Stephen Roach Thinks the Unthinkable: Debt Forgiveness

[DaveGillie]

Re: Stephen Roach Thinks the Unthinkable: Debt Forgiveness

http://www.bloomberg.com/news/2011-0...lls-times.html

By Colm Heatley - Aug 21, 2011 9:18 AM ET

Ireland should examine a proposal by Morgan Kelly, an economics professor at University College Dublin, for debt forgiveness for some of the country’s homeowners, Willie Penrose, a junior minister, told the Sunday Times.


The Economist will not be endorsing this candidacy:

http://www.belfasttelegraph.co.uk/ne...-16039536.html

Monday, 22 August 2011

Presidential hopeful Sean Gallagher has backed calls for a debt forgiveness scheme for struggling homeowners.

The businessman said the issue was repeatedly raised by voters as he travelled across the country and said he hoped some form of relief can be considered.

Forgiving debts is NOT Socialism. Using TAX money to extinguish debt IS, as is using Government FORCE. However, normal historical, PRIVATE forgiving of debts is Freedom/Capitalism. Much more MORAL than Socialism

[cjppjc]

Re: Stephen Roach Thinks the Unthinkable: Debt Forgiveness

Of course those who did not live a life absorbed with aquiring things, and living over their real means will feel betrayed in the event of a debt jubilee. This feeling will hurt. It will make them wonder if they were stupid. But the reality is someone who lived their life with boundaries to self gluttony, have aquired something more than property and lifestyle. They have developed something that cannnot be measured in conventional ways. Hopefully this thing they have aquired, can be witnessed by those close to them, and serve as a reminder to what is really important.

[don]

Re: Stephen Roach Thinks the Unthinkable: Debt Forgiveness

Of course those who did not live a life absorbed with aquiring things, and living over their real means will feel betrayed in the event of a debt jubilee. This feeling will hurt. It will make them wonder if they were stupid. But the reality is someone who lived their life with boundaries to self gluttony, have aquired something more than property and lifestyle. They have developed something that cannnot be measured in conventional ways. Hopefully this thing they have aquired, can be witnessed by those close to them, and serve as a reminder to what is really important.

I hear what you're saying, Jersey. There's no way I could do things differently, assuming the law of private property holds up! For most the feelings come through as righteous wrath. Being debt free, would I mind if the debt-laden guy down the street had it all whisked away with a gummit magic wand? It would just be another guy joining the gang bang conga line. After being systematically screwed for years (and years to come) by ZIRP, a certain numbness prevails.

[LorenS]

Re: Stephen Roach Thinks the Unthinkable: Debt Forgiveness

I've gotten accustomed to thinking about this possible outcome, that those who got into trouble will get a do-over, while those of us who acted responsibly will get little or no reward for doing so.
I hardly even get angry about it any more.

I've thought about this as well, but when I look into the mirror don't I see someone who was trying to get something for nothing by using my savings to enable this scenario?

We knew what was happening, but we put our savings into the bank regardless. Does that put us somehow in the guilty chair as well? The banks didn't loan their own money. And we did get to choose which banks to use?

I'm angry too, but I think that I was part of the problem.

[Starving Steve]

Re: Stephen Roach Thinks the Unthinkable: Debt Forgiveness

More regulators that I needed to comply with?

I had: 1.) my business license; 2.) my police reporting forms for the Chief of Police; 3.) the IRS; 4.) my money laundering auditor; 5.) the Canada Revenue Agency; 6.) not to mention U.S. Customs, Dept of the Treasury when I received a package; 7.) Canadian Customs when I shipped a package to Winnipeg; 8.) State of Colorado Sales Tax Board; 9.) State of Colorado income tax; and........

I forgot another regulator, i.e, the banking regulator in Colorado???????????????

Maybe you banking regulators might pay for the bad cheques plus bank charge-back fees that were assigned to each of those bad cheques by my bank? If I deposited 5 x $60 bad cheques for a $300 deposit, each cheque got dinged with a charge-back fee in addition to the $300 charge-back. So it would be (5 charge-back fees) + ( the $300 charge-back fpr the bad cheques).

