This page has been archived and commenting is disabled.
Guest Post: Endgame: When Debt Is Fraud, Debt Forgiveness Is The Last And Only Remedy
Submitted by Charles Hugh-Smith from Of Two Minds.
Today I present an important guest essay by long-time contributor Zeus Yiamouyiannis, who suggests that when debt is essentially fraudulent, then debt forgiveness is both the logical and the only remedy.
Endgame: When Debt is Fraud, Debt Forgiveness is the Last and Only Remedy, by Zeus Yiamouyiannis, Ph.D., copyright 2011.
Introduction
Finally serious economists are considering a position I have been maintaining and writing about since the 2008 financial meltdown. Whatever its name— erasure, repudiation, abolishment, cancellation, jubilee—debt forgiveness, will have to eventually emerge forefront in global efforts to solve an ongoing systemic financial crisis.
“On a grand scale the only way to erase counterfeit money and (counterfeit) assets of hundreds of trillions of dollars is to erase the debts associated with those fake assets. (Let me underscore again, these are not “toxic” assets, they are fake assets.)… Forgiveness in general, and forgiveness of debt in particular, stand as virtues if they free us up to acknowledge, address, and learn from our culpability, start anew, and create forward.” (The Big Squeeze, Part 3: The Quiet Rebellion: Civil Disobedience, Local Markets, and Debt Erasure (January 29, 2011)
Debt forgiveness, therefore, accomplishes two important things. It eliminates the increasing and outsized portion of productive enterprise to pay off unproductive obligations, and it clears the ground for new opportunities, new thinking, invention, and entrepreneurialism. This is why the ability to declare bankruptcy is so essential in the pursuit of both happiness and innovation.
Currently we are mired in a “new normal” and calls for “austerity” which are nothing more than the delusional efforts of a status quo to avoid the consequences of its own error and fraud and to profit evermore. So bedazzled by the false wealth created by debt multiplication and its concomitant fantasy of ever-higher returns, this status quo continues to be stupidly amazed that people are not spending and that the economy is not picking up. But how could it be otherwise?
Productive wealth has been trapped in a web of parasitic theft, counterfeiting, liability evasion, non-regulation, and prosecutorial non-accountability. All the fundamental attributes of a functioning exchange economy have been warped to reward creative criminals. I spoke extensively about this in my posts from 2008. (Imaginary Worth, Empire of Debt: How Modern Finance Created Its Own Downfall (October 15, 2008)
The unsustainable nature of debt
Two observations: 1) Fabricated/parasitic so-called “wealth” destroys value by diluting the value of productive wealth. 2) Debt/credit that cannot be paid back is never an asset and is always a hot-potato liability (needing to be foisted to a greater fool to garner “profit” and transaction fees):
“The models [modern debt are] based upon had no contact with reality. They assumed unlimited growth and ability to pay. When matched against the reality of people paying ten times their salary for mortgages that actually added more money owed to their principal (i.e. with negative amortization), required no money down, and set up “balloon payments,” large step-ups in payments after a few years) there is no possible way they could NOT default in a predictable span of time.” (Part II: How the Credit Default Swap Scam Works (October 13, 2008)
Systemically, all debt that charges a percentage (“usury”) originates in delusion. Debt grows exponentially indefinitely, growth (income and otherwise) cannot. This leads to a widening condition where the fruits of productive “growth” devoted to interest payments increase until those fruits are entirely consumed. (The Elephant In The Room: Debt Grows Exponentially, While Economies Only Grow In An S-Curve (Washington's Blog)
Once this happens, stores of wealth (hard assets) begin to be cannibalized to make up for the difference. You see this in Greece with its sale of public assets to private companies, and in middle-class America where people are liquidating retirement accounts to pay for their cost of living.
This problem is compounded by a private Federal Reserve that lends money into circulation at interest, and then allows the multiplication of this consumer debt-money liability through fractional reserve banking. The money in circulation today could pay only a small fraction of the total private and public debt. That fact alone is evidence of a kind of systemic fraud. “If you just work hard enough, save, and make sensible decisions, you can get out of debt” could only physically work for a bare fraction of the population, given the money-to-debt ratio. The rest would have to simply default to clear the boards.
This is why debt forgiveness makes not only moral but rational, mathematical sense. Finances require balancing to be coherent. There must be some way to redress systemic imbalance. One has to be able to “zero the scales” to get an accurate weight of value and to re-establish healthy value creation.
Voices in the debate
Some analysts are beginning to see the forest through the trees in terms of debt forgiveness. Steve Keen, Australian economist and current deflationist, and Michael Hudson, American economic contrarian and prescient essayist, are both using clear-sighted reality-based financial analysis to debunk accounting games that obscure the untenable debt situation and to call for debt forgiveness.
How can selling sovereign assets and imposing austerity on Greek citizens (taking money out of their hands through higher taxes and lower benefits) do anything other than hollow out value and contract the Greek economy in the face of a deep global recession? Michael Hudson: It can’t. Greece’s debt needs to be written off.
“It seems unreasonable and unrealistic to expect that large sectors of the New European population can be made subject to salary garnishment throughout their lives, reducing them to a lifetime of debt peonage… (T)he only way to resolve it is to negotiate a debt write-off…” (The Coming European Debt Wars: EU Countries sinking into Depression (Michael Hudson, Global Research, April 9, 2010)
("[We’ll Have] a Never-Ending Depression Unless We Repudiate the Debt, Which Never Should Have Been Extended In The First Place" (Washington's Blog)
Why isn’t “quantitative easing” and flooding the U.S. economy with debt-money working to prime borrowing and lending? Steve Keen: Because the money is going into deleveraging in a time of overextension:
“Bernanke is throwing (a) trillion dollars into the system. Rather than that leading to ten trillion dollars of additional credit money, creating the inflation people are expecting, that trillion dollars is all that goes in, and people deleveraging actually reduce their level of spending by more than a trillion dollars by trying to pay their debt down, and it cancels out what the government is trying to do… We need a 21st century jubilee.” (On the Edge with . . . Steve Keen (Max Keiser, video)
Other well-known commentators are not seeing the debt forest at all. In their contentious debates over deflation and inflation, neither Rick Ackerman nor Gonzalo Lira seem to be aware of the overwhelmingly fraudulent nature of present global debt-- including the 600 to 1,000 trillion dollars of fabricated notional wealth represented by the derivatives markets, fraudclosure, and a host of other sources.
Rick Ackerman: “’Ultimately, every penny of every debt must be paid — if not by the borrower, then by the lender.’ Inflationists and deflationists implicitly agree on this point… and we differ only on the question of who, borrower or lender, will take the hit.” (Let’s Think This Through Together....)
I posted a pithy response in the comment section:
“Both Rick and Gonzalo left out the obvious third way--debt forgiveness. No… debt does not have to be paid by someone; it can be absolved, especially debt created upon fraudulent and/or counterfeit-ridden practice… (D)erivatives are not real wealth, and neither was the ostensible climb in the values of housing resting in large part on those phony-wealth derivatives.
The only “real wealth” here revolves around ability to produce real and needed goods (to allow us to survive), and the ability to create something that increases one’s quality of life (to promote our thriving). Precious little of the present global economy involves either one of these. Yeah, if we use FASB standards and Goldman Sachs accounting, we can pretend our worthless junk is all really simply very rare, “unique condition” collectibles worth trillions of dollars.
I’ve got a better idea. Take our financial junk out of the global attic in boxes, put them out on the front lawn, and see if anyone wants to pay a few bucks for the various items, give away the leftovers to anyone interested passing on the sidewalk, and recycle, donate, or dispose of the rest. It’s a moving sale, and if our economy is going to get moving, maybe we ought to have one.” (Zeus Yiamouyiannis April 6, 2011 at 4:11 pm)
How it might play out
This subtle debt extortion creates a system of never-ending debt-slavery for a vast majority of the population. When this “manageable” slavery is aggravated by a desire to use hardship to extort ever greater assets from the overburdened at ever cheaper prices (what Naomi Klein calls “disaster capitalism”), by open and unapologetic widespread fraud, and by the unjust offloading of risk and liability to taxpayers who had nothing to do with poor decisions of private banks, then the systemic abuse is revealed in the daily lives of citizens.
