100% Debt Discharge Decision In Greece Sets Troubling Precedent For Local Banks
A very disturbing precedent, for the already frayed domestic financial system, was set in Greece over the past few days, where as the linked story from On-News.gr explains, an unemployed Greek woman who owed a little over 26,000 euros to two banks, Eurobank and National, received a full debt discharge on her outstanding loans. As the blog logical concludes, this decision will probably be adhered to in thousands of similar cases. Furthermore, it should be noted the woman had a perfect payment record for 18 years, and only fell behind when she lost her job. Imagine the sheer panic that would ensue if a comparable legal decision vis-a-vis ordinary consumer debt were to occur in the US - that would be a supreme court resolution for the ages. In the meantime in Greece, a one-two punch arrives: deposits being drained and moved overseas, and bad loans being outright erased from the balance sheet by court order. At least both sides of the balance sheet are declining so there will be no way for banks to fudge their capitalization and make it seem that loan writedowns are actually a beneficial thing for book equity.
From On-News, google translated:
Bartzokas George, Attorney-President of the Citizens' Movement - Borrowers, told newsbomb.gr said: "This is a historic decision, as it is the first court decision that removes 100% of the borrower's debt . handled flawlessly Article 8 paragraph 5 of N.3869, whereby the court clears the debt because the borrower is a long-term unemployed and has not even cover the minimum, both for itself and for dependents. Surely others will follow such decisions. "
The Court rejected the claims of the banks that loan, is not determined by "who" finds the amount for the cost of living and that of her family, although included in the notice of application data permanently prevented payment and the necessary documents.
"This decision of the district court Larissa is a victory of borrowers against banks, which, let's not forget, give consumer loans without guarantees. Act 3869 will ultimately vindicate the indebted households and especially those who are truly economically impossible debt repayment, as the unemployed and the economically disadvantaged, "says the newsbomb.gr o President George IKNA Lechouritou.
It should be noted that decisions issued by local courts for citizens who seek legal assistance following the failure of-court settlement increase exponentially. It is, in the overwhelmingly positive and achieves remission in 50-60%. For the first time, but a court decision provides the total debt cancellation.
h/t Dimitrios
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jubilee, bitchez
yes! debt relief on priv/sovgn debt and jubilee!
Well it sure sucks for anyone in Greece who didn't take on a suicide loan. Any of the unfortunately responsible Greek people who correctly identified the housing market as a bubble, and thought that one day they were going to be able to purchase a house at it's uninflated, fair-value are in for a clobbering. Too bad. 'Looks like foreclosed housing won't be returning to the market any time soon. Instead, it's going to be given free to the Greeks who bought more house than they could afford. 'Turns out the responsible should have been more irresponsible.
That's some fucking Jubilee. It's living hell for any responsible Greeks waiting on the sidelines, who will be forced to watch housing prices continue to levitate, as their cash, income, investments and net worth get reamed.
I'm all for watching the banks take a beating -- but it doesn't mean that the other end of the equation should be made whole. If you're in default you're in default. Let the free market do it's thing. Housing is historically 2.5x annual income. Let it revert to the mean... Banks and government policy create crazy price distortions which ultimately hurt people.
Gaming the system is the only way to survive and prosper. None of the old ways of living work any longer. Working hard, playing by the rules, saving to build wealth - all gone. You have to learn game theory and get inside the heads of the central bankers if you want to survive, let alone prosper.
None of the old ways of living work any longer. Working hard, playing by the rules, saving to build wealth - all gone.
///////////////////////////////////////////////////////////////
It is supposed it refers to a time prior to the US. Because noboby have more gamed the own system of rules than US citizens.
Started with natural rights theory just to game it.
US world order.
GL: system gaming leads to collective destruction.
AnAnon: you are a darkie a hater with penii envy, you will never be blonde go cry in a corner
ROTFL! AnAnon, go back to your sneaker factory you hater. The Century of China is over. Your Century of Homosexuality is here because you idiots aborted all the girls under your One Child Policy. Enjoy.
Ouch!
The century of homosexuality in China has arrived? ROTFL!!!
