If your house is worth less than the loan you took

Assume you bought a house for LKR 100 mn. Assume that you had cash of LKR 5 mn, and you took a loan of LKR 95 mn to make the purchase. Now, suppose house prices started to tumble, and the house is now worth LKR 70 mn.

Now, one of your richest uncles passes away, and leaves you off with LKR 100 mn. What would you do? i.e. 
a) pay the loan off
b) default on the loan, and buy a better house elsewhere (all the prices are going down, so there is this house which was LKR 140 mn then, but now going for LKR 100mn…)

:)
fyi: I am not sure what I would do…

Should interst expense be tax deductible?

Interest expense is tax deductible for corporate tax. But is this something that should be disallowed, say 2015 onwards?

Why? because at present, the tax payers are subsidising a private company because of its choice of funding.

Say company x is 100% equity financed, but company y is only 50%  equity financed. If its in the same business, I don’t see why tax payers should subsidise company y.

Karuna, AIG: Size does matter

If Karuna was of a low rank, he would probably be languishing in a jail. But he is not. He was one of the bigger fish.

If AIG was the name of a USD 100,000 annual turnover business, it would have failed if it ran out of money.

Size does matter.

What about appointing Karuna to the Sri Lankan Parliament? Morally, I can say that it is wrong to appoint a former high ranking terrorist, who planned and carried out attacks and allegedly, used children in the war.

I can also say that it is better to bring a former terrorist in to the democratic system, forgiving their past deeds – else, a terrorist will always be a terrorist.

Sometimes, I guess we have to do what is practical, and not what is “correct” or “the proper thing to do”.

So, what if Prabarkaran wants to join the parliment? Well, he is the biggest fish: and doubt he wold ever want to be a MP. If he does, Brother India would wait for him.