I think it's time to consider debt forgiveness

AARRRGH

I am cautious with my money, live within my means, save a significant amount of my salary each month, and have no debt. I avoided buying property during the "boom" because I thought houses were a rip off. In other words, I am the exact sort of person who will be unfairly screwed over by debt forgiveness.

Let's examine for a second the current problem and the current solution:

Current problem: there is too much debt.
Current solution: create more debt.

When you break it down this simply, it becomes obvious the current solution cannot work and is only going to create a larger, more painful recession at some stage in the future. Probably the not so distant future. And I worry this means my savings could be at risk.

So I've now reached a stage when I'm willing to accept an unfair tax to get us out of our mess.

Are any of you - in particular those of you who are not in negative equity - also coming around to this way of thinking?

inforfun

Abso-****ing-lutely not.

As we say in Holland: If you burn your arse, you have to sit on the blisters.

AARRRGH

inforfun wrote: »

Abso-****ing-lutely not.

As we say in Holland: If you burn your arse, you have to sit on the blisters.

OK, I understand it's unfair, but that's not the point. The point is our current solution cannot work and is just going to create a bigger problem for everyone.

ntlbell

AARRRGH wrote: »

OK, I understand it's unfair, but that's not the point. The point is our current solution cannot work and is just going to create a bigger problem for everyone.

Who do you plan on forgiving

AARRRGH

ntlbell wrote: »

Who do you plan on forgiving

Greece, Spain, Portugal, Ireland, etc.

So I'm talking about national debt more than personal debt.

It wouldn't have to be full forgiveness, it could be 25c in the € or something like that.

Being straight up I don't know how exactly it should or could be implemented, I just know our current solution - create more debt - cannot work and not only is delaying the inevitable but is going to create bigger problems for everyone.

danbohan

AARRRGH wrote: »

Greece, Spain, Portugal, Ireland, etc.

So I'm talking about national debt more than personal debt.

It wouldn't have to be full forgiveness, it could be 25c in the € or something like that.

Being straight up I don't know how exactly it should or could be implemented, I just know our current solution - create more debt - cannot work and not only is delaying the inevitable but is going to create bigger problems for everyone.

their is debt forgiveness , its call defaulting , coming soon to a country near you

inforfun

I am in the position to just pack my bags and leave tomorrow if needed.
And that will be exactly what i am doing if the day comes that a "NAMA for the little guy" or whatever they are going to call it, comes in action.

I have lived her for 8 years and I have been looking in amazement how people signed up for 30+ years of mortgages based on 2 salaries. I had numerous calls from my bank if it wasnt time i considered buying.
I didnt have any problems to resist the urge to buy, no matter how much pain i had every month paying rent.
But just a bit of common sense and a little bit of knowledge (most of these "superb quality apartments" will fall into pieces in 10/15 years time) and now i am not upto my eyeballs in debt.

There were people in those 8 years that happily screwed me over with absurd rents and now i have to bail those people out?

AARRRGH

danbohan wrote: »

their is debt forgiveness , its call defaulting , coming soon to a country near you

No, it's not the same.

Defaulting will cause panic and serious problems.

Debt forgiveness can be controlled and structured...

ntlbell

Isn't this the equivalent of each country just raising each of their tax bands?

Which we know from previous problems you can't tax your way out of it?

Our current borrowings are so high because of a bloated overpaid PS and the current heavy load on SW because of increased unemployment who are also overpaid.

Would it not make more sense to reduce our borrowings significantly, investing the money in job creation to reduce the load on the SW.

If this would done it would also reduce the cost we currently pay for credit and be more beneficial than giving everyone a pat on the back from their mistakes and no lessons will be learned bar if I get myself up to my nipples in debt i'll be bailed out?

I'm not sure I fancy this too much.

AARRRGH

inforfun wrote: »

I am in the position to just pack my bags and leave tomorrow if needed.

Do you think Holland will be immune when Greece, Ireland, etc. default?

If you remove any emotions and think about it logically you can see our current solution is going to end in a lot of pain for everyone.

