Where's our bailout?
By Thom Hartmann A...
Americans are drowning in debt. A new study from the Urban Institute shows that more than 35 percent of us have debt and unpaid bills that have been reported to collection agencies. These debts include auto loans, credit card bills, hospital bills, mortgages, and even gym memberships and cellphone contracts, and they average over $5,000 dollars a person. Although wages have been pretty much stagnant for the last three decades, the cost of living hasn't stopped rising, and many Americans had to use credit just to get by.
To make matters worse, laws that used to cap interest rates on that credit were weakened during the 1980s, and that opened the door to a flood of high-interest lenders to prey on consumers. Not only did people need credit to supplement their stagnant wages, but they had to pay more to borrow than ever before. The situation was a recipe for disaster. The rising cost of education, health care, and housing made borrowing inevitable, and high-interest rates made defaulting on debt an almost-certainty for many Americans. Fast-forward a few decades, and it's not hard to see how we ended up with more than 100 million people being harassed by collection agencies over debts that they can't afford to pay back.
According to Urban Institute senior fellow Caroline Ratcliff, “Roughly, every third person you pass on the street is going to have debt in collections.” That is flat-out insane. Taxpayers have bailed out the banksters and propped up the too-big-to-jail banks, yet we're the ones who need some relief. It's time to wipe out all debt in our nation and reset the system to repair the damage from three decades of Reaganomics. Let's bail out Americans by calling for a national debt jubilee.
Comments
#2
I'm surprised by your experience, "stecoop". Last I recall hearing was that Congress had tightened bankruptcy laws for us peons, making it a lot harder to access. And not long ago, I read a horrific article in The Nation about debtors' prison making a comeback in "our country 'tis of thee"!
Meanwhile our constitutional rights are being attacked from every angle by these toadies in Congress, while extortion and usury cast a broad net over the 99%. Perhaps you should consider yourself fortunate, "stecoop", to still have a life. - Aliceinwonderland
#3
A national debt jubilee sounds like a wonderful idea. It is nothing more than what the federal government has already given the savings and loan industry. What is the savings and loan industry if it isn't us anyway? A bunch of rich bankers? I say what is good for the goose is good for the gander. We certainly deserve it; and, more importantly, we;re already paying for it!
#4
AIW - It is true that Congress (and their banker toadies) made it much more difficult to file bankruptcy, it's still not that hard. My income at the time I filed was just below the average for the region I live in (one of the new criteria for filing bankruptcy) and I didn't have a significant amount of assets; in fact, all of my real assets were covered by various exemptions. More than 75% of my debt was unsecured - credit cards - and I reaffirmed two of my debts - my mortgage, and my auto loan. I filed pro bono (with out a lawyer) after doing a lot (A LOT!) of reading about the bankruptcy code, the exemptions, my rights, etc. It was an interesting experience, and I hope I never have to go through it again; but the relief from all the stress of trying to keep up with the debts was a great reward.
Obviously, bankruptcy is not for everyone; and there are some people who will abuse the right (which is why congress made it more difficult). But, for many people, bankruptcy may be the best, if not the only, solution.
#5
This just in--although a bit off topic! Methane interaction confirmed in creation of Siberian mystery hole.
http://thinkprogress.org/climate/2014/08/01/3466466/siberian-craters-permafrost-climate-change/
#6
I'd like to see the word "Reaganomics" dropped for "Bushmenomics." Let's give credit where credit is due, and decide whether the chicken or the egg was first.
#7
Stecoop01 is right... the relief from so called "debt threat" is palpable... follow what he stated
Declare bakruptcy en mass... everybody... allover the place again and again... allover the place!!!
Let them banksters suck their own
Do it!
Argentina just did a nice Fxxx U to some hedge fund crooks... kinda liked that one!
Now banksters are all over themselves trying to attract Argies into more debt obligations
What is that all about?
And...
Fractional resreve banking is the issue that NOBODY wants to address
I wonder why?