Debt creates scarcity, which stimulates fear, which drives manic competition, which favors opportunism, collusion, and concentrations of power, which translates to abuse, which results in a collapse of legitimacy for the economic system. Overreach causes a breaking point, and we are getting close to it. Will the response be warfare, taxpayer revolt, political upheaval, mass default, debt forgiveness, something other, some combination? I have predicted pockets of violence would be mixed with some softer combination of taxpayer revolt, mass default, political upheaval, and debt forgiveness, along with a return to community exchange to meet basic needs. (The Big Squeeze, Part 3: The Quiet Rebellion: Civil Disobedience, Local Markets, and Debt Erasure (January 29, 2011)
This possibility of epic reprisal may very well compel banks to come to the table around debt forgiveness to avoid violent backlash and criminal prosecution, even over preserving their gravy train companies. The bitter irony of these companies and their galloping greed is that they ended up victimizing each other by selling junk to each other and extracting all the real value in salary and bonuses. Their assets rest on notional values, that when unmasked would drive each into immediate insolvency. They have simply been scam artists, producing little value and extracting mountains of money.
What might this look like? Looking at present trends and using the very useful framework of Kubler-Ross’s stages of grief, it might go something like this…
Average debtor:
1) Denial: Liquidate savings to pay for over-priced house and cost of living.
2) Anger and fear: Exhaust resources, experience want, compounded by austerity measures.
3) Bargaining: Attempt to negotiate with bank through HAMP and other mechanisms to lower payments. Banks don 't bite and even have incentives to foreclose.
4) Depression: Lose/default on the house and move in with family or cheap rental.
5) Find out life is better without being a debt slave and spend more time with community and the ones you love.
Bankers:
1) Denial: Collect 144 billion in bonuses after financial collapse and laugh as not a single trading day loss arises for zombie TBTF banks completely subsidized by governments.
2) Anger: Express false righteousness, indignation, and hubris over even modest/toothless demands/regulations attempted to be placed on them by governments. Exhibit sadistic zeal at being able to simply claim you own and liquidate properties they have no clear title to.
3) Bargaining: Experience dawning awareness that may have just cooked your own gooses as strategic defaults skyrocket, populist demands to prosecute fraudclosure gain traction, and quantitative easing ad infinitum dwindles and fails to keep stock prices artificially aloft. Improvise panicked attempts to "be reasonable" and actually negotiate, once the asset and money flow well runs dry.
4) Depression: Contemplate and realize possible bankruptcy by big banks. Retreat to the Hamptons to hire criminal defense lawyers, contemplate empty life, and shoulder the abuse of media and contempt of a global citizenry.
5) Acceptance: Trying to regain "good guy" status and avoid criminal prosecution by agreeing to be part of debt forgiveness.
Once defaults happen in increasing numbers and certain asset prices plunge (i.e. real estate), what will initially look like a bonanza for capitalist parasites could easily get out of hand, with people either unable or unwilling to buy inventory even at greatly reduced prices. Profits would tank at banks, liabilities would skyrocket even with most of it transferred to government guarantee. Because no one plays the game anymore, banks could go under as well, as people rise to vote out bank-friendly politicians and simply refuse to pay. This unraveling could easily force exposure of the notional value of derivatives in banks as worthless, meaning they are as bankrupt as the people they exploited. At this point, there will be a common desire and need to simply "forgive" the debts and try to find some way to distribute these empty homes.
Conclusion
Debt forgiveness simply calls out either the inherent systemic inability to make good on debts or the recognition that debt was produced through fraudulent means. In the present situation, both conditions obtain. There has likely been no point in world history where debt forgiveness has been so comprehensively merited. The only speculation from my point (barring world-wide global feudalism and eternal debt slavery) is whether we will initiate such forgiveness or be forced into it.
Thank you, Zeus, for this prescient and insightful analysis of debt and debt renunciation.The Kondratieff Cycle can only turn to Spring after debt renunciation completes the Winter cycle. Let's stop pretending we're still in Summer, and that the Fed's puny "quantitative easing" and monetary cargo-cult machinations can reverse the seasons.
»
- 34730 reads
- Printer-friendly version
- Send to friend
- advertisements -
Exactly! Nature dictates this!
In international law, odious debt is a legal theory that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are, thus, considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion.
http://en.wikipedia.org/wiki/Odious_debt
When a despotic regime contracts a debt, not for the needs or in the interests of the state, but rather to strengthen itself, to suppress a popular insurrection, etc, this debt is odious for the people of the entire state. This debt does not bind the nation; it is a debt of the regime, a personal debt contracted by the ruler, and consequently it falls with the demise of the regime. The reason why these odious debts cannot attach to the territory of the state is that they do not fulfill one of the conditions determining the lawfulness of State debts, namely that State debts must be incurred, and the proceeds used, for the needs and in the interests of the State. Odious debts, contracted and utilized for purposes which, to the lenders' knowledge, are contrary to the needs and the interests of the nation, are not binding on the nation – when it succeeds in overthrowing the government that contracted them – unless the debt is within the limits of real advantages that these debts might have afforded. The lenders have committed a hostile act against the people, they cannot expect a nation which has freed itself of a despotic regime to assume these odious debts, which are the personal debts of the ruler.
mosta the countries we've gone into have either been solvent or had really good drugs. in libya they have a "successful" (well, they hafta get the moQ, still, right?) revolution and they have no debts, just a capital improvements "program" that people will now have meetings about and decide what to do. pretty much like the same gang did in iraq, where we swore on a stack of bibles that there were WMD b/c if there weren't, we wld have no right to go in there and take over and hang the guy. but there have been pieces in the press, now, about resisting foreign influence. okey-dokey! NATO was only there to protect civilians from the absolutely worse goobermint imaginable and the most horrid man, ever! well, no more civilian death. ??? riiiight...
here's a current piece about "financing the OMG!!!" Harvesting Libya's Hidden Water with Holland's Help who could have known? the victors have put out the obligatory Wanted: Dead or Allive poster on the moQ, and people were really pissed that when his daughter fled to have her child, they were granted asylum elsewhere in africa. what! this cannot BE! no shit
here's his kids, doin their thingz: Al Qathafi Sons Deliver Contrasting Messages About Libya Conflict
there are several entire towns in which the moQ may be allegedly hiding and the Council has said: either surrender by the end of this religious holiday, or suffer the military consequences. to the towns, if i understand them correctly. so, after the deadline (sundown on saturday? or something) they will all be finished having the religious celebration in newly-named "Martyrs' Square" and they can just mop up the last of the regime. maybe just bomb them forward into the stone age. after all, we have ample "evidence" that there were mass killings in tripoli and in the prison population. we have pictures of the dead and peaple telling us they were murdered in cold blood.
to me, this has gotten like fuk_u and the japanese: not one word of truth since march, and now we're gonna hear that these towns are military targets? b/c these people are no longer civilians? they're enemy. or they woulda surrendered? i don't know if they're gonna go there, but the sabre-rattling is quite fierce, indeed! good luck, everybody!
it would be great if we had short sales in europe, too, but this has really been awesome for 6 months! several billion (!) dollars of libyan funds have now been "unfrozen" and given to the governing council, and thigs are getting very political in Dodge! the victors have already promised to hold elections not later than 8 months from...getting the moQ, i think... the guy is a piece of work!
I know slewie has heard George Galloway school BBC on this
http://www.votegeorgegalloway.com/2011/03/george-galloway-discusses-libya-on-bbc.html
"mosta the countries we've gone into have either been solvent or had really good drugs."
Only as a last resort, honest! John Perkins clearly explains how it was their fault for refusing to allow the US banks to make them insolvent in the first place, and then having the audacity to resist our leadership 'suggestions'. Seriously, the US simply had no choice; the ever expanding parameters of the Monroe Doctrine aren't just going to fulfil themselves, you know.
system of never-ending debt-slavery
Exactly...the system must be cast aside. Debt forgiveness is inevitable, by hook or by crook.
Debt will disappear, but with it will go the entire system (pensions, Wall Street etc.).
