[lbo-talk] We Are Indivisible

[123hop at comcast.net]

But the success of the enterprise that gets the loan still depends on there being people out there who can afford to buy whatever the enterprise has to sell.  And that's the problem. 

I mean it might work. I do know that a lot of small businesses have gone under or are in danger of going under because they can't get credit to tide them over. So I guess this would help that situation. I don't know. The devil is in the details.

There is still the ideological insistence on profit -- and thus the ability to repay the loan. Govt-sponsored infrastructure and green energy projects would not be hobbled this way. They would pay people to work, those people would have money to buy stuff, and a virtuous cycle would be set up.

Joanna

----- Original Message -----
From: "Jordan Hayes" <jmhayes at j-o-r-d-a-n.com>
To: lbo-talk at lbo-talk.org
Sent: Tuesday, October 18, 2011 8:09:16 PM
Subject: Re: [lbo-talk] We Are Indivisible


> What mystifies me is the promise that $5 = $35:
>
> "The donations to Create Jobs for USA will not be loaned to the CDFIs.
> They will be turned into capital — equity that can be leveraged. 
> Pinsky
> and others told me that that equity can be leveraged 7 to 1, meaning
> that if 10 million Starbucks customers donate $5, that will support 
> $350
> million worth of lending."

I think what he means is that the donations won't go for actually Doing 
Things.  They will go to capitalize CDFIs -- through equity investments? 
Or grants?  What if those investments generate returns?  I digress.

So then if a CDFI has another $200k of capital, they can make new loans 
of up to $1.4M based on that.

So: you're not donating to make things happen; you're donating so that 
someone can get a loan.

More about CDFIs here:

http://www.cdfifund.gov/

/jordan 

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