#8
leighmf, Bush really only increased the problem that Reagan caused. The nation was doing just fine until Reagan. Reagan got rid of a whole bunch of deductions for various loans including credit card loans. He even tried to get rid of the mortgage deduction. Reagan is responsibe for the uber wealthy paying less taxes than you probably do.
If Thom's idea of wiping out all debt and resetting the system to repair the damage ever happened, this nation would flourish, the People would flourish, and we would regain our position as one of the truly great nations in the world. The stress relief that stecoop01 talked about in the first post above would be nation-wide and without stress the nation's health would be bounding! So would the People's health. Of course, banks, the Walton family, the Koch Brats, and the rest of the 1% would scream their lungs out because they might actually lose a dime or two. I'm all for national debt relief. So, Thom, how do we go about getting this started???
#9
If you put corporations in charge of the law, obviously they will pass laws to make themselves rich at your and my expense. And we did put them in charge and they do pass insane and predatory laws of course! For example: insignificant corporate taxes (even though they utilize most of our legal systems available time and cause most of the wear on our roads and bridges and benefit from public education), "forgiveness" of royalties due the public on natural resource like oil and timber; a law suit to ram subrpime lending down our throats after all the states try to shut it down (OCC under Bush), a three trillion dollar war to bail Halliburton out of bankrupcy and fill Koch bros.' pockets with billions on the oil extraction and infrastructure contracts; laws to force American taxpayers to bail the banks out after their criminal malfeasance puts them under...... And why of course! Or how about a law to wipe out the net capitalization rule (Paulson under Bush) so banks can gamble as much as they want on wall street even if their gambling to asset ratios run 30:1 or 40:1. Why of course I mean hey....makes sense to me! I'd love to bet 30 thousand dollars in the market on a chance to win $60,000 with only ONE thousand dollars to back up my bet ... and have the play be acceptable of course thank you very much because, you know, the American taxpayers back the missing rest of the money! Why of course! What a great law! Sure. Gosh thank you so much George Bush, and Romney, and the Koch's, and all their ilk. What fine upstanding men. Proud to be an American with you guys at the leadership.
Hey the 1% are the slackers not willing to acknowledge their obligation to American society. The economic crisis was perpetrated absolutley by the 1% - and not Romney's 47%.... And my my, it was all legal. How about that. The implementation of the bad laws were a complete and utter betrayal of the American public by conservative politicians. But with people of such weak character.....there's no having them admit culpability. Every narcisisstic predator believes themselves perfectly justified and innocent, even as they lie, cheat, steal, and murder. 40:1? why of course...because it makes me rich. War with Iraq? why of course, because it makes me rich. Social predation: hey is the best game in town and all the libertarians are playing! Because that's what libertarianism is all about: every man for himself; winner takes all; and power via money is the trump card that wins every hand.
So yes....how about the American public take charge of the law, and pass laws to suit the public's pocketbooks for a change. Like hey - a bankruptcy amnesty or some such thing. Anyone can declare bankruptcy, and we can pass a law that prohibits credit scoring institutions from recording any bankruptcies during the amnesty. Wall Street and Romeny and the Koch brothers - any of them could get such a law through for sure - and would if they thought they could make money from it.
#10
This is such a great topic and as many times as it comes up in conversation it always seems to lead nowhere. Lack of voter involvement, obfuscation in the mass media, 1%ers buying or manipulating law; all are certainly inputs to the equation.
But, ultimately, we are the one's enabling the system to be what it is through our consumer habits. It's all in the numbers. There are too few level headed, thoughtful and educated people involved in the resolution and too many apathetic consumers of entertainment just following the herd. To change this system we need to stop buying the products that are being sold in the marketplace. From health care to new cars to bigger houses, nothing will change until more and more people decide to take control of their own health and start riding bicycles to work.
No excuses. Just do it. Grow your own vegetables in your back yard (500 sqft will produce far more than you think), buy range fed meat (if you're a carnivore), move into a smaller house and live simply. It's so easy that its laughable.
