Guest Post: When Debt Is More Important Than People, The System Is Evil

Tyler Durden's picture

Submitted by Charles Hugh Smith from Of Two Minds

When Debt Is More Important Than People, The System Is Evil

The Empire of Debt has only one end-point: a death spiral. It is evil and must be dismantled.

Ethics has no place in the Empire of Debt. The financialized Status Quo is careful to limit the language used to describe the situation in Greece to the subtexts of "obligations" and "avoiding chaos."

The reality being masked is that debt is now more important than people. The suffering of the people of Greece is presented as a footnote to the financial play being staged; when the suffering is noted, it is presented with a peculiar set of unspoken subtexts:

1. Looky-loo detachment of the "gosh, look at that wrecked car, are there any bodies?" sort. People slow down to look at car crashes, and they revel in videos of riots with the same detached fascination with mayhem that doesn't involve them. Tsk tsk, how awful, etc.

2. They're reaping what they sowed, "they made their bed, now they have to sleep in it," i.e. the suffering of Greek non-Elites is the richly deserved consequences of their government overborrowing.

This begs further investigation. In the normal course of affairs in corrupt kleptocracies, various Elites siphon off most of the swag and the commoners get just enough shreds to buy their complicity. In other words, it may well be that the entire populace of Greece benefitted handsomely from the massive State borrowing, but it also may well be that the private-sector Greeks received little of the swag. In this case, they don't "deserve" to be forced into debt-serfdom by their Euroland overlords.

The ethics of debt, at least in the officially sanctioned media, boils down to: nobody made them borrow all those euros, and so their suffering is just desserts.

What's lost in this subtext is the responsibility of the lender. Yes, nobody forced Greece to borrow 200 billion euros (or whatever the true total may be), but then nobody forced the lenders to extend the credit in the first place.

Consider an individual who is a visibly poor credit risk. He would like to borrow money to blow on consumption and then stiff the lender, but since he cannot create credit, he has to live within his means.

Now a lender comes along who can create credit out of thin air (via fractional reserve banking) and offers this poor credit risk $100,000 in collateral-free debt at low rates of interest. Who is responsible for the creation and extension of credit? The borrower or the lender? Answer: the lender.

In other words, if the lender is foolish enough to extend huge quantities of credit to a poor credit risk, then it's the lender who should suffer the losses when the borrower defaults.

This is the basis of bankruptcy laws--or used to be the basis. When an over-extended borrower defaults, the debt is cleared, the lender takes the loss/writedown, and the borrower loses whatever collateral was pledged. He is left with the basics to carry on: his auto, clothing, his job, and so on. His credit rating is impaired, and it is now his responsibility to earn back a credible credit rating.

The debt is discharged and the borrower must live within his means without relying on credit. But he is also free of the burdens of servicing the debt.

If the lender is forced into insolvency due to the losses, then so be it: lenders that cannot differentiate between good and bad credit risks should go under and disappear: that's what happens in a competitive, transparent capitalist economy. Fools who create credit and extend it to poor credit risks must be eliminated from the system as quickly as possible lest they destroy more capital in the future.

The potential for loss and actually bearing the consequences from irresponsible extensions of credit was unacceptable to the banking cartel, so they rewrote the laws. Now student loans in America cannot be discharged in bankruptcy court; they are permanent and must be carried and serviced until death. This is the acme of debt-serfdom.

The global banking cartel has declared Greece's debts to be permanent and its people debt-serfs. More precisely, some privately held debt will be written down, but certainly not all of it, and the debt owed to the European Central Bank cannot be written down a single euro: Greece must pay the interest on the full debt, whatever the costs to its people.

We might ask why the fully-financialized Status Quo of financial and political Elites so carefully insures no shadow of ethics passes over the Greek debt crisis: If they did, it would become obvious that when debt becomes more important than people, the system is evil and should be dismantled.

Yes, evil, as in evil empire: the Empire of Debt that now dominates the global economy is intrinsically evil and cannot be salvaged; the only way to rid the planet of its parasitic, pervasive evil is to dismantle it, all of it, everywhere.

Europe is a good place to start. The only way to dismantle the evil Empire of Debt is to stop obeying its commands: Greece should not pay a single euro on any of its debts, starting with debt owed to the Evil Empire of Debt's favorite tool, the Troika of the EU (European Union), the ECB and the IMF.