I am a progressive, a libertarian, and a social-democrat: But why do we need govn't to regulate everything, including how we wipe our rear-ends? My coin shop had nine regulators that I had to answer to, and you say that I missed the 10th one?

Once I sold a gun with a bar driven through its barrel so that the gun could not be fired. Do you mean to tell me that I would have had to answer to the 11th regulator for that sale; i.e, the ATF in the U.S.?

In British Columbia, the regulation has grown to such an extent that the govn't now treats everyone like a child. It's called, '"the 'nanny' state". Government has evolved to such an extent in British Columbia that govn't now baby-sits everyone. You are regulated even for your own good, or so the govn't believes.

[c1ue]

Re: Stephen Roach Thinks the Unthinkable: Debt Forgiveness

I am a progressive, a libertarian, and a social-democrat: But why do we need govn't to regulate everything, including how we wipe our rear-ends? My coin shop had nine regulators that I had to answer to, and you say that I missed the 10th one?

That's all great, but cashing post-dated checks is one form of loan sharking.

That it didn't work great for you is not a reason why it shouldn't be regulated.

[dcarrigg]

Re: Stephen Roach Thinks the Unthinkable: Debt Forgiveness

I hear what you're saying, Jersey. There's no way I could do things differently, assuming the law of private property holds up! For most the feelings come through as righteous wrath. Being debt free, would I mind if the debt-laden guy down the street had it all whisked away with a gummit magic wand? It would just be another guy joining the gang bang conga line. After being systematically screwed for years (and years to come) by ZIRP, a certain numbness prevails.

It definitely is inherently unfair. Unfortunately, I don't see how we ever hit boom years again if at least some debt is not forgiven. If bankruptcy still worked properly, we'd get over this.

Either way, even if the .gov comes around to wash some debt away, you will have a better credit rating than those gluttons of debt.

[c1ue]

Re: Stephen Roach Thinks the Unthinkable: Debt Forgiveness

Either way, even if the .gov comes around to wash some debt away, you will have a better credit rating than those gluttons of debt.

That might not be true.

Those who have debt and were paying it, but had it wiped away via government action, might very likely have a higher credit rating than those who never took on debt (and thus have no track record).

As if we needed more proof that credit rating agencies, as well as credit ratings of any type, are just a gigantic scam.

Note the nature of the scam: credit ratings aren't a function of fiscal solvency. They're a measure of how much FIRE charges you're willing and/or able to pay.

[dbarberic]

Re: Stephen Roach Thinks the Unthinkable: Debt Forgiveness

Let me understand this: The deadbeats who have partied and bought new toys and new trucks, not to mention speculated in over-priced real estate are now going to have their debts forgiven at the expense of savers and producers? Who drempt-up this solution? Hudson? Bernanke? Greenspan? Princeton University?

There are two sides for every loan, the borrower and the lender. While there are those that will personally benefit from debt forgiveness, the lenders on the other side of the transaction will be punished. An un-credit worthy borrower could have never received the loan had the lender not made poor choices in evaluating credit worthiness. It is the bailout of the lending institutions that removed non-payment risk that has permitted poor lending decisions to continue. To fix this, the lenders need to get spanked and have their loans become uncollectable and receive no bailout for the lost principal.
It’s the first step to righting this ship.

[bill]

Re: Stephen Roach Thinks the Unthinkable: Debt Forgiveness

To fix this, the lenders need to get spanked and have their loans become uncollectable and receive no bailout for the lost principal.
It’s the first step to righting this ship.

Not going to happen to politically correct.

Hank Paulson interviewed with Buffet and said we guaranteed GSE debt.