At our Chiropratic office in Tempe, this is the message we bring to our patient base. However, you might be shocked at how hard it is for the majority of people to adopt a simple life inspite of their agreement that it makes economic and social sense. The other option is to just enjoy the benefits of modern society and stop complaining about social injustice. As for myself and my family, we enjoy the simple life and feel free to live within the bounds afforded us by that simplicity.
#11
Talk about Moral Hazard! If you wiped out all of the debt then it would be unfair to those of us who worked hard to be frugal and not get into debt in the first place. And it would drive up the price of everything that will punish those of us who were frugal. It would encourage carelessness and laziness.
It should never have happened with the banksters and corporations that got bailed out. Moral Hazard only guarantees that it will happen again and again. If you wipe out all of the debt, then no one, even those who never got into debt, will bother about trying to stay out of debt ever again! But, I don't think we have to worry much...it'll never happen! There will never be a massive forgiveness of debt for the little people. Only the big people will see to it that only they get bailed out. And that is a real shame!
On the other hand, the little people have all been suckered and swindled by the big people. The psychological ploys in advertisements and messages sent through the media are designed to get us all to go into debt. Some people are smart enough to know what's happening and are frugal enough to not fall for the debt trap. Others are dumb as snot and always fall for it. Maybe people need to wise up and rise up against the marketing propaganda we are subjected to.
If you forgive all of the debt then people will just fall for the same old marketing propaganda and will just get in debt again. But, as Michael Hudson, the economist, says "Debt that can't be paid, won't be paid!"
#12
Palindromeday, if this system wasn’t so damn rigged against the non-wealthy, I would agree with you. Need I remind you that much of the debt you’re chastising is from things like medical bills and tuition? These are not the kinds of expenses that originate from stupidity, carelessness or laziness. Lumped together, they comprise the vast majority of these debts you speak of so judgmentally. Medical care and education should never be debt traps for anyone, except in a system that is abusive, cruel and predatory by design… what the esteemed Max Baucus so endearingly tagged “uniquely American”.
Of course I’m with you when it comes to banksters and corporations.
Remember, Palin, this is not the economy you and I grew up with. Debt wasn’t so widespread before Reaganomics. Thom has talked about this extensively, and he’s right.
I also disagree with your assumption that if all debt were wiped out, people would get careless and slide back into debt again. (Even those who never were in debt before?! C’mon, Palin.)
Nothing would please me more than to see this generation of non-wealthy college students rise up en masse, and start refusing to pay their student loans. Done individually, such a move would be legal & financial suicide; however en masse, it would be a powerful act of defiance. There is power in numbers!
As you noted Michael Hudson the economist having said, “Debt that can’t be paid, won’t be paid!”
The old stereotype of debtors who got that way by purchasing luxury items they couldn’t afford is the creation of propagandists shilling for the elite. Of course there will always be people who are irresponsible, self-indulgent and immature, oblivious to consequences and so forth. But I’d bet $$ they are but a small minority of the adult population. - Aliceinwonderland
#13
I have had an 805 FICA score for several years. I am living on a retirement income, and I keep paying off my cards, one-by-one. Yet, when I was looking at a new automobile today - one I'm willing to pay cash to drive off the lot - they told me they'd have to run a full credit check in order to be able to accept my cash payment. I know this is a wee bit off topic, but not that far... If I have such a good credit score, and they can verify that the bank account upon which I'm writing them a check has twice as much money in it as the vehicle I want to purchase, WHY do they need to run my credit, and why does the purchase need to go on my financial record? It's CASH! It's in my savings account!
(When I was 30 years younger, there was a time in between jobs when I couldn't make all of my payments on time, so I understand what unemployed or under-employed people in debt are going through. Thankfully, I never had to file bankruptcy, but there were a couple of low points when I considered it as one of my viable options. NOTE: BEWARE of debt consolidation corporations!!! Recently one of my good friends paid nearly $700 to have her debts consolidated, and for over a year she paid them a single payment which they were supposed to use to pay off her debt. It was an elaborate scam, and when they took all their scam dollars and fled, she was left owing $3000 MORE than she owed when she paid them to consolidate her debt for her.)