Seriously though,the Rockefeller's really screwed the Chinese over when they suckered them into that one child policy, didn't they? Chinese civilization has endured for tens of thousands of years. It will be just a memory within a century. Wonder who will populate the vacant land? Mongols? Russians? Arabs?
ching chongs wang a dangs ....does that answer your question? why the Manichean write off of the middle kingdom? You don't like them becoming top dogs...? After the USA? WIth One billion plus, I wouldn't worry too much of one child play, as the trend can reverse any day.
Sour grapes and grumpy apes...not a recipe for future.
The Chinese will simply roll the dice with a massive war of some kind to reduce the surplus male population. They have nothing to lose and everything to gain. This is why they have sat and tolerated the fiscal insanity of the world's reserve currency for the past 20 years. The military has defacto control of the Chinese Government. So, as soon as they can reasonably shift the finger of blame for the problems of the average Chinese person to the USA, they will begin a global propaganda campaign to demonize us openly and incessantly. Then they will look to an "Archduke Ferdinand" moment that will allow them to trigger military action.
I hope everyone has food and firearms, this psycho-circus ends in pain.
i'd like to put in an argument for debt relief, clear the air and correct some misconceptions surrounding it. a lot of people are condemning debt relief or jubilee from their moral high ground, and i can relate to the sentiment.
regardless of how 'irresponsible' jubilee is, from a practical stand point, debt relief may be the last weapon we have against banksters. Little other alternative could have provided for a platform to rollback fraudulent financial transactions, since '08 we had had very few success against them, seemingly there's no other way to unwind illegitimate positions such as (morally hazardous) CDS contracts, and other financially complicated and misleading instruments that promote scams(please see Fraudulent Conveyance), most of which are simply complex financial crimes(hmm.. +1 to the oxymoron meter). the logic here is as follows: two wrongs don't make it right, but two wrongs certainly can cancel each other out. for example, the actions of repeat murderers demand the use of capital punishment, they should get what they asked for. capital punishment and debt relief are not consistent with some of our values but they are effective solutions
back to debt relief, how would it work? in effect like a flat rate wealth tax or a massive write off, a jubilee levels the overall playing field for everyone. through the process of price discovery, the market is telling us that, there are not enough money in the world to cover what we owe collectively, in other words, the people cannot create enough value to settle all the debts that were imposed on them fraudulently. a huge disconnect exists between what we produce and what our creditors say we must produce, debt relief can bridge that gap.
personally i have very little debt, (least during the hours not trading on margin) but i believe jubilee is the right thing to do at this time, to clean the slate and give everyone a second chance, to renew what we lost in this country. in order to regain the confidence of the world, we must first have debt relief.
when debt relief becomes implemented, a lot of fraudulent fiat wealth will be cleaned out, companies which have badly leveraged balance sheets will be wiped out, the super rich have much to lose. however it restores equilibrium into the market, it helps global trade, leaves us leaner and more competitively advantaged, it will ensure that we will not severely decouple from globalization, using spare labor capacity to get our GDP growing again, and gain new partnerships in the global trade (argentina).
Debt relief requires that everyone to get on board, make sure everyone is on the same page, it's the only way to go about it; and this is my effort to attempt such a thing. #CynicalSidney
If GS and JPM and Hedge Funds didn't see this coming how can you say some poor workaday slob saw it coming and is gaming the system? The rich and the banks and Hedge Funds caused this mess and they should pay. Buy and invest in the world you want. If bank bond holders lose now why should I care? Am I gaming the system? They were the ones gaming the system and now they should pay. Federal wages have been frozen for three years: (here are some more gamers that should now lose.) http://finance.yahoo.com/news/Many-government-retirees-also-apf-4250897109.html?x=0&sec=topStories&pos=main&asset=&ccode=
More Gamers: http://www.ritholtz.com/blog/2011/04/corporate-tax-rates-then-and-now/
Smoking gun of the rich gaming the system: http://www.cbpp.org/cms/index.cfm?fa=archivePage&id=3-29-07inc.htm
I'm not a fan of when people lump the "rich" in together. There's a huge difference between how much money, how it was acquired and how it is used.
You'd best start hating the English and the French too, because they are the ones who systematized the concept, even though it already existed in all humans.
Christ, what the fuck is wrong with you? Do you REALLY think that human beings own neither themselves nor the things in their possession? Are you saying that men do not gain exclusive right to land by living there, establishing boundaries, and mixing their labor with it?