We are constantly told default and exit from the debtors' prison of the euro would lead to chaos. Unfortunately for the Evil Empire of Debt and its Eurozone army of lackeys, toadies and apparatchiks, this claim is demonstrably false. Thanks to Pater Tenebrarum of the always excellent Acting Man financial blog, we have access to a 53-page report from Variant Perception that completely dismantles the fear-mongering claims of Apocalypse for the Greeks should their government default on its debts.

A Primer on the Euro Breakup: Default, Exit and Devaluation as the Optimal Solution. The only way forward is default and exit from the debtors' prison of the euro.

Once the debt has been renounced, Greece will have to live within its means, i.e. the goods and services produced by their economy. I think a critically important point has been lost in all the fear-mongering: the value of the goods and services produced by an economy remain the same whether they are valued in euros, gold, dollars, bat guano or any other open-market measure of value.

What will impoverish Greece is paying interest on the mountain of debt. If we value total Greek output of goods and services at 100 quatloos, and this economic activity generates a surplus of 10 quatloos, the Greek people can decide to consume that 10 quatloos, invest it or some mix of the two.

If they have to pay 10 quatloos in interest, then there is no capital left to invest in productive assets. As the existing productive assets degrade, wear out and become obsolete, then the goods and services produced will decline, along with the surplus generated. This sets up a positive feedback loop, i.e. a death spiral: as production of value declines, so too does the surplus available to invest in productive assets.

This is why the only way forward is default and exit from the debtors' prison of the euro. The only way forward is to value people more than debt, and to dismantle the evil Empire of Debt.

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sabra1's picture

let's see what God has to say about that!

lotsoffun's picture

lots of fun  - problem is - there are a couple of guys running around with using that title.  kind of like 'managing director'.  we all think of our guy as the one - but jehovah, buddah, allah.  don't forget zeus - although i think he's been downgraded.  who is reporting to whom?  apologies for all of those that i missed.  just trying to have a laugh, not stepping on toes.

 

 

lotsoffun's picture

the kicker in lloyds statement was - he meant 'jehovah'.  and not all of us call jhvh god.  so, really, it's up to his tribe to decide whether they agree with him or not.  get it?

 

monopoly's picture

We have been discussing this exact scenario for months here. Forget the banksters and their minions. Close the doors and put a "Do Not Disturb" sign out while you get your house in order. Default on all the debt, gear up the old drachma printing presses and call the folks in Iceland for a little guidance on how to move forward. They sure are doing a good job.

Why would the Greek people lose whatever they have left just so the banks get their interest payments. And it is OK to wipe out the private investors  but the rules say the European factions must get every dollar. Just tell them all to get Fucked.

Yes, you screwed it up with your absurd living and give aways but start over, take the pain, work within your own system and when you are ready, remove the "Do Not Disturb" sign and replace it with "Open for Business". 

GREECE, YOU CAN DO THIS. YOU CAN BEAT THEM!

cossack55's picture

If you were to get Bulgaria and Ireland to jump with them, they would become the BIIGs.

Marco's picture

Their currency is caught up with their ability to access the European market (it shouldn't be, but it is ... TPTB have made it clear that if they get out of the Euro they get out of the EU free trade area).

Do not disturb is not an option ... with some austerity they can get away without foreign financing, but they still need to be able to export to pay for their oil imports. Very few countries can afford to be in isolation in this day and age.

Iceland's energy resources are part of the reason why they could pull off their default ...

DutchR's picture
Iceland’s new banking disaster?

http://blogs.ft.com/economistsforum/2012/02/iceland%E2%80%99s-new-bankin...

 

The original article was from globalresearch but they are down at this moment: http://www.globalresearch.ca/index.php?context=va&aid=27673        (you can still read it through google cache, google: "globalresearch iceland" )

 

"owners of the old banks were given control over two of the new banks (87% and 95% respectively)"

What could possibly go wrong......

 

A Lunatic's picture

Fractional reserve misery, Bitchez.

Atomizer's picture

 

 

Look, we have a new media distraction for the next couple of days. Hahahahahahaaaa 

 

Former IMF chief Dominique Strauss-Kahn to be quizzed on prostitution ring  

by: NewsCore

From:Herald Sun

February 19, 2012 12:00AM

 

It won’t be long, News Media outlets will be headlining.. ‘Our Efforts to Provide Journalism Has Become a Three Ring Circus’

cossack55's picture

I heard his pimp was Rupert Murdoch and The Judge found out and was canned.

lolmao500's picture

That's what happens when bankers run countries.

MobBarley's picture

As a Rothchild once asked in a contemptouis lilting vocal singsong, "Is poverty really that bad?"