#14
Ms. Metcalfe, I’ll confess, it creeps me out that a credit check would even be a factor when one opts to pay in cash; especially when it can be verified that there is more than enough in one’s bank account to cover a major purchase like a new car. That smells rotten to me. It seems this whole credit racket is getting more and more intrusive. They spy on all our purchases, and the means by which they are paid, and invent ways to use that information against us. It’s creepy. More Orwellian shit to deal with as we struggle harder & harder to cling to some semblance of autonomy and privacy in our lives!
The credit card business has gotten WAY out of control.
My credit score happens to be approximately a hundred points lower than yours, Ms. Metcalife. Yet in the twenty years I’ve used credit cards, not once have I made a late payment, carried a balance or had to shell out a dime of interest for anything! I’ve been extremely frugal, all my adult life. I don't believe in living beyond one's means. I’ve also refused to get caught in that net because it isn’t worth all the bloody stress. When you're in debt, somebody else owns a piece of you. I would never play that game unless forced to, by circumstances beyond my control. I’ve been fortunate enough not to have been sucked into the debt trap by a health crisis either. I have always seen to it our credit card bills are paid in full and on time. Yet my score is "good" rather than "excellent". Why? Because the credit card companies don’t like us paying bills in full and on time! They don’t make any money off someone like me, who never pays interest on anything. Too fucking bad! Guess I'll just have to make do with a less-than-perfect score, if that's how they play the game.
I would love to chuck the damn card, jump off the credit bandwagon and just be done with it. But unfortunately there are certain kinds of purchases we make where credit cards are the ONLY option. It seems that as the years go by, this credit racket keeps growing more and more entrenched in our system, so that we are forced to use credit cards whether we like it or not.
We are being controlled and manipulated by the financial services industry and that angers me. - Aliceinwonderland
#15
You can survive debt without using bankruptcy and perhaps collect money from the collectors without ever paying. My book is called "Debt Hope:Down and Dirty Survival Strategies."
#16
I can't help but lament the fact that instead of bailing out the people, our president bailed out the banks and Wall Street. I wonder if, when the next crash or crisis comes, President Obama will make the same mistake again?
#17
Aliceinwonderland: I agree with part of what you said about the medical bills driving people into debt. I say "part of" because a lot of people don't live healthy lives which leads to their illnesses. One could blame marketing for the psychological tactics in getting people to eat or drink all of the wrong things to excess. But there are a lot of people who just don't have much discipline and will power. And I cannot say that I am without a bit of sin on that account. It seems to me that a lot of people are willing victims. Then, there are those close relatives or friends who may tend to influence a person into doing what may not be best for that person. They live profligate lives and tend to encourage others to do the same.
I guess I have been exposed to certain relatives who are always broke and crying the blues about it when they go out and spend what little money they have on expensive things like cars. People like that often try to put their money problems over onto their relatives.
I guess I also disagree that these are not just stereotypes that are in the minority. I believe they are in the majority. But, like I said before, when we have a greedy and devious and manipulative few that use all the marketing tricks they can muster from psychology, not many people can resist falling for the decisions that eventually cause their individual economic problems.
True, many people do try to live frugally and may have no other choice to do so given their situation. Low wages, illnesses, etc. And, like you indicated, ever since Reagan's attack on the workers of America, some people can barely stay above water...and it's not their fault.
And wouldn't it be great if all those students did, en masse, refuse to pay their loans. It would be kind of like during the housing crisis when the mortgage loan insurance companies could not, or would not, pay for the criminal bets the mortgage companies were making.
I'm kinda rushed right now...so I've gotta go...for now.
#18
one in three Americans has a collection agency after them. But everyone one of them has the latest smart phone and big screen TV.
Here in Canada they just changed the law that collection agencies can't contact your place of employment anymore to garish your wage. Now it is harder to get credit. That will stop a lot of people from going into debt. Hopefully it will but banks out of business. The world would be a lot better off if there was no credit at all.
#19
Palindromedary ~ I think you forget that massive debt is a relatively new phenomenon in this country. It is the direct result of a concerted effort where wages simply stopped keeping up with productivity and the cost of living. If you would remember recently it was shown that if wages did keep up with the cost of living the minimum wage would be something like $35/hr.