Increasing debt is all about grabbing from the future, about borrowing from future growth for today. Problem is, the future NEVER had enough to borrow from. Nature wasn't going to abide by our silly virtual schemes.
Yes
There was once a time when you missed 3 mortgage payments, you were evicted and the house was sold to the true highest bidder, not just back to the bank so that they can hoard the property and mark it to fantasy lanave d.
We should do this now. Let prices FALL to where they belong, if that is another 50% then so be it. That will alleviate the home loaner problem going forward. Why get yourself into debt for 150,000 when you should be able to get into it for 75000. That will free up half of what your mortgage payment would have been for other things. Including paying down and off the mortgage which should be the goal.
Instead of paying 1500 you would pay 750 and the other 750 can easily pay for all the rest of the house expenses every month.
This is what America NEEDS. We could finally have a country where 1 person can work and 1 person can take care of children instead of ruining the nation for the benefit of the banksters.
There is NOTHING WRONG with an ACTUAL UE rate of 50% in the US, when one person with a job can afford a family which includes owning their home.
Right, and that falls under the category of 'TBTF banks taking a markdown loss' and will never happen, even if every last man woman and child peasant in the US has died. On that day, REIT's would melt upwards.
Interesting post.
It sounds pretty good, but you know that requires a collapse of the banking system, and most folks still keep their money in banks.
Hear hear. The alternative these days is to live in half the home, so you don't necessarily need to wait for the future to do it. The banker/mortgage guy/realtor will tell you that you must max out their square footage and amenities in the interest of owning just as much as you can afford. This is 'common wisdom' really designed to entice you into debt slavery. Don't fall for it, and, if you did, adjust your circumstances accordingly.
The problem is that the current system can not function without the exponential multiplication of debt as "profits". Most of what is consumed would not be able to be bought without expansive credit. Wages can not justify the cost of almost any commodity. Labor as a percentage of profits is miniscule however labor cost can not increase without a drop in profit, so this can not happen because of the fiduciary responsibility of publicly traded corporations to maximize profit for shareholders.
The problem is that stock market system itself. The only endgame it produces is the concentration of wealth in a few hands and the reduction of competition to a few singular players. Eventually growth through direct sale ends and the only path to future growth is the confiscation of others. Is there any wonder to why all we have seen in the past 20 years is the massive consolidation in almost every industry.
In the past 30 years how much wealth has been produced in the production of nothing? Paper wealth is of no real value to society because paper wealth does not involve production an does not really involve labor. There is no need for a system that pulls something from the ground and turns it into something of value in our current system of wealth generation. The quickest path to wealth is to be lucky and pick the right algo driven stock and cash out. The production of that wealth did not involve anything of value. You can argue that the wealth effect will stimulate the economy because that person will purchase more goods and that could be correct.
However the current system is so skewed towards the massively wealthy that the increase in wealth to them does not stimulate the economy at all because they can already purchase just about anything they want and there is a limit to the amount one person can consume. Instead of being spread evenly due to competition the destruction of competition has only concentrated wealth into pools that just sits there and doesn't flow into the real economy.
Although debt forgiveness would be great for those in debt it will not fix the problem that most people do not have the means to consume without going into debt. That is the balance that must be restored.
Trenchant!
Them's some purdy words...so purdy I am gonna dress up, put on cologne, buy them flowers and ask them out for pizza.
The only ones bedazzled are 401K/pension holders, and mortgage squatters. The banking cabal knew just what it was doing when they crashed the markets in 08, beginning of the endgame.
For whatever reason I can't give 'Whatta' a green flag so in lieu of that I will +1000.
BILL GROSS TURNS OLIVER TWIST: Bill Gross admits he was wrong...why? Game's not over yet!
I know why he's flipped...he knows QE3 IS ON THE WAY PEOPLE, GOLD AND SILVER SET TO LAUNCH!
http://www.youtube.com/watch?v=MFnAT_5PjxM&feature=uploademail
Oil too high, gold too high, dollar too low, stocks within 10% or so of all time highs, many stocks OVER all time highs, QE3 diamond encrusted Tiffany trunk full of free cash for stocks simply NOT coming, I dont care what Bill Gross says.
'Gold and silver set to launch' I really doubt it, as that would mean the dollar has also collapsed and oil is now at $150 at least so QE off.
Yeah, seems silly to be rejoicing that one's PMs are worth more worthless fiat! Silly rabbits, PMs STORE wealth, they don't create it! It's OK to rejoice that one is not LOSING, but one shouldn't confuse that with GAINING (such as you clearly note).
About oil, though, how likely is it that it'll rise again to $150(USD/bbl? If demand isn't there will it, even though the USD is shit, get to any such level again? I can see the price tags on other stuff (like food) increasing, but oil seems a bit more elastic. And really, I guess I shouldn't even try to figure this out since I've repeatedly stated that it doesn't matter what the price of oil is... (it's just that I'm always curious as to what logic/data people use to form their forecasts)
Well through in the mid east at real war and oil becomes so controlled its rationed. Seems not likely right now, but it is very likely.
Take the median mortgage and give EVERY homeowner that amount in cash! If you own your house outright then you get a tax-free windfall to spend any way you want. If you have a median mortgage then the money goes to DEBT FORGIVENESS and now you own your home outright! If you really want to go down this debt forgiveness path then EVERY SINGLE HOMEOWNER should benefit not just the UNFORTUNATE!
I think it will be time to start shooting and hanging people if only deadbeats and losers get helped, at the expense of conservative prudent disciplined people.
The TARP got the tea party started. This would be so big as to cause revolution and violence in the streets.
Maybe thats just what they want. FBI leaked memo suggests the political class wants race riots to start up now. Of course any civil unrest in this country would be immediately painted 'race war'
If true that would make me a useful idiot.
At least I would be useful.
Is this a bug or a feature?
.
And you're going to convince foreign creditors of this how?
Poeple repeatedly think that it's just US debt, it ain't! If it were this easy a plan would have already been worked out: yeah, banks would take an initial hit, but the backroom deals would ensure that they'd be back on top in no time at all.
Why do HOMEOWNER's (your caps, not mine) only benifit? What about those of us who saw the housing bubble and, prudently, didn't buy into it? We get screwed again? Just like those of us who 'saved' money, rather than going into debt, and watched it's buying power debase faster than any available interest rate return? I'm not trying to pick on you, it's just that I get really pissed off at all of these plans to 'rescue' homeowners, just like the 'rescue' of the banks, GM, all of them.. Jim Sinclair has used a saying "When the whore house gets raided the piano player goes to jail with everyone else", true also in 'rescues' and bailouts.
sorry, rant over.
Robbing Peter to pay Paul.
Paul's debt forgiveness may be Peter's retirement asset.
No matter how you resolve this someone gets hurt. That is why moderate inflation is the only viable option. It spreads out and hides the hurt among more people who dont even realize the extent to which they have been robbed.
After all Keynes supports it and claims not one in a million could figure out the ruse.
"Paul's debt forgiveness may be Peter's retirement asset."
Exactly! The pie is the same size. Mixing around the pieces is all that's available. And because most retirement programs were based on improbable returns it was inevitable that this game would blow: declining resources and increasing population age tells us that the future is incapable of sustaining (let along exponentially growing) this.
Retirement accounts are being liquidated, whether through/by direct funding (401Ks, IRAs etc.) or home values (sell the house to cover retirement- I bailed on this belief a decade ago).
This is why we wont have a jubilee. We can make the sheeple take their losses contentedly since they do not understand nominal versus real returns.
Moderate inflation is clearly the long term strategy. The question is will it work to avoid a depressionary collapse.
Right
start 11:00 min
http://www.youtube.com/watch?v=f4MeiF3p1WQ&feature=relmfu
GOLDMAN SACHS going to tank! Fed announced enforcement against GS on foreclosures.
Remediation for mortgage owners.
Finally!
The banksters start to eat each other.
what happens to gold on theoretical debt forgiveness
If it is done via monetization then up up and away!
When debt is paid off (or forgiven) then technically money is removed from the system. Theoretically the value of all remaining money (and money equivalents) should increase in value causing deflation of hard asset prices. If gold and silver behave as money their value should skyrocket even as the value of the dollar should rise.