What the fuck do you want? A return to savagery, where men kill men every day over scraps of food, and where no-one makes more than they need because it will just be stolen from them? A world where there is no division of labor?
So the natives who lived here before Europeans, by your definition, owned this land. Then what? Savagery came with a gun, a steel blade, and a pox infected blanket, took what was theirs, claimed righteousness by jotting new lines on a piece of paper, and this you stand by as the correct order of things.
Land ownership is a joke. No man creates land. Man is subject to the land. Without land - healthy, viable land - man and all his imaginings like governments, currencies, state lines, and even ownership, cease to exist.
Now pay attention: When man can own land, you immediately create a slave and a master class. The owners and the owned. Those with no land forced to rent from the owners, further enriching the owners, who "buy" more land. The population increases, reducing the demand for the labor of the slave class, reducing their wages, and further distancing them from ever becoming "owners" themselves.
Native peoples lived without currency, without masters, without ownership for hundreds of thousands of years. They managed to do so without destroying the life giving planet on which they relied. Capitalism has been around for a blink of an eye, and has coated the world in nuclear fallout, acidified the oceans, offset the atmospheric balance, decimated rain forests and other old growth, eviscerated the top soil, and on, and on, and on.
This system has eaten everything, and is now eating itself. It doesn't care about you or your money worship. Nature bats last bitches.
TDoS, you knocked that one outta da park!
One of the reasons there was an American revolution was because the local Europeans wanted to expand westwards, and British/English law forbade that, because it was recognised that that land belonged to the indians.
There are still disputes over land ownership in Canada because they respect the fact that the land belonged to other people relatively recently.
Most of the buildings in my city are many hundreds of years old, and I bet you can trace the land ownership back 1000 years to the Normans, nearly to the Vikings.
So land ownership does work, but for the first few hundred years it might be contentious. I would never buy property in North America for that very reason.
NIcely said.
Ever heard of the Aztecs, or the Egyptians, or the Greeks, or the Pheonicians?
I hope you aren't suggesting that the Europeans are the root of all evil and the originators of oppression.
I never once mentioned race. This isn't about race or national origin. It is about cultural memes. It is about the ideas we hold in our heads which then guide our actions, and whether or not those actions are ultimately sustainable or not, whether they are exploitative or not, etc. If they are, then the ideas in our heads are toxic and need altering.
That's the amazing thing about our greatest predicaments: We can solve them merely by changing our minds. If we change our minds about what it means to be a human, to live in concert with our human and non-human neighbors, to give back as much as we take, to see that the value in a tree is in it living and trading respiratory gasses with us, not in cutting it down and turning it into Louisville sluggers.
We are at a critical juncture in our history, where we need to evolve or else perish. Everything must be on the table. No more rearranging deck chairs. An infinite growth paradigm cannot last forever, and there is no longer enough energy to back up the money we would need to create in order to plug our debt hole and double down again.
Evolution doesn't care if a species wants to change or not. They change or die. That is our choice. Change our minds, and thus our actions, or die clinging our crumpled and useless money.
I agree GL. The perverse incentives set up by corrupt central bankers and governments destroy economies by this very mechanism. When the monetary system is subverted the economy is corrupted; and when the economy is corrupted the people are corrupted, and then the whole system collapses. The only long term solution is sound money: for true prosperity we need gold as money coupled with a 100 per cent reserve banking system.
The only way to win is to not play the game.
You have to play the game at some level. Unless you move to Alaska and NEVER use any product from the outside world.
Perverse though it may be to do so, I wish to explain myself further.
I do not advocate gaming the system, nor do I applaud it as a survival mechanism. I merely observe that the old rules no longer work. I stand by my dictum that you have to learn game theory and get inside the heads of the central bankers if you want to survive, let alone prosper. I did not say that this is a Good Thing.
In the 1960s my mother, who was a chicken farmer, read Carson's "Silent Spring", and worked to abolish factory farming. She had a particular hatred of battery hen cages. She failed in this endeavour. In the 1980s my father, a respected economist at the World Bank, returned from a mission to a notably flea-infested part of Africa and described the work he did as "the aid racket". Towards the end of his career he became so disillusioned by the World Bank, the FAO, and (particularly) America, that he lost heart. My parents worked all their lives, became wealthy, bequeathed their wealth to me, and died sceptical about the entire wealth-creating process, and the powers that were built upon it.
