is a 'Debt Jubilee' The Only Way to Avoid a Depression? (washingtonpost.com) 402
The Washington Post just ran an interesting op-ed from a research professor of economics at the University of Missouri:
Massive social distancing, with its accompanying job losses, stock dives and huge bailouts to corporations, raises the threat of a depression. But it doesn't have to be this way. History offers us another alternative in such situations: a debt jubilee. This slate-cleaning, balance-restoring step recognizes the fundamental truth that when debts grow too large to be paid without reducing debtors to poverty, the way to hold society together and restore balance is simply to cancel the bad debts...
The U.S. economy has polarized sharply since the 2008 crash. For far too many, their debts leave little income available for consumer spending or spending in the national interest. In a crashing economy, any demand that newly massive debts be paid to a financial class that has already absorbed most of the wealth gained since 2008 will only split our society further.... The way to restore normalcy today is a debt write-down. The debts in deepest arrears and most likely to default are student debts, medical debts, general consumer debts and purely speculative debts. They block spending on goods and services, shrinking the "real" economy. A write-down would be pragmatic, not merely moral sympathy with the less affluent.
In fact, it could create what the Germans called an "Economic Miracle" -- their own modern debt jubilee in 1948, the currency reform administered by the Allied Powers. When the Deutsche Mark was introduced, replacing the Reichsmark, 90 percent of government and private debt was wiped out. Germany emerged as an almost debt-free country, with low costs of production that jump-started its modern economy...
In the past, the politically powerful financial sector has blocked a write-down. Until now, the basic ethic of most of us has been that debts must be repaid. But it is time to recognize that most debts now cannot be paid -- through no real fault of the debtors in the face of today's economic disaster.
"Critics warn of a creditor collapse and ruinous costs to government," the op-ed argues. "But if the U.S. government can finance $4.5 trillion in quantitative easing, it can absorb the cost of forgoing student and other debt."
The U.S. economy has polarized sharply since the 2008 crash. For far too many, their debts leave little income available for consumer spending or spending in the national interest. In a crashing economy, any demand that newly massive debts be paid to a financial class that has already absorbed most of the wealth gained since 2008 will only split our society further.... The way to restore normalcy today is a debt write-down. The debts in deepest arrears and most likely to default are student debts, medical debts, general consumer debts and purely speculative debts. They block spending on goods and services, shrinking the "real" economy. A write-down would be pragmatic, not merely moral sympathy with the less affluent.
In fact, it could create what the Germans called an "Economic Miracle" -- their own modern debt jubilee in 1948, the currency reform administered by the Allied Powers. When the Deutsche Mark was introduced, replacing the Reichsmark, 90 percent of government and private debt was wiped out. Germany emerged as an almost debt-free country, with low costs of production that jump-started its modern economy...
In the past, the politically powerful financial sector has blocked a write-down. Until now, the basic ethic of most of us has been that debts must be repaid. But it is time to recognize that most debts now cannot be paid -- through no real fault of the debtors in the face of today's economic disaster.
"Critics warn of a creditor collapse and ruinous costs to government," the op-ed argues. "But if the U.S. government can finance $4.5 trillion in quantitative easing, it can absorb the cost of forgoing student and other debt."
too moderate (Score:4, Funny)
A debt jubilee is a nice moderate, historically successful policy. Why stop there? We ought not let this panic go to waste! I say, let's go for a full palintokia.
Re:too moderate (Score:5, Informative)
The German state had essentially been wiped out. Many of the people holding the debt had been killed. Many of the people owing the debt had been killed. Don't even talk about the actual records, that were all on paper, being destroyed. If they had not wiped the slate clean you'd have people trying to collect debt on behalf of dead debt holders, from the dead, based on just their say so. (So, kind of like debt collectors today).
I doubt they could have maintained the existing debt structures without chaos.
Re:too moderate (Score:5, Insightful)
A debt jubilee is a nice moderate, historically successful policy. Why stop there? We ought not let this panic go to waste! I say, let's go for a full palintokia.
For you young whippersnappers, debt is something you owe. But for retired people, debt is something they own. Bonds generate the income they live on.
So have you decided to kill off all the old people by giving them corona, or will it be by making their bonds worthless?
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I though all the old people had bootstraps they can pull up?
Or was much of the wealth for the boomers just happened not by working harder and smarter then the generations before and after them. But from a set of conditions that made it economically stable for their lives?
WWII Putting most of the world in rubble, while the United States infrastructure was unharmed. And people with GI bill getting college degrees, and serving in the military had been trained for a degree of discipline. Allowing the boomer g
Re:too moderate (Score:5, Insightful)
For you young whippersnappers, debt is something you owe. But for retired people, debt is something they own. Bonds generate the income they live on. So have you decided to kill off all the old people by giving them corona, or will it be by making their bonds worthless?