One very sound theory I heard recently is that the debt fiasco we are now facing is a direct result of corporations skimming OUR WAGES off the top of THEIR PROFITS and then packaging that excess wealth as credit and lending our own money back to us at INTEREST! If you agree with any of that logic then all a jubilee would actually be is to return the stolen wages back to their rightful owners. I'd like to think you might agree that would be a good thing?
#20
Thom Hartmann argues for taxpayers to bail themselves out of debt they created, arguing that taxpayers bailed out the "banksters" and propped up the too-big-fail banks.
At the Center for Economic and Social Justice (www.cesj.org), we advocate using self-liquidating capital credit to build financial security for EVERY child, woman, and man and significantly reduce our dependency on consumer credit to satisfy our consumption needs and wants.
What is Credit?
Credit. A loan of money to be repaid, usually with an added amount of interest, transaction fees, or, under Islamic banking, through a risk-sharing, profit-sharing loan.
Credit, Capital. Funds lent or borrowed to finance feasible, “self-liquidating” projects that are expected to generate an income and repay the loan out of that future income. Capital credit is designed to advance outside funds to be repaid with future savings. It is a modern social tool for enabling people without sufficient past savings to become capital owners voluntarily on market principles. Also referred to as “Productive Credit” and “Procreative Credit.”
Credit, Consumer. Funds lent or borrowed to expend on consumer goods and services; that is, things that do not pay for themselves. Credit, Interest-Free. Loans made for productive purposes, where the money loaned does not involve existing savings, and therefore no interest is due to the lender.
Under certain religious and philosophical traditions (particularly in Judaism, Christianity and Islam), interest charged for non-productive loans is considered usury, as it takes a profit where no profit is generated. In a productive loan involving existing accumulations of savings, the provider of those savings (the lender) is due a return because the loan is recognized as a form of investment and due to the owner as a right of private property.
When a productive loan is made based on the present value of existing or future marketable goods and services whose proceeds are used to pay off that loan (and not based on past savings), the lender has no pre-existing private property interest and therefore no interest is due. (See also “Credit, Pure”)
Credit, Non-Recourse. Loans in which the borrower is insulated from the risk of default and his personal assets cannot be seized in the event of loan default. Instead the loan will generally be secured by the assets standing behind the loan, by loan default insurance, or by a guarantee of a third party or the corporation itself. Under one example of nonrecourse credit, a loan to a corporation is nonrecourse to the shareholders of that corporation, unless the shareholders personally guarantee the loan. Another example is with a leveraged Employee Stock Ownership Plan, where the workers who benefit from loans made to an ESOP Trust are not personally liable in the event of default. Under Capital Homesteading, the proposed capital credit insurance provides a substitute for collateral to enable the lender to recover funds lent, thus insulating from risk any personal assets of the borrower.
Credit, Pure. An interest-free loan made for a feasible productive project. Pure credit is based on a system of enforceable promises, the acquisition of income-generating assets, and the ability of the new assets to generate a future stream of profits for repaying the loan used to acquire them.
In business loans for new capital formation and expansion, pure credit would be monetized as newly created, asset-backed, interest-free money authorized and regulated by the central bank and a competitive system of local commercial banks. The only costs associated with pure credit are transaction/service fees charged by the qualified financial institutions facilitating the loan creation and loan repayment process, and risk premiums for capital credit insurance and reinsurance to cover the risk of loan default. (See “Bank, Central”)
Pure credit differs from conventional credit, which charges interest on the use of already accumulated savings (or depends on non-related sources of income for repayment) to pay the lender a market-based yield on his savings.
Pure credit is backed by 1) the loan paper, 2) the shares purchased with the loan funds, and 3) the present value of the productive assets purchased with the money coming into a productive enterprise from its sale of new shares. Pure credit enables the borrower to finance feasible capital projects that create “future savings” (future profits) that pay for the assets themselves.