Debt forgiveness only encourages more bad behavior.
The reason we have bankruptcy laws are to allow individuals and companies to start anew. But we need to keep score of who was responsible.
We got into this mess in 2008 by not making all the people who baheved badly or stupidly face the music. Let bad banks fail. Let individuals declare bankruptcy but don't make their problem my problem.
If you are a saver then you will get screwed.
The problem is what they "saved" is fundementally worthless.
Exactly!
This is the answer...
It makes no sense to forgive debts when our system already prohibits debtor's prison and has a mechanism by which people can initiate "foregiveness" of their debts...
The only reason why the mortgage mess hasn't been cleared is because of moral hazard. Loans were prolificly originated without fundamental support and collateral. These loans were assigned, often times, without the necessary legal requisites. As a result, many homeowners have figured out the purported holder of their respective mortgages has no standing to do so...
Further, given the propensity of additional losses, the banks have not been required to mark down assets due to changes in accounting regulations and/or gaping holes and/or a severe lack of prosecution for failure to adhere to applicable law and/or a general refusal to make meaningful changes to the law where necessary to bring about this inevitable act. This, in turn, in connection with the afore-mentioned assignment/origination problems, causes debtors to remain in their homes without paying the note...
This entire mess can be cleaned up pretty quickly through changes to accounting requirements...
The system ALREADY has the measures in place to deal with the write downs and losses... it makes no sense whatsoever to initiate foregiveness campaigns when the system is already equipped to deal with the problem, but for regulatory changes to delay the inevitable. At this point, after years of record bonuses... asset levitation (stocks, etc.)... and a grotesque assfucking of middle america, we're going to implement debt foregiveness? How far back do we get to dip for remedial measures to ensure those who behaved properly are not punished for their efforts? How much do we claw back? How do we calculate it? Who does it?
There is no need to answer these questions... change it to mark to market and step out of the way... if we need to invest in more bankruptcy courts, then so be it... if we need to steamline the procedure, then so be it... but those who deserve to fail get to fail and those who need to file for bankruptcy protection need to do so and take their 7 year slap on the wrist and sideways glances from the rest of society (probably a lot less).
I keep saying this over and over again, but the system can never heal itself until some sense (even if superficial) of moral legitimcy is reintroduced... we don't even have the appearance of moral legitimacy. It's really not that complicated. Next move is to punish those who broke the law... and while I'm sure the brightest apples on the tree made sure they were only bending it, we at least need to make a good faith effort to determine that.
If those things ever happen, then maybe just maybe those seeking policy changes might have enough goodwill to implement them.
It makes no sense to forgive debts when our system already prohibits debtor's prison
I THOROUGHLY disagree with that one. There are plenty of types of debt out there where lack of payment WILL get you thrown in jail.
Generally speaking, this approach does not work with non-dischargeable debts (e.g. student loans) or debts to governments or their agencies.
Yes, if you do not pay your traffic ticket and flip the bird at "the man," you're going to get an FTA and get thrown in the slammer... and then get to pick up trash or the like to work off the dough if you can't afford an attorney or if you have a particularly hard assed judge.
With the exception of student loan debt, which is a biggie, I will admit, I think it is necessary for some debts to have the risk of getting you thrown in the slammer... it's up to a particular judge as to how he or she will sentence you... and, generally speaking, they get it right.
As for student loan debt, it would seem if the debt is too burdensome, that one would try and convert it from its present non-dischargeability to another form (e.g. credit card debt, heloc, etc.).
Point being, you don't get to rewrite the rules mid stream... especially not when you refuse to allow safeguards already built into the system to function correctly... if the safeguards are utilized and prove to be inadequate, THEN get creative...
Your right , He missed this.
In jail for being in debt
http://www.startribune.com/investigators/95692619.html
This is total bullshit. These people are in jail for ignoring court orders and/or refusing to submit to the court post judgment to supply information about their assets, place of employment, etc. (for garnishment/collection). The court has inherent contempt powers... you fail to abide by its orders and you can go to jail... period. Not much of anything new...
The problem is that judges are sometimes too fucking stupid to understand they're driving their counties into the ground by jailing indigents... this certainly keeps up law enforcement with jobs, etc... but it's terrible for taxpayers. As a result, I see this type of practice already having peaked... simply put, the demand to trim budgets will necessitate taking a closer look at spending public funds on this type of matter... and these judge positions are elected...
but, "i knew about the warrant, I just thought it was a civil thing" or "I didn't bother to read the mail" are not particularly good excuses for the court.
You raise a good point. It's trivially simple as long as you're willing to dismantle the global financial system.
Mark to market, collapse all the banks, nationalize the financial industry, float new currencies.
Easy-peazy.
you peeps just can't get it.
For the 100th time.......................................
There is nothing down there, once it goes it goes all the way.
Your precious 401 or whatever will be worth ZERO or very close to it.
30 years of ponzi will do that to ya.
You have not produced anything of lasting/trure value in that time.
It was all a debt ponzi!
You types will never get it.
Debt Ponzi built upon a Growth Ponzi. Or do I repeat myself?
We no longer have laws that allow a consumer to declare bankruptcy anymore. Congress fixed that a few years ago. If your income is over the state median, you can't discharge debts. Because you all ready have enough, and its your fault if you mismanage it. The laws get downright punative. They can seize everything down to 1 tv, 1 radio, and 1 computer. Even your POS car is gone. Not even a driving to work provision a la drunk driving. Without a car, you may as well be in debtor prison. The bus line is full of $7 an hour jobs you can use to pay your debt back. Your home is long gone, and we all know student loans can't be discharged through bankruptcy.
Lets also mention that if debt is forgiven, that the individual that defaulted or had his/her debt forgiven will need to have their credit score reflect that.
p>
Wrong!
When Debt is Fraud, holding the fraudsters accountable is the ony remedy!
The debt forgiveness proposal is a more humane way to get beyond this economic nightmare than all of the alternatives touted/applied by TPTB.
What Zeus and Charles Hughs Smith miss is that debt destruction = destruction of fiat currencies = monetary hyperinflation/asset deflation.
This guy is out to lunch if he thinks the bankers will lose any money. The taxpayer will simply make them whole. The bankers don't give a fuck if YOU pay because someone ELSE ("the taxpayer") will pay them.
BUT... what the fuck do THEY have of value? Fiat? Crap houses? Crap commerical real estate? A stake in businesses that feed us crap, that make crap? For crap sakes, let's quit pretending that they have anything of value other than our incarceration to supporting the system that allows them to escape real work!
The only "gain" by us playing their game. We can absolutely stop all of this, but we have to embark on a totally new game: I won't venture as to what that new game would be other than it shouldn't involve any centralized power (yeah, problems here with property rights and all, but I'm sure that we'd figure something out organically).
Take the red pill and move on...
You need to stop thinking of my money as something you can give to someone else.
Debt forgiveness right after they give up the asset.
You need to stop thinking your money is anything but paper, or electronic 1's and 0's
Does your money have the words "Federal Reserve Note" on it?
Expecting honesty in a rigged system isn't rational.
Or any other central bank. The predominance of paper money proves Gresham's Law
Distilling Magnets
Consumption is a natural temporal addiction, periodically added to DNA to regulate populations, which is why cows and all kinds of other critters follow each other off a cliff. The nature of the bridge to the investment half-cycle determines distribution outcome. The moneychangers employed medical research and computer science to lock both females and males into the consumptive black hole, with all kinds of programs in the bipolar world of bipolar worlds, to maximize strength of control, addicting the participating bodies (AMA, etc) as they went.
Like pit bulls trained from birth to fight, the primary participants are nasty, but that doesn’t mean pit bulls are bad dogs. Trained correctly, they are excellent dogs, and most poorly trained dogs are recoverable. Addiction DNA is temporal. It is the social construct that locks the addictive universe.The good news / bad news is that we are cracking the social lattice wide open, but, like any social addiction, it will efficiently seek to reconstruct itself.