You are correct that this excessive debt is not just bad for the ones who owe the debt, but also for those who own the debt itself. Those who are in debt have difficulty paying it, but those who own the debt will find they own an asset which isn't worth what they paid for. This is why the problem isn't just for those who have taken on debt they cannot pay.
A solution which lessens the burden on borrowers and keeps the economy going so stocks and bonds continue providing returns ends up helping both parties. Lenders may not make as much money as they had hoped, but that would be doubly true in a protracted recession / depression.
Re:too moderate (Score:4, Insightful)
I'm still perplexed why this was a problem in 2008. I just assumed if many loans were under stress that the banks would be tripping over themselves rushing to re-negotiate the terms. They should have had huge motivation to lower rates, delay payments, and all sorts of other things to keep from having to call the loan. That didn't seem to happen to anything lose to the scale I expected. Apparently ownership and decision making got diluted by CDOs which made this difficult. I hope we sorted this out since then.
Why would they forgive loans and re-negotiate rates if they can count on the government to bail them out? They have very little incentive to prepare for worse case scenarios because our government officials (in both parties) are so interesting in rising stock markets they aren't willing to hold financial institutions accountable. You would have thought hundreds of people would have been in jail and hundreds of billions in loan forgiveness issued, but that wasn't how Bush or Obama handled the situation. So it isn't surprising we are in a similar situation today.
Re:too moderate (Score:5, Insightful)
You must be joking. Of course there are shitty ARM mortgages, and higher education prices have been outpacing inflation for decades.
But you seem to miss the point. There are good bonds, like municipal bonds that build the future, and shitty bonds that are basically indentured servitude contracts. If you hold the latter, I hope you lose everything because those are really terrible financial instruments.
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Going to university and buying a house are not guaranteed rights. They are choices. If someone chooses poorly, then they should live with the consequences.
That's stupid. Going to university is nearly a requirement now if you want to have any hope in the current job market. Whether that's a good thing or a bad thing is debatable, but making that choice is not poor decision making. Buying a house isn't a right, that's true. If you're a parent, though, what do you do when your kids are of school age? Just stay wherever you are and hope for the best? Or do you buy a house in a good school district and pay the piper?
But as long as we're talking about what is a rig
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Going to university is nearly a requirement now if you want to have any hope in the current job market.
Says who? I think you are spreading a myth. Here is what turned up right at the top of my google results for jobs that don't require a degree:
check it out [thejobnetwork.com]
And furthermore, Universities are notorious for pitching expensive degrees in fields that are completely saturated, where 95% of the students won't have a prayer of finding work once they graduate (like, say, Journalism). Young kids who don't know how
Re:too moderate (Score:5, Interesting)
No, you miss the point... There is no moral aspects to bonds — all are purchased voluntarily and for the purpose of profit.
That's just stupid. If you hold contracts on slaves, those contracts are immoral. If you hold bonds for mining conflict diamonds, those bonds are immoral. You can make the argument that financial instruments are either legal or illegal, but you cannot say that they carry zero moral weight.
Sure we overspend on basic education, but that's a policy problem. Education is infrastructure and building infrastructure is forward-looking.
And "my ilk" are GenX. You may have heard of us in myths and legends. We haven't done anything because we're just milling around waiting for the Boomers to die.
Re:too moderate (Score:5, Funny)
"A debt jubilee is a nice moderate, historically successful policy. "
Yes, the Trump Hotels and Resorts first, then the billionaires, the millionaires, the well-off and hundred bucks for the rest of us.
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At the end of every seven years you shall grant a release of debts. And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the Lord’s release.
https://www.natlbankruptcy.com... [natlbankruptcy.com]
Re:too moderate (Score:5, Informative)
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"Unfortunately, the monetary system of the USA (and pretty much the whole world now) is a pyramid scheme where debts are traded on paper. "
BTW, à propos 'paper', the toilet-paper industry will buy all the stocks that are in the cellar right now.
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>> There is literally no way to repay everything without the system collapsing
Fortunately there is also no need to repay everything by a fixed date. Furthermore, inflation helps deflate the debt, so, assuming there is at least some some real growth, part of that problem solves itself with time.
There are two choices for who pays the debt (Score:3, Insightful)
You bring up an interesting point, in a non-serious way.
Debt doesn't just vanish, of course, somebody ends up paying. Suppose you loan me money which I use to buy a new truck.
If I don't pay for truck, paying you back, then YOU paid for my truck.
Of course that's still true if the taxpayers pay off the debt - somebody pays.