Using “pure credit” financing, profits generated by the new capital are first applied to pay off the loan, and thereafter are distributed as dividends to the owners. Under “capital homesteading,” pure credit (reflected in the issuance of newly created, asset-backed money) is also backed by capital credit insurance and reinsurance, which serve as a substitute for traditional collateral to cover the risk of loan default. (See also “Credit, Interest-Free”)
Credit, Self-Liquidating. Loans expected to cover the costs of capital assets out of future profits realized from the productiveness of those assets.
Credit System, Two-Tiered. A key monetary reform under Capital Homesteading that distinguishes between “good” uses of money and credit (i.e., used to finance broadly owned private sector growth and production) and “bad” uses of credit (i.e., used for fueling nonproductive consumer and government debt, or speculation). The Fed’s discount window would be available exclusively to member banks and members of the Farm Credit system for discounting “eligible” paper for feasible, ownership-expanding industrial, commercial, and agricultural projects.
Under this policy, credit and “new money” for Capital Homesteading, i.e., feasible business projects linked to broadened ownership (Tier 1), would be generated “interest-free” through the discount mechanism of the central bank, at a service charge based on the cost to the central bank of creating new money and regulating the lending institutions (0.5% or less). Credit and money for nonproductive, ownership-concentrating uses (Tier 2) would come from past savings (“old money”), and would be charged an interest rate determined by normal market yields on such savings. Under Capital Homesteading, local lenders would add their normal transaction fees and risk premiums for servicing capital acquisition loans, and the new loans would be collateralized by newly issued shares and newly acquired capital assets. Premiums paid to capital credit insurers and reinsurers would be pooled to spread the risk of default.
A Summary of the details of the Capital Homestead Act can be read at http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/
#21
Palin, I’ve heard that argument before, about people’s unhealthy habits. Such an argument overlooks various factors playing a huge role in people’s health destinies. What about poverty? There are low-income people living in “food deserts” where healthy food is simply unavailable. These folks are too poor to travel the distances to where decent unprocessed food is sold. What’s more, the cost of simple vegetables and fruits that, in the decades of our youth, were very affordable, can be prohibitive to someone on a fixed income, or struggling to make ends meet on minimum wage in today’s economy… especially if that person is a single mom with kids to feed. The brussel sprouts that in the 1980s, cost sixty nine cents a pound, now often go for $3.50 a pound or more. Bell peppers are a buck fifty or more apiece; even the cheaper green ones now cost a buck in most stores. These are just two examples; I could go on and on. Meanwhile incomes have not gone up proportionally to food prices, along with other necessities.
What you also overlook is is the sheer insanity of healthcare’s price tag, not to mention its unholy inclusion in the marketplace where commodity resides. Healthcare is not a commodity. It does not belong in the marketplace, where commodities and various optional services are sold for profit. This hijacking of our healthcare system by a for-profit extortion “industry” is the ONLY reason we’ve had this lethal price tag on healthcare and why it’s still rising, and why so many people have needlessly lost their lives over the past thirty or forty years just for lack of it. Preventive medicine that is affordable and universally accessible would make a huge difference in public health, overall. What's more, the status quo gives health providers a disincentive to help people stay healthy, creating an environment where there’s greater profit to be made by managing a disease than by simply curiing it, or preventing it in the first place.
There’s much about our whole way of life making it extremely difficult for many to take proper care of themselves. We’ve got a class of people in our society who must work such long hours for so little compensation that not only do they lack the means to provide themselves and their children a nutritious, healthy diet; they don’t have the time or wherewithal to cook anything much, beyond heating a can of soup or shoving a ready-made pizza in the oven! Processed foods are not only cheaper, they’re way more convenient for the overworked and underpaid.
Those subsisting on these cheap processed junk foods consume lots of sugar and chemicals that are very toxic to health, including high fructose corn syrup, the latter of which has made a significant contribution to the obesity & diabetes epidemic in this country.
A lack of education about proper diet is as big an obstacle as lack of means and availability for nutritious, real food, compounding the problem that much more. The processed food industry’s influence on what “information” is out there is based on misinformation that only serves their bottom line and is injurious to our health.
