20% Of Valley Startups Can’t Get To Their Cash

20% Of Valley Startups Can’t Get To Their Cash

Today we learn a new word: Auction Rate Securities. Instead of being an investment tool, this tool has proven to be a liquidity facility for banks whose main job is to invest in bonds or debt with long maturity period. When credit rating of bond falls, it affects every security linked to it, creating this little yet intimidating liquidity crisis.

Now, I actually have a nice idea about developing derivatives. How about, for example, developing derivatives using the concept of annuity? A brilliant student of modest economic background can apply for this kind of student loan, and pays a modest amount back throughout his entire life. He or she will suffer less chance of bankruptcy, and bank will have better liquidity, less risk of student not being able to pay back and even potentially better return. Investor of this kind of security will be able to draw stable amount of money from this pool of money, making this security optimal for retirement fund. Besides, it can be also a form of charity, helping talented student move up social ladder without suffering suffocating financial pressure.

I must be a genius. Or dumb. Or too naiive.