems like the lender is taking a massive sucker bet.
Or is the reality that the lender gets repaid the vast majority of the time, and we only hear about the bad outcomes?