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Mr. Keen, I am disappoint!!! forgive all debt?
- Thread starter boyd_05
- Start date
I agree lenders should suffer.
But there are some fundamental problems with how the system works. eg. banks should go bankrupt absolutely, but the people who were responsible at the banks have, for the most part, profited handsomely and likely won't suffer in any way.
The problem in my view is in the way we have states backstopping banks through bailouts, guarantees, etc either implicitly or explicitly. It encourages recklessness because there are benefits if it pays off and no personal downside if they lose. It is like going into a casino where someone says they will backstop any losses you have. Without any guarantees that my losses will be given back to me, I will only bet a small amount. With a guarantee to pay my losses I will bet the house because it is all upside, no downside.
The debt jubilee? Just imagine if everybody in this country who was in debt had it written off tomorrow. Would that be fair? Would it be fair if the guy living next door who racked up massive credit card debts buying all the things he wanted while you were prudent suddenly had his debt written off. It would send the message that the reckless benefit and the careful and prudent suffer in comparison. Can't agree with him on it.
But there are some fundamental problems with how the system works. eg. banks should go bankrupt absolutely, but the people who were responsible at the banks have, for the most part, profited handsomely and likely won't suffer in any way.
The problem in my view is in the way we have states backstopping banks through bailouts, guarantees, etc either implicitly or explicitly. It encourages recklessness because there are benefits if it pays off and no personal downside if they lose. It is like going into a casino where someone says they will backstop any losses you have. Without any guarantees that my losses will be given back to me, I will only bet a small amount. With a guarantee to pay my losses I will bet the house because it is all upside, no downside.
The debt jubilee? Just imagine if everybody in this country who was in debt had it written off tomorrow. Would that be fair? Would it be fair if the guy living next door who racked up massive credit card debts buying all the things he wanted while you were prudent suddenly had his debt written off. It would send the message that the reckless benefit and the careful and prudent suffer in comparison. Can't agree with him on it.
hawkeye said:I agree lenders should suffer.
But there are some fundamental problems with how the system works. eg. banks should go bankrupt absolutely, but the people who were responsible at the banks have, for the most part, profited handsomely and likely won't suffer in any way.
The problem in my view is in the way we have states backstopping banks through bailouts, guarantees, etc either implicitly or explicitly. It encourages recklessness because there are benefits if it pays off and no personal downside if they lose. It is like going into a casino where someone says they will backstop any losses you have. Without any guarantees that my losses will be given back to me, I will only bet a small amount. With a guarantee to pay my losses I will bet the house because it is all upside, no downside.
The debt jubilee? Just imagine if everybody in this country who was in debt had it written off tomorrow. Would that be fair? Would it be fair if the guy living next door who racked up massive credit card debts buying all the things he wanted while you were prudent suddenly had his debt written off. It would send the message that the reckless benefit and the careful and prudent suffer in comparison. Can't agree with him on it.
thats a problem i see with it also. Saying that all people that got into debt did so by being 'tricked' by the banks is too much of an assumption and just a convenient excuse. i think its more common that a lot of people that have unsustainable amounts of debt (especially credit card) are in that situation due to over consumption and being fiscally irresponsible.
I also dont think this would be very fair on the people that borrowed within their means and busted their a$$es to pay back the debt. meanwhile, the person next door who maxed out multiple credit cards, over leveraged on their mortgage, and spends like crazy ends up with more than their hard working neighbour for doing all the wrong things
or am i missing something?
edit: but also agree the banks should suffer too
Over in the UK, about 10 years ago it was store cards that were the big problem.
I remember Harrods (Posh London Store) gave store cards to just about anybody who came in through the doors, needless to say they gave them to some students, who immediately racked a hugh debt (I have been to Harrods, it isn't that hard!).
The judge wrote it off saying Harrods was irresponsile for not checking whether the students were good for it or not.
Also British Telecom got into trouble when kids rang up party lines on their parent's home phones, they just rang the number for the good times that were promised and the parents got hit with thousand pound bills. Some say the parents should hve been supervising the children better and some said the telephone companies were irresponsible. The bills were generally split in half from what I remember.
I remember Harrods (Posh London Store) gave store cards to just about anybody who came in through the doors, needless to say they gave them to some students, who immediately racked a hugh debt (I have been to Harrods, it isn't that hard!).
The judge wrote it off saying Harrods was irresponsile for not checking whether the students were good for it or not.
Also British Telecom got into trouble when kids rang up party lines on their parent's home phones, they just rang the number for the good times that were promised and the parents got hit with thousand pound bills. Some say the parents should hve been supervising the children better and some said the telephone companies were irresponsible. The bills were generally split in half from what I remember.
boyd_05 said:Yea, i went and had a look around Harrods when i was in London. Didn't buy anything though, lol i had a budget
You screwed up!
You go in, you look around for half an hour, then you buy the cheapest thing you can and they put it in a big green and gold Harrod's bag for you.
You then walk around and put all your other shopping in the bag so people think you are rich and then when you go home you smooth out the bag and keep it, forever. I still have my bag somewhere but to be honest I don't think it fools anyone (and this was back in the day before you got mugged everytime you left the house)
I don't think Prof Keen was saying to have a debt Jubliee just for the sake of it. From what I understand from other words of his, if the system is to stay the same then the debt has to be written off if the debtor can not pay. Sure he loses his house and the bank takes a loss also.
But when it is systemic like this and the whole financial system is in this situation where the normal order of things would have the whole system implode then things need to change.
I hear others trotting out the other side of the story for the little bloke that has been prudent with his money losing out. In case you missed it lads, it is that same guy that is losing the largest in this system. Every time money is printed to bail out these banks, the prudent person gets penalised the most.
I think what we may have missed here is that Prof Keen is advocating that we protect the saver first and foremost and write off all of that ridiculous debt that should have never been issued in the first place and start from scratch. The prudent person wont be hurt at all in what he is saying, and possibly after the reset will be the person best off...... as that person should always have been.
But when it is systemic like this and the whole financial system is in this situation where the normal order of things would have the whole system implode then things need to change.
I hear others trotting out the other side of the story for the little bloke that has been prudent with his money losing out. In case you missed it lads, it is that same guy that is losing the largest in this system. Every time money is printed to bail out these banks, the prudent person gets penalised the most.
I think what we may have missed here is that Prof Keen is advocating that we protect the saver first and foremost and write off all of that ridiculous debt that should have never been issued in the first place and start from scratch. The prudent person wont be hurt at all in what he is saying, and possibly after the reset will be the person best off...... as that person should always have been.
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Bullion Baron said:The banks here are publicly listed, bankrupting them by forgiving debt would put a huge hole in investors portfolios, in superannuations funds, etc, it would put a larger burden on the government and provide a free ride for those who havent earned ot. Agree with most above sentiment that it would be a poor choice to forgive debt on a large scale.
I can't add anything further as it seems people have hit the nail on the head.
Agree completely.
Socialising debt is bad enough, but to forgive debts as well would (IMHO) be outright criminal.
We need to bring back the culture of living within ones means & personal responsibility if we want to have balance, fairness and lasting stability.
Incidently, a free market model would have this condition already built into it as a core foundation.