Get away from the sources feeding the addiction positive feedback cycle, including processed foods, mass media, and centralized power, long enough to avoid the recrystallization/fusion process. Yes, migrating from the consumption addiction, reinforced by the global IC chip, through individual selflessness, sounds crazy, but that is the distillation process of intelligence. The brain is a muscle, seeking a steady state. It is your spirit that makes it work.
Understanding these processes is the key to understanding the fusion/fission AI reactor. Go at it from the perspective of time, integral to derivative and back again. Positive infinity becomes negative infinity at the looking glass, which is division by zero, incrementally on either side, creating the number line / time on either side. The problem is not the chicken and the egg. That one is easy.
Credit is not intrinsically good or bad, but it ultimately comes from surplus, and the planet is already expecting that surplus returned. Where is the surplus? Like all energy, it is transformed. Getting the non-performing debt/credit out of the way is essential, but it does not solve the problem.
Jere Melo, councilman and past mayor of Fort Bragg, was murdered on the morning of Saturday, August 27, while conducting property management for a private timber company adjacent to the Skunk Railroad about four miles east of Fort Bragg.
and so it begins...
A more condensed/simple solution: "Just fucking take the Red Pill!" :-)
I stopped at usury. This faulty logic was rejected over 700 years ago. If the interest rate had been higher, perhaps there wouldn't have been a debt bubble to begin with.
The problem not addressed here is that governments all over the world have taken it upon themselves to contract debt. And that contracted debt is being used mistakenly as the benchmark rate for risk adjusted cost of capital throughout the economy. The gravity of this error can not be overstated as there have been extremely rare instances in history when governments have paid back their contracted debt at par. If there could be such a thing a predatory borrowing, the US goverent would be top of the list.
The repudiation of government debt and private debt are very different. In private debt, there should be an attempt to make the debtee as whole as possible. The bankruptcy process has allowed for borrowers to alleviate themselves from their obligations to their creditors. This is not necessarily a good thing and it's one of the many societal hazards created by the state for people to take on debt. Government debt is different in that the government is contracting with a creditor for a share in future tax loot. When you contract debt with thugs, don't be surprised when the thugs stiff you. This is not "austerity", it's called getting stiffed. The delusion on the part of the government and it's workers is that they think that deficits don't matter and they can spend whatever they want. That's because they know they can just stiff their bond holders.
Take a look at the Islamic financial system, where interest (riba) is forbidden. Lending someone money is seen as an act of charity, and done at 0% interest.
Rather than borrowing money at interest, business partnerships are formed. The debtor/lendor relationship is inheritly unequal. Also, the act of lending money creates no value in and of itself. Value is only created from successful enterprises. Rather than a guaranteed fixed rate, the lender is paid from a percentage of profits. If the enterprise is a bust, the lender loses his capital, and the borrower loses his time and effort.
The result is a careful due due diligence before forming a business venture. Time is spent vetting the personal and moral credetials, before rushing to form a partnership. This would mean slowing down the pace of western business
And a big portion of govt debt is due to covering externalities of private business.
Removing govt from the equation (I have no objections if govt completely went away, but I understand the FULL ramifications, I don't hold any silly illusions that all will be unicorns and skittles with it gone) won't resolve our fundamental problem of requiring perpetual growth (which is the premise that business operate off of). Don't get me wrong, I'm all FOR proper price discovery, and I believe that govt distorts this process, but I also believe that the realization of proper pricing will result in a massive economic crash (after which we'll pull ourselves out of the ashes and will operate mostly within geographic regions, with fewer "products" and without large corporations).
"Now is the winter of our discontent
Made glorious summer by this sun of Yuk yuk;
And all the kondratieff clouds that lour'd upon our house
In the deep bosom of $2000 gold buried."
Our financial system is about to experience an Apollo 13 moment; rather than calling for gloom and doom, I believe we will pull out of it and live to see another day, much like Apollo 13.
Personally, Im believing pink unicorns will appear over the glitter rainbows and save us all by serving up mounds of delicious Skittle that they shit out and chilled pink lemonade which they piss.
Party on.
Just as Timmy would speak... He (and you?) should be asked the BIG question: and if it doesn't work? what are the backup plans?
This is one article here on ZH -- one of the few -- that I wholeheartedly DISagree with. That's rare for me!
Do you really think it will be the BANKS that will suffer the losses? HA! Think their stockholders would bear the loses? Only marginally! The real cost would be borne by the depositors (the FDIC is also insolvent) and the taxpayers, NOT the bankers! This silly notion would amount to a taxpayer-funded free GIFT of housing to people who should never have purchased homes in the first place, or made the unwise decision to purchase homes at the peak of the market. It would be the ultimate entitlement that would tip us over the edge into the economic abyss!
Here's why:
In 2009, Treas. Sec. Geithner made a public announcement one day that extended INFINITE (his word, not mine) taxpayer guarantees over all Fannie Mae and Freddie Mac liabilities through at least 2013. Have we so quickly forgotten that? The TAXPAYERS would be on the hook for the entire cost of this so-called loan forgiveness program.What would THAT do to the US government's credit rating? We'd be not just insolvent, but BANKRUPT, virtually overnight. The calamity and consequences would be incalculable!
Imagine the consequences of an additional $5-$7 trillion of debt on top of that which we already have -- almost overnight. If anything would topple our economy, and tip us into a debt-induced depression that would last for a generation, THAT would!
I think in this case, Phd. means Phoolhardy Dumbass!
Banks are NEVER going to take a loss.
WELL by mid day we've ONLY had 200 point swings in the DUH positive to negative....LOL all is well party on and keep waiting for the magical QE3 gifting in a few weeks.
Mad distribution, Hopium clouds fill the room as the great collapse is confirmed and yet people still believe a magical gift of more of the same that got us into all this mess will arrive with a bowtie in a few weeks.
WTF, smoke the hopium if you got it, soon it will be all gone.
I like that Zerohedge article for Effen vodka....'Hey pick me up some Effen VODKA while yer out! Im all outta hopium!'
When debt is fraud, I would like to see some frauders going to jail...
PS: Remember the French revolution where frauders were even treated worse!!!
Just like the French Revolution days these socio-paths, who decapitated capitalism, need to part with their own heads. Nond of this white collar 'soft' time behind bars. They need vicious. public. justice.
I don't trust any sort of debt forgiveness, even if they do it the 'right' way and repudiate ALL debt, both public and private. It will only kick the can and lead to further expansion of this police state. Of course, that is exactly what they want..
It’s not coming, it’s here. In the area where I live, there are numerous upscale residential developments where building lots were selling for $300-500k at the 2006 peak of the heyday. The same lots are now offered as resales for $25-50k and no one is buying. Most of these lots are now bank owned by the same banks that coordinated with the developers to provide buyers with balloon financing at 0% interest for 2-3 years. As you can imagine, some of these developments remain completely undeveloped; hundreds of lots surrounding a dilapidated golf course (which is also in receivership) and not a single home on them. It really sucks for the few buyers who paid cash for their lots with the intention of actually building a home instead of flipping the lot for a profit. Oh, just to add insult to injury, local realtors now charge a 10% fee to list and sell a lot, because, the price is so low and they are so hard to sell.
sounds like Forgiveness is the F word here
I loved BANKERS #1 Denial: Collect 144 billion in bonuses after financial collapse and laugh as not a single trading day loss arises for zombie TBTF banks completely subsidized by governments.
This might sound silly, but if the gov't had given the bailout money to the people, they would have paid off their mortgages and the banksterz would still have gotten the $$$$.
PAY YOUR DEBTS. AND SHUT UP. TAKE CARE OF YOUR OWN PERSONAL SITUATION.
Didn't the Repugnicants do away with personal bankruptcy? Even in the case of catastrophic health crisis?
Must have been one of those kinder gentler repugnicants.
Unintended consequences.
That is all.
there is plenty of oil, plenty of power, and plenty of insulated minds
.
debt forgiveness is like god comming down with the 10 commandments
.
AGAIN
So.... the bankers, politicians and the other pricks who got us into this mess in the first place are going to have their debt foregiven but everyone else has to keep paying?
well shit, time to max out all the dusty credit on guns and ammo and then declare bancruptcy
I like this forgiveness idea and have from the start-
The question then becomes-what will replace the loss of now circulating debt money?