 

q99x2's picture

  • In the Crosshairs: Drone Aircraft Approved for Use in US
  • CNBC says US Drone Aircraft aid industry in the decoupling process.

    Last year I had to worry about falling spacecraft now they are putting up 30,000 of these suckers that can't even be expected to stay in the air over enemy territories. Then there's the solar cycle, the evil empire and Nigel Farage as guest on Alex Jones. I'm goin fishing.

    cossack55's picture

    Be sure to claim that all of your PMs and guns fell overboard.

    William Wallace's picture

    The Greek people are not really responsible for getting themselves into debt.  The Greek government did it to them.

    The banks bribed the government to do it to them.  The banks gave politicians cushy jobs and other goodies in return for putting the Greeks deeper into debt.  The banks controlled the media, and the banks controlled the economics departments of universities, both of which told the Greek sheeple that debt was a good thing.

    The debt was imposed on the Greek people by the banks, the government, the universities and the media.

    The Greeks should repudiate the debt and impose heavy fines on all these people who betrayed their own countrymen by saddling them with crushing, unpayable debt.

    Whiner's picture

    Could that also be what's going down hard in IOUSA? Get your family or self into a fortress, self sustaining, Chumps!

    LasVegasDave's picture

    who voted the pols in?

    The pols acted on behalf of the greek people who wanted goodies and lots and lots of free stuff.

    I gotta laugh when I hear the term "debt slave"

    As if the debt just magically appeared.  Greeks pissed away the $$ the crooked bankers lent them.

    If they want to default, let them. But slaves?  Yeah, slaves with 30 hour work weeks.  and pensions.

    Excursionist's picture

    My thought exactly.  A fool and his money are soon parted, and in the case of the Greek populace, fools and their freedom are soon parted.

    Why oh why does ZH continue to give air time to buffoons claiming banks' culpability in nations, states, cities, corporations and individuals over-leveraging themselves?

    I'll say it once again - lenders are like enterprising crack dealers providing supply to meet demand.  You don't want to end up face down in the gutter?  Lay off the fuckin' pipe!

    blunderdog's picture

    The same logic applies to you too.  You realize that, right? 

    You deserve your share of that $15T (not to mention the $80T or whatever in "unfunded liabilities") of debt because you've been getting the government you asked for.

    Excursionist's picture

    You're absolutely correct.  The (morally dubious) hope by the typical, semi-literate American is that he dies before his bill comes due.  The kids can fend for themselves.  Bask in all the glory of this Baby Boomer ethos.

    Augustus's picture

    That is as nonsensical as anything I've read here.

    Look at what is currently going on there.  They are rioting because the government is not giving them enough stuff.

    The population has been lead to believe the communist / socialist lies for 50 years or more.

    They demanded the feather bedding and benefits.

    The government simply gave them what they demanded, that is how it works in an out of control democracy.

    International bankers did not force anything on the population in any way.

    geekgrrl's picture

    While it might be true that international bankers didn't force anything on the population, it does not logically follow that the population consented to the actions of the government in incurring that debt. That is to say, some part of it, probably a large part, is odious debt.

    Also, I'm in agreement with CHS that the lender is the one who should bear losses in case of a default. Otherwise, where is the risk in lending? If you can lend to a country and if they default, permanently enslave them, then you should state those terms up-front, and not come along later and say that because you can't pay your debts, the people are now debt slaves to central bankers.

    The answer is a debt Jubilee, and it is the only answer.

    Excursionist's picture

    Pray tell, how do voters NOT provide consent every time they step into a ballot booth?

    If your answer relies on some permutation of 'stupidity and / or ignorance among the electorate', then fine.  I'd then venture that stupid / ignorant voters receive the same treatment as other mentally deficient members of society who pose threats to others (e.g., many schizos are relegated to institutions, non-functional autistics don't get drivers licenses, etc) - their voting priviliges be revoked until their condition improves.

    geekgrrl's picture

    Come now. Everyone here knows the public in many countries are being deliberately brainwashed by the moneyed powers. It's all a game, a show. All voters demonstrate by voting is their belief in the legitimacy of the system.

    geekgrrl's picture

    Exactly. It's odious debt and should be repudiated.

    jm's picture

    People are base creatures that in the main care little about anything but themselves and their own, just a step above Blankfein and two above the cockroaches.  Debtors and creditors are no different, mirror images crawling the earth.  The "system" as you call it, is the interface between the two.  It's not evil, that's too rich a word for how we screw ourselves and each other.

