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Iceland and Debt Forgiveness

Discussion in 'BBS Hangout: Debate & Discussion' started by RedRedemption, May 6, 2012.

  1. RedRedemption

    RedRedemption Contributing Member

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    http://truedemocracyparty.net/2012/...debt-forgiveness-is-the-last-and-only-remedy/

    The source is a little... radical to say the least. However the story is true.
    This would be like the country-sized version of YOLO. Lol.
     
  2. Northside Storm

    Northside Storm Contributing Member

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    A better potential solution than TARP if done right. It is amusing to me that this was never even really thought of in the United States.
     
  3. RedRedemption

    RedRedemption Contributing Member

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    Apparently, according to the source, this is being blacked out from all major and minor news sources in America.
     
  4. Northside Storm

    Northside Storm Contributing Member

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    For the longest time I've been wondering if instead of pumping liquidity into degenerate firms that mishandled liquidity, we'd pump liquidity into homeowners instead...how that would work. I mean, I think it might work better than TARP.

    I'm not surprised there hasn't been more discussion of this idea, it's dangerous to people who always run around saying the banks prop up everything, point finale.
     
  5. geeimsobored

    geeimsobored Contributing Member

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    lol no its not being blacked out. I dont even think our government is capable of doing something like that.

    The IMF has been talking about this for months. This is something the US actually did during the depression and seeing as how banks have been pretty uncooperative after the bailout when it comes to reducing household debt, the IMF has suggested debt forgiveness programs to lower household debt. And considering how toxic some of these mortgages are, simply writing them off really isn't a big loss. They've already been practically written off since even foreclosure has next to no value in some of these neighborhoods.
     
  6. AroundTheWorld

    Supporting Member

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    Doesn't that mean that people who built a house on debt basically get their house for free, paid by taxpayers who did not build their house on debt, but instead decided to save until they would have the money to build a house?
     
  7. RedRedemption

    RedRedemption Contributing Member

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    Yup.
    Also puts the burden on lenders instead of debtors.
     
  8. Northside Storm

    Northside Storm Contributing Member

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    That'll be a better sap to systematic moral hazard then anything else.

    We can live with encouraging moral hazard from big ass banks that can take the whole economy down---

    but we can't live with helping a fellow neighbor?

    Yeah, something's wrong with that.
     
  9. Commodore

    Commodore Contributing Member

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    Why is it a good thing for people not to pay back what they borrow?

    Who took the haircut, the banks or the taxpayer? (i.e. who owned the mortgage?)
     
  10. Raven

    Raven Member

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    Everything is built on debt. Our entire way of life is based on debt. It's a collar around our necks. That's what this is about. The people you suggest are getting screwed are also victims. This isn't taxpayers verses moochers. It's wall street verses everyone.
     
  11. Northside Storm

    Northside Storm Contributing Member

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    When it's sent as a warning to the banks not to borrow out to subprime borrowers ever again?
     
  12. Commodore

    Commodore Contributing Member

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    so why lend at all?
     
  13. Northside Storm

    Northside Storm Contributing Member

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    Because you make usurious profits on capital, even when you're just a retail bank passing out safe loans.
     
  14. Commodore

    Commodore Contributing Member

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    So the borrower gets to default and keep the asset?
     
  15. Northside Storm

    Northside Storm Contributing Member

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    Yep, stops the slide of real estate prices that sank the big banks in the first place.
     
  16. RedRedemption

    RedRedemption Contributing Member

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    Who's fault is it? The guy who took out a loan he could not pay? Or the banks who gave him the loan knowing full well he couldn't pay.

    Are these debts going to get paid? No. Its choking our economy. Default and start over. Conservatives love telling poor people to suck it up and stop being impoverished like it was their fault.

    This is effectively the reverse angle of that. Suck it up. Except the only difference is the rich can afford to pay for this. 50 years ago, after WW2, the rich gladly took on the burden and paid of the national debt which was just as bad as it was now.

    Its happened before and more importantly, it has worked before.
     
  17. Commodore

    Commodore Contributing Member

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    You want to reinflate the real estate bubble?

    There already is a disincentive for issuing risky loans, the loss of interest payments that come with default. Of course, the state mucks this up by backing the loan, and then condemns the bank for issuing it!

    But the asset belongs to the lender until paid for.

    When the state starts dissolving contracts by force, be very afraid.

    Europe is becoming a scary place. The makers should flee before the takers devour them.
     
  18. RedRedemption

    RedRedemption Contributing Member

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    The state backs the loan in order to PREVENT banks from dying because of it. Inevitably in the pursuit of greater wealth banks will take that risk since there has been no RECENT precedent of failure. Might as well take insurance for something that you know is going to happen.
     
  19. Commodore

    Commodore Contributing Member

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    Why would the bank issue the loan if the borrower couldn't pay? Because the state was backing the loan.

    When you default you don't get to keep the asset. That's insane and immoral.

    Can you imagine borrowing $1000 from a friend to buy a stereo, and then telling him you won't pay him the money back or give him the stereo (even though you gave your word you would)? And then claiming the moral high ground and condemning him for lending you the money!
     
  20. thadeus

    thadeus Contributing Member

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    Commodore refuses to believe that something that is good for the general populace is actually a solution. He is mired in the mindset that only policies good for the wealthiest members of society are good for society as a whole.
     

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