I think simply blaming people for their bad habits is counter-productive, Palin. It doesn’t resolve anything or fix anything. Shaming & blaming is not the solution. We need to offer alternatives that are within reach of everyone including the working poor.
My friend, let me remind you, we grew up in an era when the working class, not just the middle class, could afford to support families, own their homes and sock something away for retirement… without a college education! College was affordable or even free, as well as optional back then. Nobody was bankrupted by medical bills. The reason that’s no longer the case has everything to do with politics. When rich folks get more than their fair share of influence over laws and policies affecting everyone’s quality of life, we all are screwed except for the very, very rich. And when you have people working longer and harder for less and less, their health suffers alongside their bank accounts.
Mac’n cheese, it’s what’s for dinner! (To parody that old beef ad… tsk)
You’ve stated you still believe the majority choose to live beyond their means. Here we have an environment where the most basic necessities are held hostage by extortionists and plutofascists! In light of all that, I think your assessment is simply outrageous. Are you saying most of the debt incurred by the nonwealthy in this country is for things like vacations and new cars? Really?! Just so happens that student debt alone trumps all other debt combined. As for the rest, more than half of that is from fucking medical bills. Never mind the cost of housing and other necessities!
“Judge not lest ye be judged”- that’s one biblical quote I can get behind.
Making food safe, nutritious and accessible would require some restructuring of our society and economy. Instead of oranges from New Zealand, we could be eating fruit from our own back yards, or from a little neighborhood orchard/garden! Instead of factory “farms” we can have real, local farms again! But not while the world's food supply remains in corporate hands.
All these things, along with universal nonprofit healthcare, could make it easier for people to stay healthy, thus requiring less medical intervention. This translates to lower medical costs.
Tragically, it’s not a big enough priority in this society. Profit trumps human need. And that’s the sad truth of the matter. - Aliceinwonderland
#22
AIW -- BRAVO! -c8
#23
Gary B -- I think you should also mention that most interest charges are usury in 48 of the 50 states. As you should know, that is why credit card companies are located in Delaware and one of the Dakotas.
#24
Pal -- You and everyone else so far seems to ignore the other moral hazard that would be eliminated. As a matter of fact it would be a much larger one. Let the creditors absorb all the losses. They would probably never provide credit again to poor credit risks.
#25
Aliceinwonderland ~ Very, very well said! Take a bow!
#26
Why, thank you! Much appreciated, Marc, Chuck...
#27
I would like to point out there is an advantage to having a low credit rating - your identity isn't woth stealing. (Except for other than financial reasons).
#28
Palindromedary ~ (Apropos to post #20) Here is that lecture I was talking about. "Capitalism Hits The Fan" by Richard Wolff. He is an economists, author, and Professor emeritus of the University of Massachusetts, Amherst. I suggest you watch this lecture--if you haven't already--and then discuss the "Moral Hazard" of a national debt jubilee.
#29
Debt the First 5000 Years, by David Graeber, is a good read on this topic.
Thom is absolutely right, we need a debt jubilee.
#30
The interest that one pays on an bond issue to raise capital expenses of increased productive equipment, is made up of at least two factors. One factor is the administrative costs of administering the bond issue. A second one is the desired profit the lender want to make on the "rental" of the capital loan represented by the bond and a threat one is the risk that the debtor will not repay the bond principal. Rating agencies try to evaluate the ability of the borrower to repay the loan. therefore thee are several ratings used in the financial industry in judging the ability of the borrower to repay and not default. All three factors reduce the ability of thee borrower to obtain the desired production increasing investment.
A tax on the profit of a company also reduces the ability of the corporation to buy production equipment or hire production labor. However, if the tax is used to create the necessary infrastructures necessary to get the product to the customer and reasonable cost, then the tax is beneficial to the company.
A credit card interest not only has the risk factor, the administration factor but also the profit motive driving the interests charged. All three of these factors reduce the benefit to the laborer who used credit to purchase necessaries of life, food, clothing, housing, heat, medical care, transportation and education for his children. A tax on these necessities also reduces the ability of the laborer to provide for his family and produce the wealth desired by his employer.
