Comment Loan rationale (Score 1) 329
You loan people X, they pay you back X plus interest. If the "plus interest" part is more than you could make putting your money to other uses (and the risk/reward calculus is acceptable), you make the loan. That it is international is a minor consideration - it gets factored in as an increase in the risk that you won't get paid back.
The government subsidizes loans to third world countries as a form of aid. Removal of the subsidy will not stop the loans. GE, for example, started as a manufacturer, but became a bank because they started loaning money to their customers to buy their products. The commercial loan business outgrew the manufacturing arm.
So, stopping the loans may hurt the US more than it helps, in strictly financial terms. We aren't building power plants at the rate the developing world is. If you want that business, you need to be prepared make deals that include financing.
The government subsidizes loans to third world countries as a form of aid. Removal of the subsidy will not stop the loans. GE, for example, started as a manufacturer, but became a bank because they started loaning money to their customers to buy their products. The commercial loan business outgrew the manufacturing arm.
So, stopping the loans may hurt the US more than it helps, in strictly financial terms. We aren't building power plants at the rate the developing world is. If you want that business, you need to be prepared make deals that include financing.