1036000+ entries in 0.744s
copumpkin: mircea_popescu:
that doesn't mean
there was competition
smickles: mircea_popescu: wouldn't
there be competition even w/o
the 'tie up'?
copumpkin: what it ensures, from most people I've spoken
to, is very little money offered :P
copumpkin: but regardless, I'm not even going
to
try if
there's a chance my money will get
tied up for a period without any earnings on it at all
EskimoBob: copumpkin: and
thst why lender MUST be rewarded!
mircea_popescu: copumpkin yeah, it's
the #1 complaint i hear. but
that's
there
to ensure competition
tho
copumpkin: I'd also be reluctant
to call
them bonds
copumpkin: what bothers me more about
the bonds is how people offering money for lending
tie up
their money even if mpoe never uses it
smickles: mircea_popescu: arn't
those ppt.X
things zero cupon bonds?
EskimoBob: so you default on your coupon but pay back
the principal ?
smickles: EskimoBob: but
the floating can't be negative, right?
mircea_popescu: my curiosity was merely if
this is
the closest
to a bond
that we have.
mircea_popescu: EskimoBob
that's for sure. in fact nothing in btc is "like we know".
mircea_popescu: smickles i could easily issue bonds at a fixed rate and just shrug. it would break
the current price discovery mechanism in
the mpoe-bond inverse licitations
tho
EskimoBob: I am just saying
that
this is not a bond as we know bonds
smickles: or am i just not
thinking of
this correctly
mircea_popescu: but due
to variance
this could in any given interval be either -x% or +x%
smickles: mircea_popescu: so
then where would
the funds
to cover losses come from?
EskimoBob: I am not saying
taht
the instrument you have is bad
mircea_popescu: the
thing is
tho, bear with me. you have a math model
that generates say 1%.
mircea_popescu: smickles it wouldn't be either better or worsde for mpoe,
the % would just be smaller.
smickles: if ppl are buying
the
things as is, why would mpoe change how
they do
things
to a better way which just happens
to be a little worse for mpoe?
EskimoBob: if you include a "premium" - aka fixed rate coupon + risk reward,
then you have a FRN.
mircea_popescu: or otherwise,
the coupon from
the profit participation of
the bondholder.
EskimoBob: the % of coupon is meaningless in
this context -- it's X
mircea_popescu: im gathering
that
the main problem here is
that i haven't carefully enough sepparated
the
two parts
EskimoBob: We are
talking about how a good bond operates not what
the fair % is
mircea_popescu: you can't seriously
tell me
this is
the risk-free rate.
EskimoBob: this is
the part
that fuck it up a bit
EskimoBob: "Although
the financiers do not receive any part of profits made by MPOE,
their financing is not without risk, because
their capital will be used
to answer any shortfalls, proportionally. "
mircea_popescu: except in
the months where mpoe fails [to behave as expected]
mircea_popescu: irrespective if variance makes
the month's gain lower or smaller
mircea_popescu: the bondholder gets a share of
theoretical gain EACH MONTH
mircea_popescu: to be honest, i originally imaghiend
there'd be bankers stepping in
to offer insured versions
EskimoBob: I personally
think
this is
the unfair part
EskimoBob: only part I did not like is
that your bond starts
to act like something else when
there is a business loss involved
mircea_popescu: you don't know me
too well i guess, but i am all about finding
the best ways
to do finance in btc.
EskimoBob: I was actually
thinking, is
there a better way
to finance
those deals
EskimoBob: mircea_popescu: do not
take it personally but I
think you need
to rewrite it a bit
mircea_popescu: smickles no, im
trying
to use mr bob's expertise
to sound my own bonds on
smickles: lol, is someone saying
that
those 'mining bonds' on glbse are actually bonds?
mircea_popescu: plenty of pounds of flesh
to be had. where's
the flesh ?
mircea_popescu: greek bondholders
took quite
the hosing recently. why ? greece is still
there
EskimoBob: mircea_popescu: default is something else and not what you have
there
mircea_popescu: you're describing a very
teoretical bond.
this is how it works in a world with no default.
copumpkin: EskimoBob: I
think several people have
tried making
that argument
to him before :)
EskimoBob: you loss, is yours and
this is something you business partner have
to
talk
to you about :) not "me" as a bond holder
EskimoBob: even if you want me
to share
the profit, you still have
to return
the % and principal
EskimoBob: when
the date is up, your friendly loan shark wants hes money + % and
that's it
EskimoBob: mircea_popescu: you see, bond is a loan. Equity is like lets build some stuff and I'll give you some money. What ever you build, part of it is mine and so are
the profits...AFTER!
the bonds are paid off (its debt)
kakobrekla: EskimoBob, can you run some
tests
there
EskimoBob: hold on for sec....
There is polar bear at my door
EskimoBob: you see,
this is for
the equity holders
mircea_popescu: from what i can see with mining "bonds"/FCVWs w./e
the problem is depreciation is a given
EskimoBob: then write
this
to
the contract so
that I get my spread no matter what and if
thing go well, you pay me extra % from
the gain
EskimoBob: this is
the problem with mining
turd
too
EskimoBob: but you used my money - I have
the risk
EskimoBob: if you get a loan from me, and when you have a loss, suddenly
the loan acts like we share profit/loss - quity
mircea_popescu: you make x% unless
the country fucks up, in which case you make a loss.
mircea_popescu: but you're aware
that what you describe is exactly what sovereign bonds are.
mircea_popescu: then
that'd be a bond, but
this bondholder-insured
thing is not, for
that reason ?
EskimoBob: if you out a loan,
then whn you have a loss, suddenly it acts like we share profit/loss
mircea_popescu: so basically your ideea is
that if i bought insurance myself and offered an insured
tier
too
EskimoBob: fuck mat, I am a bond holder :) I do not care. I want mu coupon
to buy milk ... LOL
EskimoBob: but you do not share
the bigger
than expected gain
mircea_popescu: there's no "i frak up
tho", it's a math model, it works
the same
EskimoBob: so whn do I have
to share
the loss with you?
EskimoBob: lest me ask
this, if you make a killing on a month, do bondholders get something extra?
mircea_popescu: "you have 1k usd principal and making
this much per month, except in case of war"
EskimoBob: but if you frak up you still have
to pay me
the spread + principal
EskimoBob: you see, you as a bond issuer have
to worry about insurance and
this will lover
the yield but increase
the "secure" part of
the deal