So we have two choices:
1. People who borrowed money to buy stuff pay for what they bought.
2. People who did NOT borrow money pay for those who did.
Those are the two choices. The money was
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You decide based on a) what you estimate is the risk that Icll never pay vs b) how much you'd rather have $2,200 next year than $2,000 today.
True. And this is precisely the problem. Restating how things are doesn't mean you addressed the counterpoint to the first time it was stated. Microeconomics, while a solid field of study, hasn't much to do with macroeconomics. And at this level things work in aggregate, not atomically.
To make an analogy, what you're arguing is that whether a molecule of water moves right, up, down or left has nothing whatsoever to do with the shape of the walls at an bazillion molecule-lengths from it, that it's entirely d
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Because they are both rates?
Because they're deeply related. Interest rates determine the allocation of investments in productive resources, which in turn determine how much and in which areas there will be growth, stagnation or decay.
Promising to transfer wealth doesn't change how much wealth there is.
Not in the present, but due to the way creation of money works, in intensely shapes how wealth that is going to be created will end up distributed.
Also, your arguments are purely micro-economic. You're thinking in terms of someone with limited assets loaning part of these assets. That may have been the ca
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There's a run on ice cream too now?
Honey,START THE CAR were getting the ICE CREAM!
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Debt has been our key economic driver and also it highest point of risk.
If you want to start a company that is more substantial than a Mom and Pop shop, say you want to Make Electric Cars, or the next new smartphone. You are going to need a lot of capital upfront, and for the first few years your business may not be making a profit, because you are building the infrastructure your company needs. In the meantime, you will need employees who will need to be paid, you yourself should get some money for all yo
Re:Imma gonna go on a buying jubilee! (Score:4, Interesting)
Re:Imma gonna go on a buying jubilee! (Score:4, Interesting)
It doesn't have to be a full forgiveness, it could just be interest forgiveness and an interest rate reduction to current rates.
What I mean is that a lot of people get further in debt, not because they can't pay off the principal, but because they can't keep up with the interest payments, which results in the interest portion multiplying. It would help a lot of people to forgive just the accumulated unpaid interest portion of current debt and to reset the interest rate to current levels. That way people are still paying off what they owe, they are just no longer saddled with onerous interest rates. This, at least, would be relatively fair, compared to trying to figure out what type of debt to forgive as part of a Jubilee...
Forbidding usury is the way (Score:5, Insightful)
As long as money is loaned into existence with usury (please don't use the term "that which is in between" or inter-est), the debt is always greater than the money supply. In short, it is impossible to pay all the debts, because the money to pay it with does not exist.
There are two ways of paying debts: pay with something else (plunder natural resources) or borrow again ("borrow from the future"). This borrowing from the future will come to a halt when all immediate future has already be loaned out and banks don't believe in payback anymore. At this point you have a crisis. We learned absolutely nothing from the last crises. We are doing it all over again.
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As long as incomes rise at roughly the inflation rate
That's a pretty big if.
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You can say that again.
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How are you defining "inflation"? Are you using the DOL standard of the Consumer-Price Index? That's okay on the surface, but that number doesn't include changes in property values, costs for retirement savings, costs for education, etc.
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Cash flowing first and foremost requires money on the demand side. No money -> no demand -> no sale. Unfortunately we have been shifting more and more money to the supply side, that's why the economy is in the dumps as it is right now. It's pointless if you can produce cheaper if there is no money available to buy your stuff at any price.
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I'd argue that demand is effectively infinite. Who doesn't want more stuff?
Spoken like you're poor.
Suppose you made a million a week. How much money can you spend on movies that week? $100? $500? How much can you spend on food? You can get a very fancy meal for $500 and it'll take 3 hours out of your day. How many hours of eating can you stand before you end up in the hospital? Speaking of which, I heard heart bypasses are in vogue right now. Would you like 10 of them? It'll cost you $100,000 each.
"If" (Score:2)
"But if the U.S. government can finance $4.5 trillion in quantitative easing"
That particular fat lady has not taken the stage yet.
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That's just another way of saying "if the government can inflate the money supply by $4.5"
Which implies, based on the current money supply (around $15.5T) an increase across the board of prices for everything of about 30%. So, everyone in favour of prices increasing 30%, raise your hands....
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It's not inflation they're worried about at the moment.
You've not really examined the end-point of debt-fuelled expansion.
Sooner or later, there'll be a breakpoint - enough people will start to say "hey, that's a LOT of debt, maybe we should dial it back a bit", and then there'll be a run of folk desperately trying to convert their debt e.g. interest-only property investment loans* - to cash, AKA sell the properties to reap their value in cash.