I do not like gaming the system. I am just saying that it's the only game in town.
BTW I think gold has bottommed.
This "jubilee" business seems over the top. If she got her debt discharged, but in exchange she is out of the house or net worth set to zero, this is nothing more than a bankruptcy proceeding.
In 41 of the 50 US States home mortgages are recourse loans, meaning that when a home owner walks away from a home with underwater mortgage and the bank sells the home for less than the home owner owes on the mortgage, the bank can get a lein against the homeowner for the difference.
Banks then sell these leins for one cent to seven cents on the dollar to collection agencies. The collection agencies sit on the leins, waiting for better economic times to arrive, and then go after the those with judgements against them... meanwhile interest on the judgement accrues at ~ 8% per annum.
The collection agencies have 20 years to begin action against the former homeowner.
Does any of this sound like debt forgiveness?
Mish has an article about this here... "House is Gone but Debt Lives On"
http://globaleconomicanalysis.blogspot.com/
The article is about Greece. I have no idea if this was a formal bankrupcy proceeding or not, just trying to cut through all the crap sensationalism that people whip themselves into by reading a headline.
But all the same, you example seems very fishy to me. If you go through bankruptcy in the United States, you could sue a collector who tries to collect on a recourse loan pre-bankruptcy, I would wager. If you didn't get square with the law and simply left a bill then a collector could try to collect years from now, but they would have to pay off a lot of senators and representatives to make this stick.
This Greek lady prolly had a negative net worth set to zero. This is a good thing for her.
Did you read the link? If not, I suggest you do so.
Most home owners in the US that are walking away from their underwater homes are not going through bk or even seeking advice from an attorney familiar with mtgs.
At any rate read the link and we can discuss the problem further. My point is...
debt forgiveness in Greece, like some wines, does not travel well.
My point is: face the consequences of your actions and don't just walk away. Failure to do this is the choice of those parties, and the implications and costs should fall to no other party but them.
So much that is wrong with the world hinges on the failure of this one single point.
I understand poverty quite well from my youth, and it has less to do with money than most think. Poverty is the lack of apparent choices available to a person, and the sense of helplessness this imparts. It informs the sense of helplessness in many posters' comments. But life is never hopeless when one accepts the truth of their situation. The truth immediately makes choices available.
Well said jm.
how is it fair that I bought a house in the bubble years and therefore overpaid as a result of the FED playing games to make the economy look healthy. now the bubble pops, I lost all my equity as my house value declines.... next I lose my job and my ability to repay the debt on a house that contines to sink in value... your suggestion is that i work three jobs to try and repay the bank (which admittedly is not the FED- but part of the corrupt system run by the FED)... sorry man, but i am not going to waste my life trying to prop up the banks. true savers will get screwed.... but the truth is that we all got screwed by the same people. they are the ones that should pay the price to fix things, not the little people. btw, i did not buy a mcmansion, just a small house well within my budget.
so fucking sick of this - why did you buy the fucking house?! if you didn't know at the time that you were "overpaying" whose fault is that? do you still have a babysitter?
Does the bank need a babysitter too? Seems to me there were two sides to this fucking deal. In fact, isn't the sophisticated lender in a much better position to decide the risk of a housing/economic downturn? So why not rephrase your question: "why did you loan money to the buyer of the fucking house? Didn't you know she was overpaying?"
I've got a car I'd like to sell you.
Sell it to the woman in this story. I'm sure we can find a banker who will lend her more money to buy it.
that'll be $5,000,000 thanks. boy, banks and greek women are Stooooopid.
Of course the bottom end knew they were overpaying.
Of course the banks knew they were lending to deadbeats.
Of course both ends knew this would eventually blow up.
Of course both ends knew the prudent responsible sheep (and their sons and grandsonds) would pick up the tab.
It has worked that way for millennia.
Two questions:
1) What was rent?
2) What was the trajectory for rent?