As stated already, I have done everything right when it comes to my finances, and am almost militant when it comes to personal responsibility , but logically I can see we have little choice.

silverharp

Countries default all the time, so I think the likes of Greece should default and negotiate new terms. It would be up to their government to demonstrate that they would restructure the economy so that the remainder could be paid back or that they could run the economy at breakeven.
Wasnt it a Rogoff study that outlined that any economy with a debt to GDP above 90% will suffer slower growth by about 1% per year so its in no countries interests to maintain crippling debt. Here the moral hazard reverts to the banks and pension funds for bank rolling these drunks

AARRRGH

ntlbell wrote: »

Isn't this the equivalent of each country just raising each of their tax bands?

Which we know from previous problems you can't tax your way out of it?

Our current borrowings are so high because of a bloated overpaid PS and the current heavy load on SW because of increased unemployment who are also overpaid.

Would it not make more sense to reduce our borrowings significantly, investing the money in job creation to reduce the load on the SW.

If this would done it would also reduce the cost we currently pay for credit and be more beneficial than giving everyone a pat on the back from their mistakes and no lessons will be learned bar if I get myself up to my nipples in debt i'll be bailed out?

I'm not sure I fancy this too much.

I think you and I both know there will be no "reduce our borrowings significantly, investing the money in job creation to reduce the load on the SW" solution. Nor will there be a fix the "bloated overpaid PS" solution.

There is little political will for these things.

Would you at least agree with me that our current solution - create more debt - is the wrong one?

AARRRGH

silverharp wrote: »

Countries default all the time, so I think the likes of Greece should default and negotiate new terms.

Can the Euro recover from Greece defaulting?

ntlbell

AARRRGH wrote: »

I think you and I both know there will be no "reduce our borrowings significantly, investing the money in job creation to reduce the load on the SW" solution. Nor will there be a fix the "bloated overpaid PS" solution.

There is little political will for these things.

Would you at least agree with me that our current solution - create more debt - is the wrong one?

But if you don't have faith in the government to reduce borrowing etc etc, why do you think they'll handle your "debt forgiveness" package correctly?

Obviously mounting up the debt is not the answer.

Reducing the waste in the PS.

Reducing the PS wage bill.

Reducing the amount of people on SW

Reducing the overall bill of the SW

bringing more people into the tax bands and increasing the overall tax intake by increasing job creation.

these are the answers IMO, is this government capable of that?

is any other party we currently have to choose from capable of doing it?

Scan Man

I think it's time people stopped trying to look for a way out of the crap they piled on top of themselves.

People who took out insane mortgages, which they kept re-mortgaging, to buy the two new car, second house, and three holidays a year deserve to get what's coming to them.

Everyone knew what was coming, yet they think they can now evade the consequences? This is no different than the pissheads on the town who kick the living **** out of people, and then end up in Court trying to evade the consequences.

About time people sucked it up, and took the fall.

Permabear

This post has been deleted.

AARRRGH

ntlbell wrote: »

But if you don't have faith in the government to reduce borrowing etc etc, why do you think they'll handle your "debt forgiveness" package correctly?

Obviously mounting up the debt is not the answer.

Reducing the waste in the PS.

Reducing the PS wage bill.

Reducing the amount of people on SW

Reducing the overall bill of the SW

bringing more people into the tax bands and increasing the overall tax intake by increasing job creation.

these are the answers IMO, is this government capable of that?

is any other party we currently have to choose from capable of doing it?

I don't believe any political party are willing to make the right decisions as it involves "scapegoating" one or more large groups of people. Obviously it isn't really scapegoating, but the PS won't understand that.

So I do not believe the political will is there to make the right decisions.

Hence why I think debt forgiveness needs to be considered. It will piss off a lot of people, but it will also make a lot of people happy. Politically it seems the lesser of two evils.

AARRRGH

donegalfella wrote: »

This post has been deleted.

Because the consequences of Greece, Portugal, etc. defaulting are a lot worse for everyone than having to pay a bit more tax.

Listen, I understand it is unfair. I just don't see any other *realistic* solution.

AARRRGH

Scan Man wrote: »

I think it's time people stopped trying to look for a way out of the crap they piled on top of themselves.