And the cash won't be there. It's not there now. It never was.
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It's not inflation I'm worried about at the moment. Just want to remind everyone that the end result of pumping an extra $4.5T into the economy is going to be a 30% rise in prices for everything.
And yes, I know the cash isn't there. We've been living an inflationary economy since the end of WW1 (or the start of the Great Depression, depending on just where you live). It can't last forever, though people have been trying to make it last forever for
Irresponsible Behavior Should Not Be Rewarded! (Score:2, Insightful)
People who have behaved in a financially irresponsible manner, and have racked up massive debts, should not be rewarded. That goes for both individuals and corporations. Rewarding irresponsible behaviour will only lead to more irresponsible behaviour. Once their debts are cleared, low class individuals will simply rack up more debts and expect them to be cleared in the future. Poorly run businesses will expect the government to bail them out every time they fail.
Debts should absolutely never be cleared.
Re:Irresponsible Behavior Should Not Be Rewarded! (Score:5, Interesting)
People who have behaved in a financially irresponsible manner, and have racked up massive debts, should not be rewarded. That goes for both individuals and corporations. Rewarding irresponsible behaviour will only lead to more irresponsible behaviour. Once their debts are cleared, low class individuals will simply rack up more debts and expect them to be cleared in the future. Poorly run businesses will expect the government to bail them out every time they fail.
Debts should absolutely never be cleared. Doing so is a road to economic ruin. People and businesses must take responsibility for their own actions. No exceptions!
That's one way to look at it.
What about the young couple who both had stable, decent-paying jobs who took out a mortgage on a house to live in, and now don't have jobs? The obvious answer is to just take the house back... kick them out and they get whatever equity they've accrued. Only the housing market will have tanked, so they'll be upside-down. Only they will have bought furnishings which need somewhere to go and storage costs money. Only they need somewhere to go and their close family may be in similar circumstances or don't have room to take them in. Only they may have moved away from family, meaning a costly relocation.
I'm not saying the fundamental idea is - or isn't - a good one. I'm just saying that there's a very real human cost here and to insinuate that people who are getting screwed by this circumstance are irresponsible is being selfish, callous, and ignoring the spectrum of fiscal reality between chronically helpless and Jeff Bezos.
TLDR:Some people were living within their means but those means have now vanished.
Re:Irresponsible Behavior Should Not Be Rewarded! (Score:5, Interesting)
This is EXACTLY what personal bankruptcy is for! I would agree that couple did not behave irresponsibly but fate deblt them a bad hand. They should declare bankruptcy. Which would all them to most likely to keep a lot of their other personal assets and savings, surrender the house and discharge the remaining debt. They go solve their problem - movie in with mom and dad, sell one of the cars and rent an apartment for 6 months while they find a job - sell some other retained personal property, whatever they need to do.
The banks gets an asset back, one that happens to now be worth far less than the money they had lent the couple to buy it but guess what they were being paid to take that risk, that is what the interest on the debt was all about! You win some you lose some. If the bank loses to many it means they were either being irresponsible or again maybe fate just dealt them a bad hands. In that case their investors lose but again they were getting dividends or unrealized capital appreciation to take that risk, you win some your lose some. Maybe they were irresponsible and did not do their due diligence before investing or maybe there was a global pandemic. Either way while they are probably pouting saying how unfair it all is the reality is its perfectly fair. What REALLY isnt fair is to dump their burden on people who perhaps very deliberately chose lower risk lower return investments like Treasury bonds. Its not fair to them for this to be monetized away and to see their money devalued.
The whole OMG families and consumers blah blah is a lie. What this is really about is retires and state pension funds! The politicians won't admit it but the simple fact is the state pension funds are all insolvent now unless the market rebounds aggressively (at least on paper). Many of them shifted into fairly agressive growth strategies after the last crisis to try and catch up. Now they are really FOOBAR. SS has less market exposure but demographic problems the government already has to basically fake the data so cost of living adjustments don't make the problem worse. SS payments wont support retirees that still have mortgage debt, and want to eat as well as prices rise. It certainly wont support consumer spending. So that leaves that 401k money. Guess what if all these workers don't see real big returns there after this once we have third coincidental retirement crisis to with our SS and state pension fund crises. These were the real reasons for the TBTF bailouts and they will be the reasons for this round. Jubilee would not even fix the problem! Half of the assets retirees hold are debts; those assets go to zero when the debts are forgiven. Guess what if you have no income, you still starve even if you have no debts, unless you have assets to generate income with either thru sales of them or dividends and interest.