    While there are truly noble and tragic things that happen every day, the story of debtors and creditors is at best pathetic for all involved, at worst just something stupid that happens.  Money has nothing to do with the occasionally noble and tragic things to which we rise and fall.  Let go of the whining.

     

    Errol's picture

    jm, I agree.  I'm your living proof at 60-something that a person can have a middle-class life without borrowing money.  Example: I've never made a car payment in my life...I drove some real junkers when younger, good used car now.

    Lenders want to collect rent on money created from a book entry.  Most borrowers are not investing in productive assests, they just want to live beyond their means.  It's hard to have a lot of sympathy for either one.

    falak pema's picture

     

    When Debt Is More Important Than People, The System Is Evil

    Amen, that says it all about society and its priorities. Putting man centre piece is very important.

    "La seule combat qui vaille, celui de l'homme"...Charles de Gaulle. 

    He was NOT my hero, on all he did. But he did love the historical perspective. That in itself is a blessing. And he paid a high price for his mistakes. Like his defense of "la grandeur de la France". France lost its empire under him, he even dared to sign its death certificate against those who brought him back into power, and whom he destroyed subsequently, his recalcitrant sons of L'OAS. Just for that and for his role as the man of June 18 1940 , de deserves his place amongst the great, much as I abhor his Vth republic, Bonapartist monarchy, and even more so, his neo-colonial  legacy of "Francafrique". 

    Great men are two faced, as their destiny is to clean the Augean stables, all the while they create another one on the sides!

    Sons of Sisyphus all! 

     

    rufusbird's picture

    Plus +1 just for the title!

    non_anon's picture

    yep, the root of all evil is money, is it any wonder the "system" is so evil?

    Atomizer's picture


     

     

    Until the Politicians are held accountable for fiduciary liabilities on failed policies, this bullshit will go on for decades. They're public servants working for you. Can you see the illusion being cast?

    If I took risks in my company and failed, I own the financial burden. Politicians don't give a fuck if the risk is lost, they don't have to pay for their mistakes. Let me repeat.. Politicians are public servants to you!!

    JLee2027's picture

    When Debt Is More Important Than People, The System Is Evil

    Exactly.  Now when are some of you people actually going to step up to the evil of Child Support. It is created "conjured" debt out of thin air. You receive nothing for this "debt". If you don't pay it, expect contempt of court, revocation of your driving priveleges, seizure of assets, and possibly Jail.

    Now Fathers do have an obligation for your children. But the Government HAS NO RIGHT to tell you HOW to support your own children.  Do you have a living place for them? Food and clothing? Good schools?  If so, that is your support for the children - let them live with you.  Then it's by choice that the other party refuses to allow the children to live with you, then you have NO obligation and the Government has no business telling you otherwise.

    If you don't want the children to live with you, then by all means send a check every month to support them.  But again, the Government has no business making sure you're doing that. This is an Overreach - done because the States get 50 cents back on every Child Support dollar collected. So it's in their financial interest to force you to pay. This is wrong, it is tryanny.  And it is Unconstitutional.

    The child support money then is more important than the children. That is why the courts routinely replace the Father in the family, he becomes a second class citizen when in fact his he the God Given leader of his family. Money is the drug that tempts the Mother into this evil.  They (the courts) don't give a damn about the children. They wouldn't know your children if they saw them at the Mall, but the Courts/Social Workers/Attorneys are first in line to chop up and hand out the money - regardless of the impact on the welfare of the children.

    If you are the family breadwinner it is only by the grace of God that you have been spared this evil.

    This most evil system is dying now.  There are people standing up to the courts and refusing to abide by their anti-God laws for religious reasons (I am one of them). Have faith, we the People will win this.  I predict within a few years these laws will be recognized as the evil they truly are and will be throw out.

     

    jm's picture

    This attempt at dead-beat rationalization is a step below Blankfein.  Cockroaches.

    BidnessMan's picture

    So Moral Hazard only applies to borrowers - not lenders?

    jm's picture

    Read the loser's post.  Do you really want to apply a moral hazard argument to a deadbeat dad justifying why he shouldn't have to support his kids?

    blunderdog's picture

    Look on the bright side: maybe Lee's kids will starve to death and his genetic material will (mercifully) not be passed on?

    jm's picture

    I hope he's not a Keynesian.  You can be a deadbeat squatter but only Keynesianism and mistrust of Ron Paul makes you genuine "fucktard sheeple" worthy of abuse. 

    JLee2027's picture

    5 years ago, "Lee" was a lone voice.