I suppose any size of money supply will sufice-providing real market prices are allowed to self adjust-
At this time there really isn't that many FRN's sloshing around like so many believe-certainly not enough to carry a $12 trillion economy-
If we kept the current amount of world price values-minus the current credit/debt money supply-the only alternative would be to print more dollar notes-enough to carry world commerce-with todays valuations
That amount of new printing-in order to maintain the $ value and eliminate the inflationary effects ie: rising prices-would be to lock the total amount to gold-at what price is the real question-
I may have to go bankrupt, forced there by two deals where those paying commissions decided to do strategic defaults. It all flows down hill to me, I have Citi calling when I'd be happy to sign over my receivables. Another client of mine had four warehouses worth 11 million and a net worth of about 4 million, he's now moving to a Winnebago on the family farm.
I'm just saying, not all debtors are the same.
Yeah, some decide to build their castles on sand.
When Government is Pwned by Corporations, No Debt Is Fraud
THE CASE AGAINST g.s.: g.s. MUST GO
http://www.entendance.com/forums/viewtopic.php?f=5&t=762&p=19083#p19083
Shadow stats: Hyperinflation special report
http://www.shadowstats.com/article/hyperinflation-special-report-2011
THe Feds could kick this off by forgiving student loans and then ending the program altogether. Universities would be forced to offer competitive prices.
I dare anyone who thinks they are savers, never spend beyond their means and behaved conservatively into the mirror and ask yourself this question.
Where did your pay cheque come from over the last 10 or so years?
Are you sure that the money that was paid to you and that you saved was not "created" in this bogus system of leverage and fraud?
Fact is, that the economy "grew" and good money was made because of a ponzi. Some ponzi players were smart enough to put enough away for the days after. Most however, were useful idiots in the ponzi and they consumed and they bought and they borrowed TO THE BENEFIT OF THE FEW!
So, it's righteous to DEMAND a jubilee and if that means the savers will get "punished" THEN SO BE IT. If it weren't for the massive borrowing and the massive leverage and the massive SPENDING, I very much doubt the "savers" would have had their nestegg.
The whole system is a piece of shit.
Disclaimer, I'm ok. Not rich, but ok. I could care less what the fuck happens to the banks and the system. I've got my farm and will share with those that are in need. The land produces enough to feed my family and those that can help work the land. Don't care about gold and silver as it is not biblical to hoard and store riches on earth. If someone doesn't want to work for food, then maybe they were lawyers or bankers and they have gold to trade. I can use that gold to do something useful for the COMMUNITY after the system collapses.
um, i am a saver, DO NOT spend beyond my means, and am very conservative with my finances.
my industry creates products and has large markets for them (biotech).
that money was created with a tangible good.
it is anything but 'righteous' to demand a jubilee, especially you calling for it from your position.
A large portion of biotech creations are ultimeately paid for through entitlement programs like Medicare and Medicaid. if those programs ddid not exist the biotech industry would suffer tremendously with huge layoffs and cut salaries.
there is pharma biotech and industrial biotech.
we can sit here and argue what's subsidized, what's covered by insurance, but the fact of the matter is, it's an industry that has built itself largely on research and development, and innovation. much of their profit has come from this. as a whole, society has benefitted from this industry, and you bet that it's created real value.
they grew within those programs and regulations, and will continue to innovate, with or without certain benefits from the infrastructure, as it did from its inception.
to say that the industries would not exist or would have no way to adapt is utter ignorance.
Its utter ignorance to think your paycheck is not dependent in at least a tertiary manner on the special interest crony healthcare system that is not far behind the bankers in their corruption. The National Institurte of Health, The defense dept... and a slew of other goverment agencies make that initial research possible. Now, that is not necessarily a bad thing, but don't fool yourself about where your bread is buttered- taxpayor money. So get off your high horse bercause you might need help someday.
you can make the argument for anything that everyone indirectly benefits from entitlements and hand outs.
what you're trying to defend on a broader scope is like me saying it's ok for me to go out and take a mortgage on a home i know i won't be able to afford the payments on five years down the line, but i want the whole debt written off because the system is corrupt.
and you wonder why i'm opposed to that mode of thinking?
The banks need to be punished for their crime. Many people did not know what they were getting into. Unfortunately, the whole system is so corrupted at this point that debt forgiveness is the only way out; otherwise the whole system will collapse.
How did the biotech firm get off the ground in the first place?
Did you have enough pennies in your piggy bank, kid?
The banks or investment funds that put the money into what was at one time probably a highly speculative business had "earned" their money from some type of fraudulent behaviour.
Years later and you enjoy working in that very biotech firm which made it. Dozens other don't make it, are not worth a dime and the initial seed capital gets written off. The banks and investment funds that took the loss on dozens of firms but made it big on the firm where you're employed are still standing and have "created" their enormous wealth out of thin air.
The rest of your argument is bordering self agrandizement and is plain bull shit.
We've all had a sweet ride for the last few decades, myself included. I'm just regretting I didn't charge more and didn't take more off the top. Too bad, too late now. But I'm not starving and didn't overleverage myself because many that are probably overleveraged paid the price for my products and services. i care about them. I care that they enabled my life style and made it possible for me to skim off the top. I can afford to take a cut so they are allowed to breathe.
That's my point.
let me get this straight:
you believe nothing was created from research and innovation, and only from leveraged investing. i completely disagree. finance is highly speculative, but biotech is only to a much lesser degree, and certainly not fradulent, because a research, production model is actually producing something of value.
you also seem to believe that those living beyond their means, while taking advantage of a ponzi scheme are entitled to the fully vested asset while the rest of the debt on said assets is forgiven, because the whole system is a ponzi scheme anyway. wtf?
your hypocrisy is astounding.
The high priest of New Nobility has given us his wisdom:
"Screw unto others as they have screwed you"
Let us all go forth and do likewise.
You dismiss the counter-argument and then say you don't want to engage in debate? FAIL!
Society has benefited? What society is that? You're throwing out way too generalized statements to be taken seriously. Maybe I'm getting old, but I've seen these stupid movies before.
"Innovation," etc is no more than written recipes, and is of ZERO value unless there's physical resources in which to deploy them.
I look around and see LOTs of older people being kept alive by all this innovative stuff. Great! And I'm all for compassion, but this comes at a cost to the future generations.
As someone who is extremely focused on food production I've seen these wild claims before in things like the Green Revolution.
Sorry, but one cannot claim success until the books are closed, and the books on bio-tech (as well as the Green Revolution) aren't closed.
Need I point out Fukushima?
Hubris can never hide forever its painted face.
It is because of posts like this that I have come to love ZH.Even someone as financially unsohisticated as me has been saying that we need to do what Salon did in Athens.
It is because of posts like this that I have come to love ZH.Even someone as financially unsohisticated as me has been saying that we need to do what Salon did in Athens.
i don't buy into the premise of debt forgiveness.
that punishes the responsible. and i'll be mad as hell if i hear about people getting a free house because they couldn't afford it, while i have been saving to buy something outright and within my means.
Read my post.
I know that I made money on the backs of those that overspend and overleveraged themselves.
My business did well for that very reason.
You either admit to the same or you're a liar. Working for the government and saving doesn't help either. Government is parasitic.
And speaking of government and responsibilit.
WHAT THE FUCK is responsible? The government is sloshing trillions around like grain from a wheatfield.
Responsibility has got nothing to do with it.
...Responsibility has got nothing to do with it....
Imagine FDR saying that and not "a day in infamy"...you have it right there. Pearl Harbour was tipping point that brought the US into WW2 and saved the world.
Today, the US elites can only think of saving themsleves in their convoluted, excessive greed; let alone their nation and its people. And, they are doing a bad job of saving themselves, as the chickens come home to roost of their past excesses.
The US didn't save anyone except the wealthy industrialists of the US (who had money scattered around the globe [Germany, Britain and Japan(?)]).
The Soviets stopped the Nazis. That's FACT. The outcome was pretty much set by the time the US entered the war. Yeah, the US "may" have reduced Nazi terror, but they didn't STOP it.