Re:Irresponsible Behavior Should Not Be Rewarded! (Score:4, Insightful)
This is EXACTLY what personal bankruptcy is for! I would agree that couple did not behave irresponsibly but fate deblt them a bad hand. They should declare bankruptcy. Which would all them to most likely to keep a lot of their other personal assets and savings, surrender the house and discharge the remaining debt. They go solve their problem - movie in with mom and dad, sell one of the cars and rent an apartment for 6 months while they find a job - sell some other retained personal property, whatever they need to do.
Giving the housing market right now (affordable houses are practically non-existent, and all new construction is mcmansions, townhomes for the price of an expensive single-family home, or 55+ communities), you think a couple without jobs and with a recent bankruptcy would actually find an apartment that would rent to them?
Re:Irresponsible Behavior Should Not Be Rewarded! (Score:4, Interesting)
Not in the same market perhaps but somewhere yes. People HAVE to be willing to pack up the car and move with the things they can carry. That has been true of other generations and its true of this one if they expect to survive and have a decent life at some point.
I also think when foreclosure crisis two hits, the value of those properties will come down, and rents will come down to match. The banks can't just sit and maintain those assets for ever and the buys can't just generate zero-revenue because they insist on rents nobody can pay. It will hurt but the market will fix this.
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Its not really that weird. Life in NYC costs a hell of a lot more than life in say Richmond VA.. Guess what if you move to Richmond ahead of the rest of the flight from NYC you get to enjoy the capital appreciate on any real-estate you manage to acquire.
Its also true that while you can't just go be a blacksmith there are a lot of jobs that we have lots of regulatory rules on that used to be work anyone could get. We could dump those rules. We have been living above our means. Sometime safety like how much
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Its not really that weird. Life in NYC costs a hell of a lot more than life in say Richmond VA..
Median house price in Richmond, VA is still 265k, with median rents at 1350. Pretty steep for a couple with no job prospects lined up and no safety net to move there from NYC on a whim. Given prices in NYC, your middle income couple probably didn't make enough to have enough savings to afford a speculative move like that. Although on the bright side, the unemployment rate in Richmond was only 2.9% as of 2019.
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Or you could live out of Richmond VA where the average house costs $100k. Sure the commute sucks, but I've done worse.
You don't HAVE to live where it is most expensive. I actually moved away from the city center in recent years. Sure the commute went up but so did my quality of life. And now with this it's really great not to live in a packed city.
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I also think when foreclosure crisis two hits, the value of those properties will come down, and rents will come down to match.
Prices may come down, but if foreclosure crisis 2 hits the economy will tank as well and (effectively)no one will still be able to afford those houses.
The banks can't just sit and maintain those assets for ever and the buys can't just generate zero-revenue because they insist on rents nobody can pay. It will hurt but the market will fix this.
Sure they can, because they will get a bailout. They'll sit on those properties, get the bailout, and ride it out until the recovery. Or, if the banks don't get those properties, the few people with deep pockets will (at bargain prices) and rent them out. And post-recovery the stock market will hit record highs again, housing prices will skyrocket again, b
Re:Irresponsible Behavior Should Not Be Rewarded! (Score:4, Insightful)
you think a couple without jobs and with a recent bankruptcy would actually find an apartment that would rent to them?
The bankruptcy is a non-issue, the lack of jobs is an issue - how are they going to come up with monthly rent without jobs? Why *should* any landlord rent a home to people without income?
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A debt jubilee would dramatically inflate the housing bubble even more. If you think house prices are high now then forgive every mortgages and watch those prices double/triple overnight.
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Personal bankruptcy doesn't clear student loan debt.
Fix that and you'll have a point.
Re:Irresponsible Behavior Should Not Be Rewarded! (Score:4, Insightful)
No, please don't.
The current student loan program is structured the way it is because people used to simply declare bankruptcy after college, sticking the US taxpayer with their college debt, in exchange twenty-somethings couldn't buy a house for 7 years, but they had a free college education.
Student loan debt is unsecured debt that runs in the tens of thousands of dollars per student - if a high school graduate is unable to predict the cost of repaying 4 years of $30K/yr student loans over a ten year period when they go to college, why should the taxpayer forgive the debt?
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Fixing the issues with bankruptcy and student loan doesn't mean just making it easy to declare bankruptcy as soon as you graduate. It isn't an either or situation. Judges and lawyers on both sides are involved to make the results as equitable as possible for both sides. It would be almost trivially easy to draft laws which would not allow the abuses you mention in your post. As if a judge wouldn't notice a student hasn't even tried to pay down debt after graduating is insulting to our judicial system.
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How many millions of American youths have been financially ruined by this simple meme, repeated by every parent and grandparent school teacher and politician:
you can't get an entry level job anywhere worthwhile without a college degree.
