Greetings Kossacks, first diary here, just had some musings that I would like your feedback on. A little background on me- I grew up on a family dairy farm and survived the farm crisis of the 70's and 80's. The farm crisis as I best understood it was this. Farmer buys farm for $200,000. After several years banker says "Mr. Farmer . your farm is worth $350,000. May I float you $150,000 to make improvements?" Farmer says yes, couple of refi's later farmer is in for $400,000 on a farm worth $450,000. couple of years later farm values crash. farmer misses one bank payment. banker says"turns out your farm is only worth $250,000, you owe $400,000. we're gonna take it back if you miss another payment". farmer realizes that he is paying almost $80,000 a year in interest (lots of adjustable rate lines of credit back then that hit %18 interest. our farm actually payed $100,000 interest one year alone). farmer says forget it! walks away head hung in shame. after several foreclosures bank realizes that it really doesn't want all of these farms back, so they start "writing down" interest for the year- basically forgiving a year of interest if the farmer will buckle down and do his best to protect both of their investments. THE BANK REALIZES THAT IT IS BETTER TO FORGIVE THEIR PROFIT (INTEREST) AND PROTECT THEIR ASSETS (PRINCIPLE).
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