    No more.  Stick that up your ass.

    jm's picture

    Go crawl back under your rock.

    Escapeclaws's picture

    I gave Lee an uparrow just to even things out because I hate it when people just assume someone is guilty and start lobbing epithets like "deadbeat". It is entirely possible he is a victim and, for what it's worth, he's dead on about the venality of the system and the actors in it who are basically whited sepulchers using moral sounding language to justify getting their cut. It's almost a general rule that people who accuse you of immorality have their hand in your pocket. A crappy mother almost always gets the kids even if the father is an angel by comparison. Why? because there's money to be made. This is just banksters and John Corzine at a lower level. This should by no means be construed in support of actual deadbeat dads who *should* pay child support and are leaving their kids in dire straits. It's the rush to judgement I object to.

    Boxed Merlot's picture

    While I can agree with your statement on the surface, there is still more to the reasoning.

     

    The demand for the real estate baskets was primarily from government union retirement accounts that were receiving ridiculously inordinate amounts of monthly "contributions" looking for returns.

     

    These accounts, from the likes of calstrs, calpers, ect.  were being administered by less than astute "members" on a regular monthly timetable that WS could count on like clock work.

     

    These socialist wage garnishing actions exempted their members from the eventual social security trainwreck and only hastened its demise.

     

    Without this demand for "free market" "asset" backed investment instruments, mbs garbage would never have passed the smell test.  But that, combined with Barney fueled ramming of fannie and freddie "guarantees" more than assured the melt down of the US middle class and its current aftermath.

     

    Where's Corzine? 

    GeneMarchbanks's picture

    Creditmoney is sadomasochism. We've covered this ground already. More need not be said.

    The monetary system in the West won't change without a major philosophical overhaul and maybe a military coup. No going back. Nations will have to barter or find new 'money' to exchange and find new ways to endure. Those who cling to old wasy will perish.

    JohnKozac's picture

     

    Zero down loans still handed out:

     

    In the late 1990s and starting in the early 2000s Wall Street investment banks thought it would be a smart idea to go with “easier” standards (aka a pulse) and fueled the housing mania.  Fannie Mae and Freddie Mac was put into conservatorship after the collapse and yet little has changed in terms of housing finance.

     

    http://www.doctorhousingbubble.com/fha-loans-nothing-down-low-down-payme...

    House prices will not recover (or even stabilize) until there is a return to proper lending standards; i.e., 20% down, job requirements, etc. Until then prepare for continued falling RE market.

    debtor of last resort's picture

    "Who is responsible for the creation and extension of credit? The borrower or the lender? Answer: the lender.

    In other words, if the lender is foolish enough to extend huge quantities of credit to a poor credit risk, then it's the lender who should suffer the losses when the borrower defaults."

    In the end, 'they' will be hold responsible.

    In the end, that is...

    Marco's picture

    Unfortunately they have covered their tracks pretty well and have spread their ill gotten goods wide through their dynasties ... in the end the only way to recognize them will be by one trait which can't be disguised, they're rich.

    jack stephan's picture

    This is a thousand monkeys working at a thousand typewriters. Soon, they'll have written the greatest novel known to mankind. (reads one of the typewriters) "It was the best of times, it was the BLURST of times"?!

    tony bonn's picture

    "When Debt Is More Important Than People, The System Is Evil"

    praise to the all laudable and all glorious charles hughes smith.....you have finally exposed the wickedness of perpetual debt and the debt barons....

    declare a year of jubilee, declare the year of the lord and his deliverance.....fuck debt and fuck the banksters.....

    Tsar Pointless's picture

    Well, if we had a more equitable distribution of wealth in this country (i.e, the top 400 richest Amerikkkans didn't have the same amount of wealth as does the bottom 50%), and if there was a fairer tax structure in this country (and NOT the misnamed "fair tax") such as the one we had prior to St. Ronnie of Raygun, we wouldn't have the need for such massive amounts of debt for Amerikkkans in specific and Amerikkka in general.

    A "sound money" policy would go a long way to level the playing field for regular Amerikkkans. But we can't have that. The rich wouldn't get richer. And that would be un-Amerikkkan.

    snblitz's picture

    We did have a more fair tax:

    US Constitution:

    No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.

    Unfortunately that line got deleted later on.

    zerozulu's picture

    Debt is a way to control other humans’ life. A society, where people with intentions to control other human’s life get in power is an evil society.

    This is nothing new. This has happened in the history all the time and I can see French revolution II in the making.