Posts Tagged ‘Dave Orton’

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Peer Lending vs Bank Lending

In Uncategorized on May 31, 2011 by thefhpblog Tagged: , , , , , , , ,

What is the difference between a bank and http://www.lendingclub.com?

As I was reading “The Mesh” by Lisa Gansky and considering how technology is allowing people to provide services directly to one another through systems like Zaarly (www.zaarly.com), share or rent expensive or seldom used items, and lend money directly through sites such as http://www.prosper.com and http://www.lendingclub.com, I was struck by a thought: It is probable that few of my friends understand the differences between loans offered by a bank and loans offered by peer lending services.

The difference can be summed up in one word: Leverage.

The bank leverages every one (1) dollar on deposit to lend nine (9) other dollars. Peer to peer lending lend no more than one (1) dollar for every one (1) dollar it receives. We think that the Fed controls the number of dollars in circulation, and to a point they do. They control the source currency. Banks multiply or amplify the cash created by the Fed because the banking laws allow them to lend more money than they have on deposit.
Peer lending does offer some advantages over traditional banking:
Lenders may receive higher interest rates than they get with traditional banks.
Lenders get to choose which loans they fund. Traditional banks lend to those who meet their requirments.
Lenders pay fewer fees than they do with banks. Traditional banks pay interest, but they also charge depositors fees.
Lenders can choose higher reward (interest rates) for higher risk (lower borrower creditworthiness).

With increased potential reward comes increased risk:
Peer Lending deposits are not insured. Bank deposits are insured up to $200,000.
If borrowers default, the peer lender gets his portion of what is left after debt collection fees. In traditional banking, the depositors money is insured.

In other words, Peer Lending has similar risks to other investments: you may lose your investment.

From the borrower side, Peer Lending has benefits and risks as well
Peer Borrowers may be funded with when they would otherwise be turned away from traditional lending institutions.
Peer Borrowers can, in some cases, sell their story to potential lenders.
Peer Borrowers may pay less interest than their credit card rates.
Peer Lending institutions still use credit scores and other metrics to pre-screen borrowers, so if your credit score is lousy, you may still be denied a loan, or you may be paying very high interest rates.
As you create your financial happiness through investment, look and see if Peer Lending or traditional banking or a mix fits your model.

Links: http://www.prosper.com, http://www.lendingclub.com, http://www.mesh.it

Dave Orton, Thought Provoker @ fHp

P.S. Connect with us on Facebook or Twitter.

Dave Orton values thought and action, he’s a Father who is committed to sharing with his family, friends and others the principles and insights that will bring fiscally responsible change to people and government in the US and around the world. Dave earns his bread as a technology manager and loves reading, learning, public speaking, and writing. ~If not you, then who? If not now, then when?

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Articles

Why Atlas Shrugged

In Mindset on May 9, 2011 by thefhpblog Tagged: , , , , , ,

Who is John Galt?

 This is the question driving the conflict in the book and now movie, “Atlas Shrugged” by Ayn Rand.  I took the opportunity to watch the movie this week and, having read the book, I thoroughly enjoyed it.  The movie takes place in a future US where business leaders and owners are disappearing inexplicably.  The US is surrounded by countries where the only purpose of the governments is to nationalize resources.  This is a place where rumor is king and where the leadership has abandoned responsibility for their actions and instead lobby against one another to seize and control others property and lives.

The hero is an entrepreneur who had discovered a new type of steel that is cheaper and stronger and longer lasting than regular steel.  The heroine is the second in command of a formerly great corporation where the first in command is a member of the lobbying elite, while his family’s company crumbles beneath him. 

The struggles of the hero and heroine come from both sides because while the leaders of government destroy free enterprise, an internal shift occurs among the talented leaders in the corporate world.  Externally, they’re disappearing without a trace.

In the movie, a mysterious person visits these people prior to their departure and informs them of another option than continuing to struggle on behalf of those who provide no value and bleed the system as much as they can.  After the mysterious man visits them, they leave their companies and jobs.

This movie is the first of at least two installments.  The book is lengthy and the second part includes a manifesto style speech by John Galt himself.  If you don’t want to wait for the second movie, I recommend reading the book.

For me the most important message is that potential value is worthless until it is developed and delivered.  So create and share the value you have potential for now. 

A mountain has a huge amount of potential energy.  But because it is inert, it makes no use of that potential and slowly, the elements wear away at the rock until it is flat ground, and there is no more potential.

So it’s time to get moving. Be who you are, and do what you must to transform your potential into action, service, and value.

Dave Orton, Thought Provoker @ fHp

P.S. Connect with us on Facebook or Twitter.

Dave Orton values thought and action, he’s a Father who is committed to sharing with his family, friends and others the principles and insights that will bring fiscally responsible change to people and government in the US and around the world.  Dave earns his bread as a technology manager and loves reading, learning, public speaking, and writing.          ~If not you, then who?  If not now, then when?

Articles

Why I Want YOU To Be Wealthy

In Finances,Mindset on April 12, 2011 by thefhpblog Tagged: , , , , , , , ,

Zimbabwe 100 Trillion

Hyper-inflation is not new

I personally desire to be wealthy.  By this I mean well-being internal, external and financial. Insomuch as we live life in a wealthy way, we enrich our families, our communities, our nation and the whole world. Insofar as we collectively choose non-wealthy living, we lessen our life experience and the positive influence on those around us. I desire to be wealthy, and I want that for you too.

These things are important because as individuals, families, and communities decide to live a financially responsible life, the nation and the whole human family move in a more positive direction.

Our country is in deep financial trouble, and we’re digging deeper still.
Since the Second World War, the US has maintained a deficit spending budget. The only years where the clock seemed to go backward were those of the Clinton years when balanced budgets were in vogue. As our government is a representative government, we are responsible for this because we collectively keep voting in people who have no spending controls in them. Lasting change happens from the inside out which, in this case, means changing our personal habits and supporting (or becoming) representative government figures who responsibly fulfill their stewardships. Each US citizen represents a current debt balance of $45,883 (source: http://www.usdebtclock.org/)

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