And, Japan? It wasn't going anywhere! Anyone who believes that it could have invaded the US is delusional. Further, Japan lashed out at the US for blockading oil supplies into Japan (BEFORE any declaration of war- and, as we know, these kinds of actions are key catalists for war; that is, the US caused the war between it and Japan to occur- whether this was the right thing to do isn't important for the discussion of whether the US "won" any war for anyone else).
what utter bullshit. by rationalizing that everything is overpriced, your attempt at logic is fleeting by saying that no one deserves the money they made/saved.
there are other industries that actually produce something, get your head out of the ground.
responsible is: not taking on debt you cannot sustain or ever hope to pay back. i've got so many colleagues that live beyond their means this way, driving BMWs, living in a huge house, fancy clothes, all on the same wage i make. bull-fucking-shit am i going to just sit on my ass while all of their debt is forgiven, they prance around with all their shit, just because it's unsustainable, and hey, here's one on me! so then they've got something to show for being foolhardy and living at the end of their rope the whole time?! fuck that.
i won't be sitting idly by while people are rewarded with all the spoils; real estate, goods -for making the minimum monthly payment on a debt that was never realistic in the first place.
turn a blind eye if you want, it seems to suit you and your religion.
envy is a terrible thing, free your person from it.
envy is terrible thing. Live your life not you neighbors.
If you are in any cult they all preach this , of course most of them could care less.
you're wrong, it isn't envy.
by the logic you're defending, i should go out, get into mortgages and car loans on fancy cars i can't afford, and then feel righteous about it all being forgiven?
you've got to be fucking kidding.
No he believes it. This is a new religion - the religion of 'the system screwed me, therefore I can screw anybody I want to get mine'. It requires some thought to understand how to rebut it, to react to it.
Look, let me explain it very plain and simple:
If there weren't so many BMWs on the road, bought for by thousands of people that probably shouldn't drive them or couldn't afford them, the company BMW wouldn't have recorded massive profits. Neither would the banks which are invested in BMW, or the banks that funded the loans to these poor slobs that wanted to drive that piece of German engineering.
So what is real? What is responsible? Who can afford what or who shouldn't afford something? Are you the judge to call that?
Why the fuck is our government wasting billions in the desert of Iraq? Why are they wasting billions on that stupid entity Homeland Security and other nonsense to supposedly protect us from what?
Anyway, the money was created of thin air to afford the life styles and the lives of most in the US and Europe. Sure there was real production and real growth but to enable that growth, the money had to be made available to the masses so they could participate.
You got one point right. The debt was never realistic in the first place. And yet, the banks sanctified the debt and were eager to create the debt because that's how they got paid. The more debt, the better for the banks.
Jubilee, all the way and close the doors on the banks for good. Some sense has to come back.
When I was a kid, I bet my brother a million billion dollars I could throw a baseball farther than he could. Any ideas on how I can collect on my asset?
I recommend credit default swaps in case he can't afford to make good.
DogSlime is absolutely correct about the 2 possible outcomes. I certainly haven't any faith that the sheeple will wake up in time; they're too busy with their online "social networking" or playing video games or watching the idiot box whose programming becomes ever more aggressive, jingoistic, militaristic, etc. No habeas corpus, civil liberties gone and a Chief Justice of SCOTUS who is so young that he'll be around for a bad long time ready to legally wrangle us all into debt slaves. Debt repudiation - a debt jubilee - is the only way to go.
EeeeeeeeeeeeeeeeErroneous post deleted.
In the complete mess known as the tax code, debt forgiveness is generally a taxable event to the debtor.
And if this actually happens, I see little chance the dollar continues long-term as the reserve currency. I could see a complete collapse of world confidence, let alone the eventual worth of the currency. The light at the end of the tunnel could be an opening to reset the monetary system to a collateral-backed system.
Moral hazard???, we don't need to stinkin' moral hazard!
What people don't understand is that THIS article is describing the basis of MONETARISM. That's what this IS. Monetarism isn't for the people, it's for the banksters and ruling oligarch that own the banksters.
It's all about a system that screws us in favor of THEM.
This really is a great article. The thing missing is the call for Glass-Steagall
Now it's easy to nitpick, but that's not what I am doing. The other proposed ways do somewhat the same job, but Glass-Steagall is a precision scalpel, which gets at EXACTLY what IS productive debt or tied to reality, and keeps those, sometimes at a relatively small haircut. While the huge fraudulent portion is wiped away and other parts put back onto the investment banks for them to pay, if they can't, then they are bankrupt.
Within Glass-Steagall is the standard that differentiates between what is real debt and what is fraud. It's better to go through the various types of debt (pseudo or otherwise) and figure out by applying the standard what should be kept and what should go.
Applying the same haircuts to everything, or taking a hatchet to it, will screw over the debt tied to productive issues more than it should, and keep value to unproductive or fraudlent debt where there really shouldn't be any. Who wants to pick up some of these fake assets at a garage sale? It implies there CAN be some worth to fraud. There can't.
Thus in this differentiation, the pensioners are not zeroed, the banksters ARE. Glass-Steagall hold the key to sorting out the crap and pointing the finger at whose money or claims are kept, and whose goes. It's done on reality, not we need to meet some percentage metric. We go off of reality, and the reality is, pensioners funds and the like are safeguarded. Besides anyone that argues otherwise needs to realize that the pensions, while worth trillions, aren't worth quadrillions. They are real money, really worked for, and not a function of pure gambling debts.
The best way forward is Glass-Steagall, and if we want to avoid such a fuck up in the future we must take the time to end monetarism now. Because that is the ideology which got us here. Keynesian, Austrian...all types of monetarism puts the banksters and oligarch first, and thus pushes for the payoff of this crap. One side says austerity, other side says printing, but the key dynamic is the debt stays and is still considered legitimate. Of course not everyone toes the moentarist line about everything, but still one should really wonder where it ends and where it begins when they are looking at voting for any monetarist candidate. Hint: ALL THE PRESIDENTIAL CANDIDATES ARE MONETARISTS. Austrian or Keyneisan. All have it in them to do the banksters bidding by following their bankster derived monetary dogma. Because that's what MONETARISM IS! You can't be FULLY against the banksters, unless you are against all forms of monetarism. Thus in their own ways, ALL presidential candidates have it within them to be banskter whores. It just needs the right environment to coax it out of them.
Overall great article. Not perfect, but damn good nonetheless.
Glass-Steagall
Bankruptcy is societies only protection from fractional reserve banking, it is the lost pillar of credit capitalism
Anyone who looks to toughen bankruptcy laws are committing a crime against the general population.
It speaks for itself.
But that didn't stop them from marketing it as something very different:
http://en.wikipedia.org/wiki/Bankruptcy_Abuse_Prevention_and_Consumer_Pr...
Just let me know when it is about to happen so I can max out all my lines beforehand.
No joke. I'm seriously thinking about breaking my oath to never borrow again and take on some debt to hedge my bets in this crazy market economy. It's really just a diversification strategy. Be everywhere there is likely easy money to be made at someone else's expense. If there is one thing the TBTF banks and financial industry has tought us, that's it.
Debt forgiveness on a massive scale will only serve to weaken further the creditor/debtor bond. In the end this serves to destroy the economy by splitting it into the 'real' economy, which deteriorates and is starved for credit (which cannot be obtained because debt is meaningless), and the 'fake' economy which gives off the illusion of activity through speculation, and self perpetuates itself through influence peddling.
In the end, whether we have 'orderly' debt forgiveness or disorderly default, the result is the same - we end up with a localized economy that no longer depends on credit from banks to grow and survive, and where credit is meaningless in the traditional sense anyway. The only thing left is to figure out which path to the past we take, an orderly or a disorderly one. On the other side lies a fundamentally different world.
As inividuals, we have also to choose - do we engage in the 'new noble' which is to take all we can get and screw the creditor, because the debt is fraudulent anyways? Or do we find ourselves on the other side having somehow retained some integrity, having adjusted to the new reality without trying to get all we can as the system collapsed in our own self interest? Searching questions that we should be asking ourselves.
