Mercury Rising 鳯女

Politics, life, and other things that matter

Some good news

Posted by Charles II on November 12, 2012

From Thom Hartmann, t/o:

The Occupy Movement is tackling the nation’s debt problem. Though the physical occupations have disappeared, the movement is busy helping Americans avoid foreclosure and providing disaster relief post-Hurricane Sandy. Now they’ve unveiled a new initiative they’re calling the “Rolling Jubilee.” The movement is raising money to buy debt from financial firms at pennies on the dollar. Then, rather than hounding struggling homeowners and students whose debt they just acquired, Occupy is completely forgiving it. As one organizer explained it, “OWS is going to start buying distressed debt (medical bills, student loans, etc.) in order to forgive it. As a test run, we spent $500, which bought $14,000 of distressed debt. We then ERASED THAT DEBT.” Since Wall Street got bailed out and Main Street got sold out, average Americans are drowning in enormous debt. Good on Occupy for doing something about it.

This is what community based organizing can do and, for those who have read this blog over the years, it’s essentially [1] what I said the government should do long before the mortgage crisis turned into a financial meltdown. If they had done, there would not have been a financial crisis.

Thank God for Occupy. They seem to be the only people with any sense.
___________
1. My solution was actually to force the borrower to reduce the mortgage to the level that it was payable by having the pain shared equally between the bank, the borrower, and the government. What that amounts to is having the government buy the mortgage at a discount, then re-issue it at a lower rate, thereby canceling a portion of the debt. So what OWS did was even better, though I’m sure that the debt they purchased at 4 cents on the dollar was absolutely unpayable.

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13 Responses to “Some good news”

  1. Some people wondered if there still might be tax implications for the debtor, but per lawyer folk I know those are easily avoided: http://my.firedoglake.com/cindykouril/2012/11/12/mayor-bloomberg-owes-ows-an-apology/

  2. MEC said

    This is good news, but the implications are shocking: Primary creditors are willing to sell the debt for less than pennies on the dollar, but they’re not offering such settlements directly to the debtors; often, they’re not even willing to renegotiate the debt so the debtor can pay back the full amount on easier terms.

    • Charles II said

      MEC, this is what I have been screaming about since 2007. Creditors would rather that families be thrown into the streets, that vacant homes become crack houses, that whole communities be destroyed than that they write down assets.

      They have a sort-of reason: If too many assets are written down, then Assets < Liabilities. This is called bankruptcy. But when they sold the debt for pennies on the dollar, they realized the loss. At the point they realized that there was no way to stave off writing down the asset. But by delaying the recognition of the loss, they gave themselves time to earn some more money or for other assets to recover value, and thereby avoid bankruptcy.

      But this is where government should have stepped in and said, "We want you to realize the loss early, so long as we can keep this person in the home. We will reduce the loss and guarantee the asset."

      Unfortunately, the people we have in government have not learned the lessons of the 1930s, because that is what HOLC did.

  3. Johnny B. said

    A near-meaningless gesture. Very very very very very very few creditors are in a position to accept pennies on the dollar for debt as was the case here. And paying off $14,000 with $500 is like spitting in the ocean when you’re talking about so many trillions of $$$ in both public and private debt. The fact remains that the United States has embarked on an unsustainable spending spree that will come horribly unraveled over the next two decades and leave the standard of living in this country so poor that we will essentially sink to third world status. Thank you, liberalism, you have ruined this once great country.

    • Charles II said

      By your reasoning, Johnny, if a doctor sees a sick person, he should let them die, since, after all, saving one person means nothing when there are so many sick people.

      But it means a lot to the person he/she saves.

      Liberalism did not run up this nation’s debts. It was Reagan and the two Bushes. You can look it up.

      But you won’t, because you’re what conservatism has done to the country: turned it into a bunch of angry old guys who don’t know anything but spend all their time telling people about it.

      Loudly.

      • Johnny B. said

        Actually, I’m not a conservative. I’m a libertarian. Big difference. I’m actually a classical liberal, but modern-day liberals like yourself have hijacked the label and polluted the political waters with your perverse ideals.

        By the way, your deflection about the doctor/sick person was irrelevant to my point. Of course an individual act is very important to the individual. But there’s not a chance that anything meaningful is done in aggregate when so many people in this country are so clueless about capital and resource management.

      • Charles II said

        Johnny, you’ve avoided the only substantive–and proven–point of this discussion:Reagan and the two Bushes are responsible for the debt.

        If you don’t wish to debate facts, I will refer you to our Policy on Posting, which says, in part:

        in order to keep this fun for all concerned, it has to be a real conversation. That means real facts, genuinely-held beliefs, and mutual respect. If you’re not willing to take the risk that your opinion might be changed by talking to someone, well, then, are your beliefs really worth holding?

        So far, you’re about as much fun as an apparatchik at a Party Congress.

      • Johnny B. said

        What’s to debate? In other words, who said I disagreed? Yes, the Reagan and Bush regimes take much of the blame for the debt crisis we have. But that’s not mutually exclusive to the point I made that liberalism has also brought us myriad issues that will lead to our downfall/demise. Your deflection and snide tone in trying to smear me with political characters who don’t represent my point of view is indicative of just how substance-less you are.

      • Charles II said

        Johnny B. says, “Reagan and Bush regimes take much of the blame for the debt crisis we have…liberalism has also brought us myriad issues that will lead to our downfall/demise”

        So, you will please enumerate at least one of these myriad issues that “liberalism” has done to bring down the republic.

        I am getting really tired of this Johnny. It is trolling. Unless you start seriously debating the issue, you will discover that you are unable to post on this site.

      • Johnny B. said

        I am a troll who has overstayed his welcome.

        I insist you listen to me even though I have nothing to say.

        (slightly edited by siteowner for clarity)

    • Johnny B. said

      As for “seriously debating the issue,” you’re the one who deflected away from my initial point with a rant against Reagan/the Bushes. That point being that there is simply far too much debt, both public and private, to be written down and “forgiven,” the cutesy little effort that OWS is spearheading notwithstanding. But to “enumerate” it for you, liberalism is ideology that champions spending and debt. Those are the policy prescriptions of Keynesians/statists. Unfortunately, people of that persuasion make up the majority of both our major political parties. Yes, that’s the inconvenient truth here. There’s not really a dime’s worth of difference between Democrats and Republicans. Both have championed unsustainable spending and debt in the name of giving more and more control of the economy to the state.

  4. MarkH said

    As I understand it the plan actually was for gov’t to buy the bad mortgages from banks at some discount and then to repackage them for resale. But, a one Edward DeMarco and Republicans in Congress decided to muck it up.

    We’ve got the best gov’t and economy a divided public and right-wing ideologues will allow.

    If they refuse to hold down tax rates on the middle-class it will be a great big “FU” to America. After that I’d expect ‘em to start yelling “Get off my lawn!”

    • Charles II said

      Edward DeMarco only holds that position because President Obama failed to appoint someone to head the FHFA when he had a chance. It’s easy to blame Republicans, but they are always a–holes. It’s up to Democrats to figure out how to get around them.

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