People who took out insane mortgages, which they kept re-mortgaging, to buy the two new car, second house, and three holidays a year deserve to get what's coming to them.

Everyone knew what was coming, yet they think they can now evade the consequences? This is no different than the pissheads on the town who kick the living **** out of people, and then end up in Court trying to evade the consequences.

About time people sucked it up, and took the fall.

Sorry, you're kind of missing the point.

The point is our current solution (what you described) cannot work.

silverharp

AARRRGH wrote: »

Can the Euro recover from Greece defaulting?

Big question! Greece defaulting would stick it to the French and German banks, that would then put pressure on state finances if their was a new round of bank bailouts.
The currency would devalue versus the other currencies, but "kicking the can down the road" wont change anything either. The bad debt will be squeezed out of the system one way or the other. Its like a ruddy game of pass the hand granade.
History suggests that currency unions breakdown eventually and the Euro does have flaws so it cant be ruled out. The German taxpayer and Greek taxpayer are sitting on different sides of the fence.

Permabear

This post has been deleted.

AARRRGH

donegalfella wrote: »

This post has been deleted.

I like this solution.

But is it realistic?

Would the EU be willing to do this?

I dunno...

ei.sdraob

AARRRGH wrote: »

I like this solution.

But is it realistic?

Would the EU be willing to do this?

I dunno...

For gods sake all the eurozone states
ALREADY signed up to the Stability and Growth Pact before
yes its realistic, and several of the states have kept their end of the deal
its a matter of enforcing existing treaties
of course the reckless states are not willing to do this, just like the reckless people here want others who were sensible to pay for their mistakes


there are parallels between Greece and Germany
and
the sensible people in Ireland and the reckless muppets who endebted themselves into a corner

its a pity you cant see the similarities

AARRRGH

ei.sdraob wrote: »

For gods sake all the eurozone states
ALREADY signed up to the Stability and Growth Pact before
yes its realistic, and several of the states have kept their end of the deal
its a matter of enforcing existing treaties
of course the reckless states are not willing to do this, just like the reckless people here want others who were sensible to pay for their mistakes


there are parallels between Greece and Germany
and
the sensible people in Ireland and the reckless muppets who endebted themselves into a corner

its a pity you cant see the similarities

I can see them. You are simply misunderstanding my point.

Idealism and politics do not match.

You want the *right* thing, but the right thing tends to be impractical in politics. We are already seeing this all around us. Come on, why else do you think so many bad decisions are being made? That is why I think debt forgiveness is probably our only solution now.

You are being idealistic if you think the *right* solution will be implemented. We need to focus on *realistic* solutions.

ei.sdraob

AARRRGH wrote: »

I can see them. You are simply misunderstanding my point.

Idealism and politics do not match.

wrong

an irresponsible and cheating husband on one hand and a responsible and faithful wife on the other hand

dont match


nothing to do with idealism, everything to do with responsibility and (gasp) "fairness" and getting a divorce

ei.sdraob

AARRRGH wrote: »

You want the *right* thing, but the right thing tends to be impractical in politics.

Because turkeys dont vote for xmas

Politicians will lie and appease the voters, kicking the problem down the road to next government

in turn creating larger and large problems


how did Greece and Ireland endup where they did? yep weak and populist politicians, giving people what they wanted but what they could not afford to pay for

AARRRGH

ei.sdraob wrote: »

wrong

an irresponsible and cheating husband on one hand and a responsible and faithful wife on the other hand

dont match


nothing to do with idealism, everything to do with responsibility and (gasp) "fairness" and getting a divorce

If you stop thinking about the issue emotionally and think about it logically you will see the concept of fairness is politically unimportant.

They are not going to implement a fair solution.

This is obvious as it is already happening.

The current solution is to continue creating more debt.

This is just going to create another crash.

So when you stop being idealistic and stop hoping for a fair solution you see we don't have many options.

One is debt forgiveness.
Another is force Greece to default.

We are currently doing the latter.

I am saying the former is less damaging.

dan_d

Scan Man wrote: »

I think it's time people stopped trying to look for a way out of the crap they piled on top of themselves.

People who took out insane mortgages, which they kept re-mortgaging, to buy the two new car, second house, and three holidays a year deserve to get what's coming to them.