Define "worthwhile" - why must a student assume $100Kin student debt to get an entry-level job somewhere?
It's nice how this career advice avoids any specificity in suggesting a college degree - because they are interchangeable, right? A degree in chemical engineering is just as useful as a degree in Women's studies, right? Oddly, they both cost about t
Re:Irresponsible Behavior Should Not Be Rewarded! (Score:5, Insightful)
Yeah, Government policies invariably penalise financially prudent people.
Own your own home? No help with the rent.
Cleared the mortgage? No relief for you.
Have savings? You don't need state assistance if you're out of work.
Have property assets? Sell those before you can get social care.
Have unsustainable levels of loans and credit card debt? Of course we'll help.
Cunts.
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So your complaint is that we don't help people who don't need help and, instead, help people who need help instead?
Re:Irresponsible Behavior Should Not Be Rewarded! (Score:5, Insightful)
No. I find it frustrating that people who are sensible end up funding the irresponsible lifestyles of others.
It incentivises profligacy. Why save for your old age when you can spend the money now and still get the same standard of living when you retire anyway?
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I see why you posted this anonymously. Tell me, if I'm a 1%er then why am I living in poverty?
Who am I stealing from, when I have no income from the Government and no sources of income beyond my own work product?
You're silly.
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If "their best" fell apart as soon as they got sick, lost their job, whatever, then "their best" really wasn't that good, was it? Let's not pretend that everyone living paycheck-to-paycheck isn't currently making payments on car loans that had the negative equity of their previous car rolled into it, has the latest $1K cellphone in their pocket, and eats out 5 nights a week because cooking takes time.
Hint: if you find yourself living paycheck to paycheck, try dialing back your lifestyle and putting a little
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So your complaint is that we don't help people who don't need help and, instead, help people who need help instead?
No, it’s that if politicians can find a majority population of grasshoppers to vote themselves free money at the expense of the ants, they will indulge the irresponsible - who will go right on being irresponsible. That’s how we turn into Zimbabwe.
Comment removed (Score:5, Insightful)
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I entirely disagree. My parents were poor, I grew up in second hand clothing, half my extended family die young from cancer because of their working class lifestyle.
Yet my parents had no debt until they bought a house, which they bought using savings and the assured income from a pension.
I have no debt because I don't take on debt I can't afford to repay. I could easily have bought a house three times the size, at three times the price, and chose not to because it would've left me financially exposed. I've
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That's not what "financially prudent" means. It means you only take on debt you have a reasonably good chance of paying off.
A lower income friend of mine paid for college in a really clever way that I wish I had thought of. She attended a cheap community college for severa
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On the flip side, you could see this as punishing irresponsible lenders, who might then be less inclined to lend to irresponsible borrowers in the future.
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Re:Irresponsible Behavior Should Not Be Rewarded! (Score:5, Informative)
Lenders used to be responsible, but then one party cried poor people can't afford house, cars, colleges and started pressuring lenders to relax their standards. Easy loans then started and everything became very expensive for everyone.
Yeah, I'm sure the lenders absolutely hated getting payments for years and then, when those poor people inevitably defaulted on the loans, getting assets they could turn around and sell. And they certainly didn't adjust up rates or prices for everyone to ensure they would keep making profits.
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Irresponsible lending should not be rewarded either. It's a two-way street.
No bank is forced to lend money to anyone. When they do, the must accept the risk of default.
Re:Irresponsible Behavior Should Not Be Rewarded! (Score:5, Insightful)
People who have behaved in a financially irresponsible manner, and have racked up massive debts, should not be rewarded. That goes for both individuals and corporations. Rewarding irresponsible behaviour will only lead to more irresponsible behaviour.
Damn yeah! Screw all those irresponsible, lazy, good for nothing free loaders like doctors or small business owners! If you can't afford it up front you shouldn't do it at all! And college? If you can't afford it, you don't need it!
Or, you know, there are a lot of things that are beneficial to society and the economy that have substantial up front costs and debt is the only way to get them started. Doctors can come out of med school with hundreds of thousands of dollars of debt. Small businesses, restaurants, etc often require debt not only to start up but also to run for the first couple years before they can really get profitable. Graduating college debt free is technically possible but getting more and more difficult, is pretty limiting, and not possible for everyone. Debt is not inherently a bad thing. But debt such as owning a 500k house and a 90k car on a 50k a year salary and carrying 20k debt on 3 credit cards is bad and irresponsible. It shouldn't be conflated with all debt though.
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Or, you know, there are a lot of things that are beneficial to society and the economy that have substantial up front costs and debt is the only way to get them started.