Hindsight can be a form of tunnel vision.
rent was the better deal, esp. w/trash and water included, no maintance $'s, etc. and "unit available" signs all around. a lot of the underwaters are people who had bought and sold at least once since 2000. it sounds too good to be true for everyone else. . . sick of it.
a rather silly comment, really. most people didn't realize that they were overpaying because the way our system works, most are kept deliberately ignorant of the "big picture". If i take your logic to its conclusion then, no one should have bought a house from 2004 on because they should have known that big banks and the FED were creating the biggest financial bubble in world history for the purpose of collapsing the middle class and literally stealing wealth from millions of people. yeah, guess we all should have seen that coming... but, just because I fell for it back then, doesn't mean that I am going to play this game twice. i will not be their debt slave any longer. the debt based slavery system has to end, let the chips fall where they may. savers and debtors alike get screwed in this system.
If your home had risen in value, would you have considered an equity loan? If you sold the home and moved to a less expensive residence, would you have kept the gain?
If so, that sounds eerily familiar to a bank prop desk that believes in privatized gains but socialized losses.
If it is wrong for the banks, it is wrong for everybody.
Fair? Fair?
Come on... one must shy away from such questions which are easily retorted to by saying 'life isn't fair'.
For more detail - you overpaying for a house wasn't so much as the Fed (it takes 2 to tango) and over-eager buyers not realizing the intrinsic value of a home, as it was merely due to bad luck on your behalf for being an unfortuante buyer in that time.
You saying you will walk away from this is no better than the hippies right now camping outside WS, living on hard working Americans tax $$, seemingly protesting "for the people" yet in reality have no clue what they want besides from some media exposure which they, rightfully so, aren't even getting.
Your bread is obviously buttered on the banker side. After this point your comments will be considered with that caveat.
..and yet, it might explain why i prefer to spend my little free time reading and responding on finance-oriented websites as opposed to wherever people buttered for free with my tax money spend their days.
It may also explain and reveal that you are a shill. You can't defend these bankster fuckers and also claim that anyone who is against them is somehow sucking off you teet. You're really not as important as you think you are. Really.
Face the consequences? And what would those be? Being a debt slave for the remainder of a 30 year agreement?
Walking away has it's consequences. A mortgage contract includes remedies and penalties for default; loss of equity, credit damage.
I don't know anyone who has ever asked for their mortgage to be purchased by Fannie or Freddie. If it wasn't their decision how can they be held culpable for the Bank's and Govt's decision to expose the public?
The consequences vary by circumstance, but in every case it implies living within one's lowered means, at least for a time.
Don't take my comments as supportive of bank bailouts. Taxpayer abuse is what keeps banks from actually taking the steps they need to shore up their balances sheets. As painful as this is going to be, I'm coming around to the idea of ending this charade up to the point of systemic meltdown.
Very few of the problems of the global economy areanywhere near resolution even after Civil War style quantitative easing and New Deal^2 style fiscal stimulus.
I agree. Let the banks face the consequences of writing loans that any moron could have seen would not be paid back. Or does personal responsibility only apply to persons? Wait, never mind, corporations/banks are persons too according to U.S. law anyway. Sucks to be a person when you have to take responsibility for mindless greed and short-term thinking. If there were really personal responsibility, we would see clawbacks of banker bonuses that were paid from origination of these ridiculous loans.
I think it useful to see why banks get such treatment, not that there is anything right in it. Banks play a crucial role as economic coordinators.
Every business has to roll their debt. When you impair their bank, it is harder for them to do it. Businesses will either have to get an extension of day to pay, or they will have to pay more in financing. This puts some small chunk companies out of business. So there are more unemployed people. They have trouble making their mortage payments, which makes banks even less willing to roll debt. The combination of fewer customers (due to lowered income through unemployment, inability to roll debt and extend days to pay, among other things) in turn puts remaining businesses under pressure. This is all a vicious cycle. Easing bank stress through Fed policy is thought to be a way to short-circuit this cycle. Whether it works or not is debatable at this point.
I have no problem with stopping this cycle. But I think that banks should have been placed in receivership as a condition, or some similar arrangement like Woori Financial or Mizuho, if bondholders faced liabilities in excess of their capital investment. But that would mean 401ks vaporize because equity = 0, and bondholders too.
Not really good options anywhere you look.
In the US, banks are rarely holding these loans. They sold them to USA taxpayer (FNMA) a couple weeks after they wrote them at a profit with many fees.
