I was served the banner ad above on NYT.com. Intrigued, I clicked. Could this really be an online pawnshop?
Yes, it could be, and it is. But the difference is, Borro wants your chinchilla, not your chainsaw.
Borro—Sound it out. Pretty clever, no?—caters to people who have more nice stuff than money. Or sense. Because what Borro accepts in hock are items in the following categories:
Jewelry and diamonds
Gold & precious metals
Fine art & antiques
You notice what’s missing? That’s right, tools, guns, stolen electronics and musical instruments, which in my experience are the bread and butter of traditional pawnshops.
Pawnshops are a major part of the so-called fringe banking industry, which exploits people who don’t have access to traditional banks, typically because they live paycheck to paycheck.
I will assert that pawnshops seem to represent the least exploitative of fringe banking entities. At least their business model isn’t built on creating a growing cycle of indebtedness, like payday lenders or “buy here, pay here” used car dealers. Hock transactions are largely cut and dried; you give me your gun, I loan you $75 dollars. If you don’t pay me back in full—plus a buttload of interest—I get to keep your gun and sell it.
Borro would seem to be different, because anyone who has $50,000 tied up in a luxury watch or fine wine obviously has enough cash to open a bank account. Or had enough cash at one time.
What Borro represents, I think, is the extent to which our economy is dependent on consumer borrowing and spending. Hey, Mr. or Ms. Upper Middle Class: you want to live like a true one-percenter? Go ahead, just sign on the dotted line and the trappings of luxury living can be yours.
Until the rent on your penthouse is due.
But the real one-percenters? They’re smarter than that. They’re the ones funding ventures like Borro, which would seem to be just another way they can use their vast wealth to wring more of it from the rest of us.