WRONG. You could have the government pay for college for all qualified students so they won't have to graduate with crippling debt to begin with. Works quite well in many places in the world.
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More generally, government measures should affect all people equally. I wouldn't mind some kind of helicopter money or basic income that is distributed equally to everyone.
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Like the beginning of the game Monopoly.
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They have perfected their modus operandi. Lend indiscriminately and demand government bail out.
In all other countries it is the responsibility of the lender to make sure the borrower has the capacity to pay back. Only in the USA lenders give money to all and sundry with minimal verification. It is possible to provide minimal information, like, name address, ssn and borrow money. SSN is identification, not authentication. But somehow the b
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You are going on the assumption that success or failure are 100% up to bad decisions.
Bankruptcy protection laws, LLC, and Corporations are all about debt forgiveness. There is a degree of risk for any company or even any financial transactions.
Do I buy an Electric Car now, where I can have 10-20 years with a car that I don't need fuel (cheaper per mile electric) and less maintenance. However If I lose my job, then I will not be able to pay off the loan.
Do I keep my ICE/Hybrid Car, and risk oil prices goi
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Firstly , about 1 third of american have medical debt nd half of them around 16% defaulted on it. Unless you are gurgling the fox and right wing kool aid 24/7 there is NO WAY to think people get medical debt because they are "irresponsible".
No. Do you realize how stupid you sound saying that?
One out of 6 Americans have "medical debt" to an extent they defaulted on it. Are you serious? You would have us believe that one one out of three Americans (120 million people) hold significant medical debt, and the half of them (60 million) defaulted on that debt?
What are you smoking?
You continue:
And i am not even starting on those who (like me) bought a house, started payment over a few years , it was also well within my means by all definition even the "faux news" one (I had 40% cash in , I only had to finance for 6 years and could still spare money while financing it !), BUT now due to covid 19 and possibly without a job I won't be able to finish paying it easily.
Your numbers make no sense - you are several years into mortgage you only needed 6 years to pay off, but now the possibility of job loss renders you insolvent?
S
This would also be a GREAT opportunity (Score:3, Insightful)
To introduce a universal basic income.
Various good reasons to do that anyway. Even better reasons to do it in face of the current crisis. Full-blown or not. Just an amount that allows everyone to buy food no matter what. Or a bit more like include housing or basic healthcare costs. Temporary or not.
But in the heartland of capitalism? From the probably-not-gonna-happen dept...
Re:This would also be a GREAT opportunity (Score:5, Funny)
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Maybe not (Score:3, Insightful)
Problem is that this favours people who built up massive debts. Maybe they have a huge debt on real estate and cars, well now they got all that stuff for free. And if the idea gets floated people will be buying the most expensive stuff they can find on credit in the hope that the debt gets wiped out. And if you are one of the creditors, say a business offering finance because margins are so thin in your industry, it could be pretty bad for you.
It only worked in Germany because the country was in ruins and dependent on aid anyway.
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Take car sales for example. They are falling fast, and so are used prices. People suddenly only get half what they were expecting for their old car (no exaggeration) so now they can't afford a new one. The car manufacturers and dealers make a lot of money from finance deals so when this happens they usually offer better finance terms to encourage sales. But if they have a load of cars on finance and the debt is forgiven they basically sold a car for a fraction of what it cost to build and the owner gets to
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The obvious solution is to only eliminate debts made before some date. If we were to do something like this today, you might pick a date as old as 4 or 5 years. If things get worse, you could move that date forward, but it should be clear from the start that new debts won't be eligible for forgiveness.
Re:Maybe not (Score:5, Interesting)
I'd say just eliminate certain types of debt, like student loans and medical bills.
Ultimately though trying to use capitalism to fix this won't work. People are going to need socialism. In the UK the government is paying 80% of people's wages if companies don't fire them, for example. It's not enough but it's a start. UBI would be even better.
Mortgages are on hold and they need to do something about rents too. Things like car finance too.
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I'd say just eliminate certain types of debt, like student loans and medical bills.
Ultimately though trying to use capitalism to fix this won't work. People are going to need socialism. In the UK the government is paying 80% of people's wages if companies don't fire them, for example. It's not enough but it's a start. UBI would be even better.
For right now something like student loan forgiveness (or at the very least, instead of suspending interest they should have suspended payments) and guaranteed income for employees kept on payroll would take care of a good part of the "stimulus", as people would both have more disposable income and wouldn't have to worry about not having a paycheck next week so they can keep spending. Basically you would create a trickle-up stimulus. People will still buy/order food, still need to buy gas, still order thi
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Problem is that this favours people who built up massive debts
You mean like our national debt and yearly deficits?