Thus my clawback comment. The banks made money making loans they knew would not be paid back. The taxpayer is now left holding he bag. The simple solution is to disgorge the profits and return them to the taxpayer.
Most home owners in the US that are walking away from their underwater homes are not going through bk or even seeking advice from an attorney familiar with mtgs.
Yes, it's called "strategic default" or something like that. You know, the same thing fat cat Wall Street banks do.
"Your credit rating" is how they keep sheeple like you hooked into their debt game. You sheeple out there wana keep that credit rating good.
Thankfully more people are saying fuck that credit rating and walking away from debts because Wall Street destroyed the value of their homes and / or destroyed their jobs.
Fuck that credit rating. Destory it. You're forced back on a cash basis where you should have been the whole time.
... and your mailbox doesn't get junked up with credit card offers anymore. Another benefit.
If everybody did that, the housing market would collapse. Just fucking crash. Overnight. And banks would collapse, exactly what everybody wants to see. And homes would be affordable again. What everybody wants to see.
It wouldn't stop there. All big ticket items would collapse. Cars. Appliances. Boats. College tuition. Things people go in debt for.
The debt game has to stop. That's how we break fat cat banks. That's how we break Wall Street. Not stupid pointless protests like "Occupy Wall Street".
How many of those stupid morons up there are neck deep in debt, firmly hooked into Wall Street's debt game?
DEBT IS WHAT KEEPS THEIR DAMN PONZI SCHEME GOING.
If they can KEEP YOU IN DEBT and PAYING YOUR LAST DAMN DOLLAR to maintain that DAMN CREDIT RATING you think is SO FUCKING IMPORTANT, then THEY'VE GOT YOU RIGHT WHERE THEY WANT YOU.
SHEEP !!
SUCKER !!
SERF !!
SLAVE !!
+1 Excellent rant
However, first you'll have to pry 95% of the suckers away from the TeeVee - they're brainwashed and don't even know it.
so, the reason this made any news in greece is that, unlike , say, the US, erasing debts through a bankruptcy is very very rare, almost unheard of. On top of that, the law under which it was done is a very new law and this is news because this is one of (perhaps the) first applications of it. Indeed they mention this in the article, that the law actually was applied without a problem- perhaps because it hasn't been tested in a court yet.
In greece you can still go to jail for unpaid debts (uncommon, but yes it still happens, especially if the court suspects you have the means to pay, or if there is some evidence that it was dishonest, like writing bad checks or something)... the total debt circus the politicians are running is an ENORMOUS contrast to the strict regime the people in greece face. Mortgages are typically of the sort that you are still on the hook for the loaned amount even if the property is foreclosed and siezed, for example, and this particular case made the news because people getting debts erased by a court ruling is extremely rare.
I will point out that actually foreclosing on property and evicting the occupant is also a very slow and difficult procedure in greece. If someone lives in it, evicting that person is legally difficult. Not impossible, but difficult.
"Does any of this sound like debt forgiveness?
Mish has an article about this here... "Ho
use is Gone but Debt Lives On"
And that is exactly why housing is not coming back for a MINIMUM of 20 years. There are no jobs, the inventory cannot be sold, the baby boomers are going to keep on retiring, and the people who got burned won't buy, even if they could. Laugh in the face of anyone who tells you it is going to recover in less than ten year. It will probably be more like 30 years.
Ha! House debt forever, and then there is that scumbag made in Amerika collection agency..
And there goes your inheritance A-hole.
If you think imigrating to Amerika is easy, Try de-immigrating.
That is what you call impossible.
Keep working you immigrant Amerikan slave.
For nothing.
normally that scenerio may be true but today with the chain of title broken in the USA for so many loans the effectiveness of the deficiency may not be enforceable. Further there are many ways to avoid the party that picks up those - deficiencies - they are not liens - you can file a UCC against the person but absent a W2 for a wage attachment / garnishment - difficult to perfect
Hard working and responsble folks better buy some KY b/c they are taking it hard and painful. Seems like KY has sold out in Germany.
German hetero "strap on" girlfriends.
Ouch.