My post:

Hank said we guarantee their debt 11:40min.

http://www.itulip.com/forums/showthr...05194#poststop

[Slimprofits]

Re: Stephen Roach Thinks the Unthinkable: Debt Forgiveness

http://www.imf.org/external/np/speeches/2011/082711.htm

"Global Risks Are Rising, But There Is a Path to Recovery": Remarks at Jackson Hole
By Christine Lagarde
Managing Director, International Monetary Fund
Jackson Hole, August 27, 2011
As prepared for delivery

Second—halting the downward spiral of foreclosures, falling house prices and deteriorating household spending. This could involve more aggressive principal reduction programs for homeowners, stronger intervention by the government housing finance agencies, or steps to help homeowners take advantage of the low interest rate environment.

[Adeptus]

Re: Stephen Roach Thinks the Unthinkable: Debt Forgiveness

Debt forgiveness may turn out to be a great technical solution to the massive financial woes out there, as it helps reset the system; however, what happens after that? Debt forgiveness of the financially incompetent may make them think they were smart to spend all that money recklessly, and so what's to stop them from doing it again? In other words, it would just create moral hazard on a massive scale, and I find that a VERY hard pill to swallow, and one I can't stand behind.


The only kinds of debts I'm ok with forgiving are odious debts: http://www.youtube.com/watch?v=7TdYphvlDk8

Whether imposed against an entire nation or individuals through predatory lending practices - so long as the same individuals were not also in on it.


Debt forgiveness to the morally corrupt might wipe out a financial burden, but doesn't negate all the bad karma that was created and only encourages more to be accumulated on a grander scale. Did we learn nothing from the attempts to bail out all the big banks?

What we need is more Financial Darwinism: You make a mistake? MAN UP and deal with it. Next time, you'll think twice before being so foolish and/or greedy.

[rabot10]

Re: Stephen Roach Thinks the Unthinkable: Debt Forgiveness

Once upon a time, there was a mechanism for the orderly retirement of bad debt known as bankruptcy. Then the bank lobby passed legislation known as BAPCPA made insolvent middle-income debtors into indentured servants.

Just repealing BAPCPA, and allowing bankruptcy "cramdown" of first mortgages would solve a lot of this debt overhang problem without costing the government a cent...at least not a cent that hasn't already been spent, or that will have to be spent regardless.

No truer words have been spoken

[jacobdcoates]

Re: Stephen Roach Thinks the Unthinkable: Debt Forgiveness

So far the dominate them of this thread seems to be debt forgiveness is immoral. I think I will paraphrase just to see if I get it right.

The corrupt, propaganda spewing, immoral, criminal, law re-righting in there favor lenders and rich have a moral right to have all the debt paid to them since they setup the corrupt economic and political system where by the very jobs, income, and livelihoods of these so called partying deadbeat debtor are systematically destroyed and shipped off to what is essential slave labor in other parts of the world so the rich/saver/investors(speculators) could earn a couple of percent more return and start a campaign to massively in-debt their fellow citizens so the could suck what remaining weather their is upward on the economic social scales. Nevermind, the fact that the were lending money they created out of thin air, not real wealth that they actually worked for.
Too top it all off then indoctrinate them(average americans) their WHOLE life that they are suppose to buy a house, go to college to be successful, etc etc. Are we surprised?

Oh I get it how could that not be fair. The people who rewrote the law in their favor said so.


Edit: In the interest of full disclosure- I work for a bank and fund loans

[Slimprofits]

Re: Stephen Roach Thinks the Unthinkable: Debt Forgiveness

So far the dominate them of this thread seems to be debt forgiveness is immoral. I think I will paraphrase just to see if I get it right.

^ divide and conquer not working on this guy

on the other hand:

Let me understand this: The deadbeats who have partied and bought new toys and new trucks, not to mention speculated in over-priced real estate are now going to have their debts forgiven at the expense of savers and producers? Who drempt-up this solution? Hudson? Bernanke? Greenspan? Princeton University?

How is it going to be done at your expense? Your borrowing costs will go up? That means you've been benefiting from the loans going to deadbeats all along. Loose credit for everyone.

Do you hold stock or bonds in debt companies? If so, again, you benefited all along from the loans going to deadbeats.


disclosure: I am not carrying debts that would be eligible for anything like this, longtime apt./house renter