Everyone knew what was coming, yet they think they can now evade the consequences? This is no different than the pissheads on the town who kick the living **** out of people, and then end up in Court trying to evade the consequences.

About time people sucked it up, and took the fall.

You see, there's people here that keep saying stuff like that. Now I do not believe that everyone who decided they wanted to be a "developer" and now has 3 or 4 mortgages should be bailed out, or that if you're struggling to pay your bills, they should fall on your neighbours. People were incredibly stupid and everyone played their part. But you're talking about almost a whole generation here. What do you think will happen when they "suck it up?" What does that mean? They sell the new cars, stop taking the holidays, put every penny they have to pay the mortgage, still can't pay it, end up in arrears, being repossessed and.................then what? The debt still exists. The bank have a house they can't get the original price for, or get rid of. And a couple/young family is essentially out on the streets relying on the welfare system. I would find it very hard to believe that you don't know one single person without a huge mortgage to pay for a bog-standard house that's now in negative equity. Would you like to see that person "sucking it up"?

It solves absolutely no problems whatsoever, and in fact, creates more. I have not a notion about how to solve this. I've said before here, the biggest problem we have - bigger than Anglo, Bertie Ahern, Roddy Malloy, the DDDA - is the huge mortgages that a large percentage of people are now locked into. They can't be offloaded and in many cases can't be paid.

But screaming for your pound of flesh isn't going to make the problem go away or solve it.

ei.sdraob

AARRRGH wrote: »

One is debt forgiveness.
Another is force Greece to default.

We are currently doing the latter.

I am saying the former is less damaging.

"debt forgiveness" is default

fontanalis

I wouldn't get too carried away about considering debt forgiveness especially when you see people signing up for the same crap that helped get the country into the mess.
http://www.tribune.ie/business/news/article/2010/may/30/jon-ihle-insanity-reigns-as-big-banks-woo-first-ti/

George Orwell 1982

fontanalis wrote: »

I wouldn't get too carried away about considering debt forgiveness especially when you see people signing up for the same crap that helped get the country into the mess.
http://www.tribune.ie/business/news/article/2010/may/30/jon-ihle-insanity-reigns-as-big-banks-woo-first-ti/

Yeah debt forgiveness would create moral hazard. And where would it end. Why not forgive credit card debt while we are at it? Plus its just not affordable. As it is there are many serious economic commentators who believe that Ireland has already too much debt and that we will end up like Greece. If the State was to take on a whole lot more mortgage debt where would we be?

ei.sdraob

George Orwell 1982 wrote: »

Yeah debt forgiveness would create moral hazard. And where would it end. Why not forgive credit card debt while we are at it? Plus its just not affordable. As it is there are many serious economic commentators who believe that Ireland has already too much debt and that we will end up like Greece. If the State was to take on a whole lot more mortgage debt where would we be?

It gets worse

any debt forgiveness for the reckless by the banks we now own

would mean current and future taxpayers would have to pay for it, thats unless this event pushes the country itself to default, and that would be bad for EVERYONE

on second thought, bring it on

AARRRGH

ei.sdraob wrote: »

"debt forgiveness" is default

That's not true.

If Greece announces it is defaulting there will be panic.

However if the EU announces some sort of debt forgiveness measure and carefully manages its message, there may not be panic.

The reality is our current solution is going to cause Greece to default.

ei.sdraob

AARRRGH wrote: »

That's not true.

If Greece announces it is defaulting there will be panic.

However if the EU announces some sort of debt forgiveness measure and carefully manages its message, there may not be panic.