Popo: that's a strawman argument; "Instead, it's going to be given free to the Greeks who bought more house than they could afford." that will never happen! debt relief doesn't mean they get free real estate. did you read the article at all? for 18 years this woman made prompt payment on her debt obligations. furthermore, suicide loans are exploitative, it's a form of enslavement, therefore not a legitimate transaction. debt-based assets are going to be devalued, regardless of jubilee and debt relief. having people owe money they can't ever pay back does not alleviate the situation, and debt relief does not inflate housing market.
"living hell for any responsible Greeks waiting on the sidelines, who will be forced to watch housing prices continue to levitate, as their cash, income, investments and net worth get reamed" runs contradictary to your statement: "I'm all for watching the banks take a beating" and greek banksters are anything but responsible.
This ruse of responsible v irresponsible is just one more divide and conquer technique.
When will we be able to move past the childish tendancy to compare what we got v what little Tommy got? When will we be able to move past using money to measure our own happiness? Especially in comparison to others?
I would gladly 'suffer' to have the system reset away from the current private central bank fractional reserve system. If that means Jubilee for the indebted (I have no debts) - then so be it.
Many of the people in my generation said that we did not want to become just another number. 30-40 years later, so many of my peers have defined themselves by their credit card limits, the amounts they were allowed to borrow for their homes, their ease of refinancing their mortgages, the cost of the cars they drive, the cost of the schools for their kids, the granite on their counters.
Monetized self-worth in a world measured in digital currencies. Just numbers.
External locus of control...fit for slavery.
It has always been the responsible vs the irresponsible parasites. Just because the system crashes, what makes you think something better will come of it?
Part of my point is - why should I care so much what others get and be jealous of that? IMHO peace and happiness are inward looking exercises.
In your definition, does one get to be defined as "responsible" because he lives in a mansion and is driven to the office in a Rolls, even if he and his banker buddies are largely responsible for the poverty of millions from whom they sucked their own wealth? And do the millions of average people who get crushed by the boom and bust cycle that enriches the "responsible" guy, fit your definition of irresponsible parasites?
So that society gets a Mulligan and in a debt jubilee we just go back to square one with all our pieces intact, happy and full of optimism?
Frankly, I have little idea about the consequences of a debt jubilee, but I suspect you and everyone you know would lose his job, even if one is a business owner. Certainly millions would lose what money they have in banks. Also, if it is done once, many would assume it can be done again. And again. Like QE, it would be Jubilee forever.
The other way it could go post jubilee is that a new bubble would start immediately, because we would have nationalized moral hazard. Everyone would realize that irresponsibility is the way to go, since the worst that can happen is Jubilee II. We would all take as much as we could get, knowing that it carried no consequences. We would all become bank prop desks, with privatized gains and socialized---of jubilee'd---losses. We would build 8000 sf McMansions instead of the tiny little 4000 sf ones in the last bubble. Prices would rise even faster than before, because "no price would be too high", since failure would just mean Jubilee II.
The only way to minimize the pain, and prevent a new bubble, is to hold everyone responsible for his mistakes. Every dollar paid back is better than none. Those who are forced to struggle to repay would serve as a reminder to everyone else to consider the consequences of one's actions. Banks and bankers and consumers---nobody gets a free ride. Clawback the bonuses and unlimited liability for any officer of an institution that took bailout funds or utilized the alphabet soup of Fed Freebies. Not a penny of credit ever again for anyone who defaulted. Crush moral hazard in all its forms.
Who says she got to keep the house? Full recourse mortgages tend to be the standard on this side of the pond, she probably lost her home and had to swallow the remaining debt any way.
The problem now is that the "Lifeboat Rules" have to go out the window. It's women and children first, until you realize there aren't enough lifeboats and the water is freezing. Then those who live are those who fight their way onto a boat and are strong enough to take an oar and whack anyone who tries to overcrowd it.
"Let the free market do it's thing."
I understand your point about moral hazard, but the free market IS doing its thing. This was a private contract that was entered into by a bank and an individual. Both knew that the courts (e.g., the "rule of law") would govern any dispute that arose including a change in circumstances that made repayment impossible or difficult. Presumably the bank has teams of lawyers who could have written the contract in a way that this result would not occur. Or the bank could have requried secured collateral. The bank was greedy and the debtor was greedy and the free market system of contracts and laws resolved the dispute.