Or how the banks leveraged the shit out of sketchy financial instruments and got bailed out so they wouldn't go tits up?
A debt jubilee may not be a good idea, but if you're going to make individuals wear the hairshirt, let's talk about the real abusers of debt first.
I cannot eat bread that has not yet been made (Score:4, Insightful)
So comparing the number of tokens available to the common man vs the very wealthy is not a useful metric. We should look at the minimum standard of living (the lifestyle of people who have no tokens) the median standard of living, and the highest standard of living. Those standards of living are what need to rise. Whether our policy changes debt, the overall number of tokens, and who we give and take tokens from the concern must be for those standards of living. Everything else is a red herring.
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You fucker. You posted the first truly insightful comment of the decade on slashdonk when I unusually have no mod points. Not that my +1 would really make any difference.
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Nah, it's just an hour away from the US east coast waking up and modding him down for saying the wealth gap isn't important.
If that's what he was saying, my reply is completely mistaken and should be considered withdrawn. My interpretation is that tokens are just tokens, and that what the wise would focus on instead would be the experience of life of a people.
Apples and Oranges (Score:3)
Let's suppose, just one example, that the US government defaults on its debt. Default is the right word, debt-jubilee is some kind of happy spin.
One third of the debt is held by the same government or the Federal reserve. Talk about bootstrapping. No problems there, I'd guess.
Another third is held by foreign countries and investors. Well, nothing lost there, I suppose, except the fact that the US will keep running a deficit, and the foreign investors may think now twice about buying debt. But perhaps the nullification of interest payments would help enough with the deficit.
And the other third is held by basically individual investors, via their funds, retirement schemes and banks. So your retirement may be halved, not funny. What happened with retirements in Germany after the war? Well, who knows, but the social security net was still to be invented, so there is that.
That is just one debtor. But hey, it worked for Germany. I suppose the individual opinions about this jolly idea will depend on which side of the debt equation you find yourself.
How much does that work out per person in the US? (Score:2)
I calculated some large number, but I may have hit too many 0's or not enough.
4.5 trillion has a whole lot of 0's.
As to the companies who are struggling, and previously accepted a bailout and used the money to buy back stock?
Fool me once, shame on you. Fool me twice and declare chapter 7 or 11 as appropriate.
Pay some token amount per full time employee at the companies with issues. Not including their management.
Since part time employees, contractors and H1-B's don't (generally) have any benefits, neither
College has become a scam (Score:2)
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Or how about we stop paying these fat cat colleges hundreds of thousands of dollars.
Some of us sacrificed to keep college costs down. My school only had 2 pools!
Corporations do it (Score:2)
Germany (Score:2)
That worked because no one in Germany owned anything but their share of the pile of rubble Germany was bombed into. (at least the general population. Please allow that oversimplification here)
And it wasn't simply a debt cut. All your assets were reduced, too! (Most of them by the war and not by the reform itself)
I would prefer percentage caps and garnished wages (Score:3)
I would prefer that you capped debt at 10% of a person's income and allow a person's wages to be garnished.
This would make it so that debt could never be debilitating. Depending on the type of debt, I would also be willing
to consider loan forgiveness after a certain length of time. 30 years for mortages, 10 years for student debt.
You could probably not make these retroactive without huge consequences for retirees who own a lot of this debt
but going forward if companies knew that there was a max amount of debt a person could have and they had
to pay it back in 10 years then they would calculate risk accordingly.
No, just no (Score:3)
No, I think a just as impractical idea would be a 2 or 3 month rent/mortgage holiday/car payment holiday. Just don't allow them to be collected. The apartment owners with mortgages would get a free mortgage, so they should be able to sustain no rent. Think of it as all major expenses are put on hold for a couple of months while this thing plays out.
There is no "debt jubilee" (Score:4, Insightful)
Re: What about the debts owed to you? (Score:2)
Before even considering action let the fall land before adding money into the economy because then you'd inject money into the upcoming healthy businesses.
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Excuse me, I went through my entire white person manual twice including the addendum added after the Senate hearing, I can't find the debt forgiveness part.
Hold on...Oh, okay sorry. You're only allowed that if you've got the platinum folder with five diamonds on it. Mine's naugahyde.
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Less than 48 hours ago Schumer was talking about how *delighted* he was with the “bipartisan cooperation” on Coronavirus aid negotiations.
Then Pelosi got back into town, Schumer immediately flipped, and Senate Democrats unanimously voted to block a critical bill.
House Speaker Nancy Pelosi on Sunday said she will halt negotiations with the Senate and move to pass her own coronavirus package in the House, which could drag things out longer than many expected. Pelosi’s legislation will be a $