The reality is our current solution is going to cause Greece to default.

debt forgiveness, debt restructuring
call it whatever you want

are a form of a default

heres a definition for you

A default is the failure to pay back a loan

any such move could trigger panic

see history

Argentina defaulted on part of its external debt at the beginning of 2002. Foreign investment fled the country, and capital flow towards Argentina ceased almost completely. Argentina was "left out of the world." The currency exchange rate (formerly a fixed 1-to-1 parity between the Argentine peso and the U.S. dollar) was floated, and the peso devalued quickly, producing massive inflation.
Large-scale debt restructuring was needed urgently, since the debt had become unpayable. However, the Argentine government met severe challenges trying to refinance its debt. Creditors (many of them private citizens in Spain, Italy, Germany, Japan and other countries, who had invested their savings and retirement pensions in debt bonds) denounced the default; the Italian government lobbied against Argentina in international forums. Vulture funds who had acquired sovereign bonds during the critical moments, at very low prices, asked to be repaid immediately.
The state had no spare money at the time, and the Central Bank's foreign currency reserves were almost depleted. (Moreover, whatever amount left was needed to control the availability of dollars in the local market, in order to prevent further devaluation of the peso.) For four years, Argentina was a pariah, effectively shut out of the international financial markets.

AARRRGH

Stop being pedantic. You and I both know an official default and some sort of debt forgiveness scheme are not the same thing and will not be treated by the markets as the same thing. One is chaotic, the other is organised.

Mr Benevolent

AARRRGH wrote: »

No, it's not the same.

Defaulting will cause panic and serious problems.

Debt forgiveness can be controlled and structured...

Isn't debt forgiveness the same as restructuring our debts? Renaming the problem won't fool anyone.

AARRRGH

Confab wrote: »

Isn't debt forgiveness the same as restructuring our debts? Renaming the problem won't fool anyone.

One is managed, the other is not.

They are not the same.

SkepticOne

What is happening now is Greece is being lent money on favourable terms. Instead of formally forgiving debt I think what is more likely is that more money will be lent to Greece at yet more favourable rates. The Greek economy will be propped up at all costs. It will cost the same sort of money as forgiving debt but it will be dragged out over a long period to minimise the political impact.

The Germans and what have you won't be happy but they've got to accept that you can't have monetary union without fiscal union. The French realise this but if they are going to be handing over money they will want some power in return which is why they're proposing this Eurozone fiscal government thing. I can't see countries that haven't yet joined the Eurozone being happy with that though. Interesting times.

maninasia

AARRRGH wrote: »

I am cautious with my money, live within my means, save a significant amount of my salary each month, and have no debt. I avoided buying property during the "boom" because I thought houses were a rip off. In other words, I am the exact sort of person who will be unfairly screwed over by debt forgiveness.

Let's examine for a second the current problem and the current solution:

Current problem: there is too much debt.
Current solution: create more debt.

When you break it down this simply, it becomes obvious the current solution cannot work and is only going to create a larger, more painful recession at some stage in the future. Probably the not so distant future. And I worry this means my savings could be at risk.

So I've now reached a stage when I'm willing to accept an unfair tax to get us out of our mess.

Are any of you - in particular those of you who are not in negative equity - also coming around to this way of thinking?

This doesn't make sense, your savings won't be at risk if placed outside the country. What is your motive for posting?

Nody

AARRRGH wrote: »

Stop being pedantic. You and I both know an official default and some sort of debt forgiveness scheme are not the same thing and will not be treated by the markets as the same thing. One is chaotic, the other is organised.

And the only thing it does is kick the ball further down the runway because the required changes in society, and government, behaviour will not be realized leading to another crash in a decade or two.

Bite the sour apple; default if needed so that yes, people learn that money borrowed is not free. I rather take the pain now then push it further down the line and ensure that people get to really see what pain is about; the society for sure needs to learn it the hard way...

MaceFace

Maybe its just me, but I don't understand what the OP is on about.
What do you mean debt forgiveness?

Who's debt do we forgive?
Do other countries forgive our debt?

I thought when I read this that it was something for the citizens of the country, but it appears you are talking about sovereign debt and I have absolutely no idea what you are suggesting.
Are you saying we should tell our creditors that we are only going to pay them back 25c in the Euro?

barrackali

No way will I accept any form of tax to bail out idiots who bought at the height of a property pyramid scheme....not a chance!

I know of many people who bought houses during the bubble and then went and got investment apartments on the back of their houses....sorry, I am not paying for those fools.


edit it seems I picked up the op wrong? must be the fact that i'm still pissed with Matt Coopers campaign for a NAMA for the little people.

oflahero

The difficult-to-spell AARGGHHH has a good point here, which is essentially the same argument for the welfare state itself - you pay some of your money, which you earned, to help out others in a worse state than yourself, knowing there will always be a minority of undeserving recipients. But that's the deal in return for social cohesion - some unfairness in return for a stable society.