Damn right! Makes we want to go out take a big loan before the interest rates rise. Here is the difference in the US: use the loan to buy "stuff" not a house. Courts here won't let you walk away with a house in bankruptcy, but you will probably get to keep a lot of your stuff. After the default, sell the "stuff" on Ebay and keep the money. I hate being responsible.
Popo :
Ten to one it'll happen here too. Too bad for we stupes who paid off our mortgages, pay off our credit cards, and don't buy what we can't pay for.
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nt
My understanding of a jubilee (no, I didn't look it up) is that it is a rare event the cost of which is borne by a supremely solvent sovereign. I don't believe that this is what we have here. Debt forgiveness will now become SOP with the costs borne by those serfs who currently are solvent or serfs who borrow in the future (OMG, "the children and grand-children"). I am a solvent serf, otherwise I would go out now and load up on as much debt as I could get my hands on.
My understanding is a biblical type jubilee was borne by the lenders, not the sovereign.
Yeah, and that made the lenders more responsible, didn't it? That's the difference when lenders think that the "system" will back them to the hilt. Knowing that debt could be expunged, and that the original lender will suffer in default, makes for more rational lending.
What would make a lot more sense is the USA would be something in between--when Clinton passed the student loan consolidation measures which capped interest rates to about 3.5%, folks with student loans consolidated their high interest rate loans into these 3.5% loans, which directlt freed up large amounts of money to spend on the economy.
What I propose is that the gubermint force TBTF banks to eat their peas too and/or create a federal consumer credit institution by which consumers could consolidate all credit card loans with their high interest rates into a federal backed consolidated loan with a much lower rate.
By allowing this, banks could take these loans off the books while consumers could directly spend the difference in the interst rates into the economy. Multply 1000s of people times the difference between 3.5% and 18-25% interest payments a month and that is a huge chunk of cash going back to the economy.
I realize this is fraught with philosophical problems, but its sensible. It should be OUR turn now, not the banks. You want to buy an election? Seduce me with that, Obama!
Ok, junk at will, I shouldof left Obama out of it..
The consumer credit loan consolidation is a good idea, as long as people aren't allowed to go borrow more to get back in the same situation. For those of you old enough to remember, one used to be able to deduct interest on your credit cards from your taxes. Never thought that was a good idea, but the consolidation idea is a good one. Fuck the banks, getting free or almost free money and turning around and lending it out at usurous levels to the very same people who bailed them out. If they lend any money at all.
I was helping a friend who lost a good paying job (got a lower paying job to replace it), try to get a consolidation loan. Even though she had been keeping up with payments, the banks lifted her CC interest rates from @10% to up to 29% (reason? debt to income ratio!). Even with a co-signer, the banks would not give her a consolidation loan to lower her interest and payments. The banks' greed has done this to themselves. What recourse do people have? They either live like paupers to try and pay back with high interest or default and live a decent life.
Credit card terms are subject to change at very short notice and your only recourse to escape the changes is to pay the card off.
You can't count on being able to roll them to another card or borrow to cover them elsewhere.
Spending money you don't have (and thus borrow from the credit card company) is reckless. Besides the high interest rates (comparied to ZERO interest if you save the money first), it puts you at the mercy of the credit card company.
I don't see any problem with using a credit card as a payment mechanism -- but pay it off before any interest is due.
Cindy_Dies_In_T... :
Fuck anymore taxpayer bailouts!! If people borrow, they pay.
Greece - the last remaining Soviet Republic
somewhat out-of-the-box...
What? The general public will get debt-free by court? LOL!
Jubilee by death of currency is more like it.
Hmmm. I will believe it when I see it.
I think the Zionazi bankers will still get their pound of flesh no matter what.
The NWO oligarchs own most of the world's governments and will just change/bend laws to suit their whims, as usual.
JPMorgan Chase recently donated an unprecedented $4.6 million to the New York City Police Foundation. The gift was the largest in the history of the foundation
http://www.jpmorganchase.com/corporate/Home/article/ny-13.htm?TB_iframe=...
Coincidence? Funny.
returning a very small percentage of what they have stolen from their pension fund over the years? How odd. They seem a bit, er, frightened.
Paying for the illusion of safety. They should have bought their own guns.
NY police look more like NAZI SS everyday. JPM donated money the NYPD you say? That's your "sign!"