In the end, whether we have 'orderly' debt forgiveness or disorderly default, the result is the same - we end up with a localized economy that no longer depends on credit from banks to grow and survive, and where credit is meaningless in the traditional sense anyway.
*************
Why couldn't there be a credit market after repudiation?
If people were willing to risk savings/investment for a reward (interest) and FRB as we know it was eliminated-i see no reason why there would not be a sufficant credit market open up-
Of course the Banks would have to be transparent with none of the scum that run them now-
A pipe dream maybe-but the economics are there-imo
Maybe after the generation passes by that witnessed the mass repudiation. If you think people are going to assign meaning to debts they owe after having witnessed a massive systemic reset that erased so many debts you are misunderstanding human nature. That they will go to work every day to pay them off. That they will forego materialistic purchases because they assign meaning to repayment of debt. Once debt is largely understood to be meaningless, it will not regain meaning for a long time.
The same for the creditors. People were 'willing to risk' now and they will be wiped out by forgiveness. Who would risk again when they can speculate, especially in an increasingly resource-challenged world? This is what people don't get, this is a step backwards that is the inevitable result of our own excess. We will not step forward for a long time, until there are fundamental changes in the way people think and act. It won't just happen.
For any of this to work-there must be a free market and a limited money supply-
The free market is very efficant and dynamic-if there is a need for credit-a credit market will emerge-if there is an oppourtunity to profit investors will take it-
All of this hinges on private entities doing the lending with the rights to confiscate collateral if obligations are not met by the borrower and the lender must bare the margin losses-
There are hard money lenders now. The free market has created such things. And assets have shifted to such things. Do you think their claims are likely to be honored when other's claims are being extinguished? If the government can just rewrite the law to suit them, as they did in the case of the GM bailout, then the enforcement of the system you describe is meaningless. That is what I am saying - there is a fundamental change of thinking required. It is a political, a moral, a natural resource, and a market crisis all rolled up together. 'Efficient free markets' will only take you so far in the face of such change. Think beyond that.
Do you think their claims are likely to be honored when other's claims are being extinguished?
**********
Why wouldn't they be-it's not like I'm saying everyone in arrears should get to keep a free house and all the toys they don't desreve-they need to lose too-
However there are sound borrowers and sound lenders-nothing has to change about that-
**********
there is a fundamental change of thinking required. It is a political, a moral, a natural resource, and a market crisis all rolled up together. 'Efficient free markets' will only take you so far in the face of such change. Think beyond that.
*************
I agree with that-but there needs to be a mechanisim that enforces the fundamental change in thinking-
That being a locked money supply-
If the money supply is locked-everything every thought must adjust and adapt to it-
Why weren't the senior debtholders claims honored in the GM bailout? If you answer that, you will answer your own question.
As for a sound money system, of course that is necessary. A fully reset and localized system will build itself up on such a basis. Just don't expect it to right itself in your gereration. We are already losing a generation now - how long do you think it will be to overcome that?
I don't know what question you're referring to-
I'm saying anyone or any company/bank or whatever that is mal-invested in anything-including rich corporate bond holders need to be allowed to die and float to surface-
Those who are solvent need to be freed to lead the markets and that includes us peasants-
I also never said this was a quick fix-it will be slow and painful but if allowed-the market will sort it out fast-meaning we will finally be on bottom-the "real recovery" can at least begin and anything (technological breakthrough?) may happen and speed the recovery-
The way we're doing it will lead to a deflationary collapse-eventually the bond market will puke and game over--
I had said hard money lenders claims would not be honored above any other claims in a mass debt forgiveness. You said 'why wouldn't they be'? The answer is because the claims will be extinguished based on political considerations, not the law. Therefore hard money or easy money claims to assets will be meaningless.
Of course that happened during the first bailout-
With something as big as forced debt repudiation the masses will pay attention-the Politicians/Bankers will be castrated-
Fair accounting and accountability/the "law" will come to the fore-
Questions will need answers-
The bankers scam game would be over-non underpinned debt will survive-
Cronyism will be toothless-
Your answer is pure speculation of the results-as is mine-
Do i think we'll do any of this willingly?
No-
What b.s. the whole of the free market system is based on doing what you think is best for you.
The invisible hand will take care of the rest.
You are not a socialist are you.
Markets have no need of integrity, the very idea is nuts.
You are just making the case for your side to get all you can under your moral code.
Tough, you make the choice live in a hut , I don't care.
No I am a realist and far from a socialist. Socialist governments degenarate into corrupt systems like anything else. And I don't live in a hut but in a house I paid off. I checked out of the debt system long ago. Maybe that takes my emotions out of it, which is why such purveyors of the 'new noble' as yourself find what I say to be so offensive. I reiterate - what is so offensive about choosing to behave with charity toward others? What is so offensive about not grabbing what you could just because it was there for the grabbing?
I find it entertaining to see how people behave when you challenge the rationalizations they live by. Sad but entertaining.
The amorality of the market is generally well understood. What's often neglected is that the individuals with the most power in the corporate world have the same perspective--there's no reason to "do right by the company" because they only have to consider what's best for themselves.
This is why companies often get cannibalized by people taking home huge bonuses, and why criminality is encouraged by the highest levels of management. The notion that this "fixes itself" doesn't appear to be correct. Some of the wealthiest individuals in the country are people who presided over the collapse of their previous employer.
The role of "markets" often appears to be to provide the greatest rewards to the criminals who don't get caught.
3 years later and people finally get it? wow. Oh, forgot three years of bonuses before being caught. One added item, banks usually mark to market distressed items; people (homeowners) cannot. Debt that has already been written down on lender book (so it can later be written up later) but is not on the homeonwer book? Something about having cake and eating it too,
Or heads I win, tails you lose.
The only thing his essay is missing is who the hell put a gun to these people's heads to sign up for this debt money? I'm mean how about a little self-control. If I can't afford a house on a 30 year mortgage payment, I can't afford the house. People are stupid.
Some of them even still have jobs, it would seem. Congratulations!
thank you ZH this is one of the best pieces I've read.
The system HAS to change. Debt reduction, forgiveness, is a part of it. The urgency now is to turn the financiial architecture round. Pronto. And make sure it never repeats itself. Hanging a few on the lamposts would help this second point.
When a person becomes old and ill, the cost of medical is the highest of the lifetime. More complicated ways to prolong life make the life more complex and costly with death the end game, regardless.
Our poor Nation may be approaching that point. The illness caused by lack of the rule of law, non-enforcement of the rule of law, and no plan to reestablish law and order, has us in a terminal situation. Financial Institutions, Insurance Giants, and our Governments have played, criminal with the rules. They have taken us down and own most of the marbles.
Control of major institutions for the normal citizen can only come through media, law, money/stock control, elected politicians, and in past history, Unions. Civil Rights and the War protests of the 60s may have been effective, but at extreme costs.
There can be any number of brilliant plans with accurate analysis of what, where, and who.
But without leadership, nothing can be gained. America the great, free, the brave has no leader. No party has presented what is needed. With a broken law system and a broken political system, there can be no recovery of the Nation.
To get where we need to go, awareness and education of the population needs to ramp up in a major way. Here at zh we see a start with many associated blog wisdoms. But we are still without leadership. Where is she or he or them?? This is a time of danger and Germany in the 20s and 30s is history worth reading. More wrong leadership at this point in time is more likely than not. Wary and active we must be.
VOTE—VOTE SMART
Please get off the magic leader b.s.
They are nuts and fools , better to follow a drunk under the bridge than any that this diseased system elects.
You don't go to a dirty river for water same here.
Being of Greek descent, Zeus should know a lot about debt.
"When Debt Is Fraud"
Stop whining!
If Debt is fraud then 90% of you must sell whatever they
have (children and wives included)
to cover their credit card and other personal debt,
cause all of you is the part of this Fraud.
And I mean most of you, with little exception.
I wouldn't be surprise, if some of you, clowns,
actually buying Gold/Silver by piling up Debt on the
credit cards..
having a bad day?
I cant think of a better way to buy gold and silver.
Fuck the banks.
The high priest of New Nobility has given us his wisdom:
"Screw unto others as they have screwed you"
Let us all go forth and do likewise.