Shouting for a default is easy - in fact part of me is tempted to see it too - in the interests of 'justice', as I'm also mortgage-free and utterly hate the idea of a debt forgiveness scheme for EU member states, let alone the 'little guy' mortgage-holders. Why should I bail out the profligate Greeks, or second-home-owners with Lexus 4x4s and big tellys on the never-never? The problem is the awful sh1tfest that would be involved in a default, the social upheaval, the resultant crime and misery. Who'd want to live with that in return for having been 'right'?

Usual disclaimers:
- no I don't actually *want* to see debt forgiveness, I prefer to see prudent savers rewarded;
- it's not going to happen anyway, as has been pointed out before - the 'who deserves a bailout?' question is unanswerable in the real world.

Lando Griffin

Texter to Matt Cooper show last week " My wife and I have lost our €65,000 a year jobs in Cork and have a large morgage on our house that we cannot afford. My wife is at home unemployed and I am on €400 per week and currently working in Dublin and cant afford to eat. Where is my NAMA.

ei.sdraob

oflahero wrote: »

The difficult-to-spell AARGGHHH has a good point here, which is essentially the same argument for the welfare state itself - you pay some of your money, which you earned, to help out others in a worse state than yourself, knowing there will always be a minority of undeserving recipients. But that's the deal in return for social cohesion - some unfairness in return for a stable society.

Shouting for a default is easy - in fact part of me is tempted to see it too - in the interests of 'justice', as I'm also mortgage-free and utterly hate the idea of a debt forgiveness scheme for EU member states, let alone the 'little guy' mortgage-holders. Why should I bail out the profligate Greeks, or second-home-owners with Lexus 4x4s and big tellys on the never-never? The problem is the awful sh1tfest that would be involved in a default, the social upheaval, the resultant crime and misery. Who'd want to live with that in return for having been 'right'?

Usual disclaimers:
- no I don't actually *want* to see debt forgiveness, I prefer to see prudent savers rewarded;
- it's not going to happen anyway, as has been pointed out before - the 'who deserves a bailout?' question is unanswerable in the real world.

your failing to realize

that the very act proposed by OP could push the already fragile system over the edge

and you endup with what you are trying to avoid

ei.sdraob

Lando Griffin wrote: »

Texter to Matt Cooper show last week " My wife and I have lost our €65,000 a year jobs in Cork and have a large morgage on our house that we cannot afford. My wife is at home unemployed and I am on €400 per week and currently working in Dublin and cant afford to eat. Where is my NAMA.

its at the end of the rainbow next to that pot of gold

barrackali

There would be social issues in such a scenario, but I don't want to reward people who were reckless.....bailing fools out like this will only encourage this kind of behaviour again in the future.

Spudmonkey

Lando Griffin wrote: »

Texter to Matt Cooper show last week " My wife and I have lost our €65,000 a year jobs in Cork and have a large morgage on our house that we cannot afford. My wife is at home unemployed and I am on €400 per week and currently working in Dublin and cant afford to eat. Where is my NAMA.

And was Matt actually sympathetic towards these people?

barrackali

Spudmonkey wrote: »

And was Matt actually sympathetic towards these people?

Matt Cooper was the joker who started this campaign for a Nama for the little people. I enjoyed his show until he started this nonsense.

oflahero

ei.sdraob wrote: »

your failing to realize

that the very act proposed by OP could push the already fragile system over the edge

and you endup with what you are trying to avoid

Coulda, woulda, shoulda. The trouble with this whole argument is that it's just a case of 'my armageddon scenario is worse than your armageddon scenario'. We *know* a sovereign default involves a tide of human misery, it's been seen before. We *think* a managed sovereign debt forgiveness will be a mess too. Whose mess will be bigger?

Lando Griffin

Spudmonkey wrote: »

And was Matt actually sympathetic towards these people?

I know, I always give a small bit to charity but I decide to who and how much.