Incomes greater than that required for the necessities of life are available for investment, savings, leisure or luxury items and should be used to pay for the infrastructure and governmental requirements necessary for Justice, tranquility and Security. High interests of credit card debt, educations debt and the necessities of life are all counterproductive.
#31
bobcox -- I think there is significant evidence that the reverse is true for companies buying production equipment or labor.
Quote bobcox:A tax on the profit of a company also reduces the ability of the corporation to buy production equipment or hire production labor.
A company can avoid paying taxes by buying production equpment or labor. Both types of investment are deducted from the profit before paying taxes. This so-called loophole is why I like loopholes (at least, some of them). This kind of loophole motivates companies to invest in their own infrastructure.
#32
Tax jubilee. You guys watch too much science fiction.
#33
Quote chuckle8:Tax jubilee. You guys watch too much science fiction.
chuckle8 ~ That's a credit debt jubilee, not a tax jubilee; and, may the force be with you!
#34
Very well said in post #22, AIW! I would only add that our culture so lionizes wealth and stigmatizes poverty that people are driven by sheer threat of social opprobrium to live beyond thir means. It's an artificial psychological need created by the Reagan Cultural Revolution - which was like Mao's Cultural Revolution only from the right - that so demonized and stimatized not only poverty but even relative lack of superfluous wealth that people feel they must keep up appearances of extravegant wealth to maintain their most basic self esteem. Amongst the poor it encourages much criminal enterprize, particularly amongst impoverished youth.
Scientifically, in our society it is necessary, in order to keep the Great Machine of consumer capitalism running, not only that everyone produce but also that they consume. Thus, in our society, an individual is judged not only by how much they produce but also by how much they consume.
#35
C8 investments are deducted from PROCEEDS, not profit. Profit doesn't occur until all taxes and expenses are paid.
#36
I was in debt before it was cool.
#37
Since when was it "cool" for someone else to own a piece of your hide?!! - AIW
#38
DAM -- Damn! That occurred to me while I was sleeping last night. Do I get to have a "redo"?
Debt Jubilee. You guys watch too much science fiction.
#39
OU812 -- Would it be proper to say any investments you make reduce your tax liability?
#40
Mark S -- I remember in the 1950's my father saying something about "keeping up with Joneses". The 1% were pushing this artificial psychological need long before reagan. I agree reagan made it a revolution.
#41
A "debt jubilee" will only help those who are in debt and not those who stayed out of debt. Since I have no long standing debts, it would only hurt me. I pay cash for almost everything and if I do use the credit card I always pay it off at the end of the month. And the way it will hurt all of those of us who have stayed out of debt is that it will drive the prices of everything sky high. Inflation to the max. Think Germany at the end of WWI. And that won't help anyone. Yes, I know the capitalist pigs have consistently cheated us out of decent wages and health benefits over the years. And I know that a lot of people may not have lived profligate lives. But a lot of people have lived profligate lives...falling for the psychological carrots through advertising and scenes in TV programs and the movies. They are partially not to blame either. But they are also partially to blame for falling for it as well. When they fall for the credit trap and not paying off their credit card balances at the end of the month, they are living way beyond their means. They should know better. But they obviously don't!
#42
Quote chuckle8:Debt Jubilee. You guys watch too much science fiction.
chuckle8 ~ That makes more sense. A tax jubilee just isn't that hard to imagine. After all, that is exactly what we've been having for the last decade and a half. It's old already. Time for a new jubilee!
A debt jubilee? Well, may The Force be with us!
#43
Quote Palindromedary:I pay cash for almost everything and if I do use the credit card I always pay it off at the end of the month. And the way it will hurt all of those of us who have stayed out of debt is that it will drive the prices of everything sky high.
Palindromedary ~ Same here. I don't owe anyone a dime either. I've been very fortunate. However, I don't see how a debt jubilee as Thom describes it would drive up the prices of anything. Of course, if it were a traditional jubilee I could see problems. However, I feel Thom is quite clear in the title of the Blog, "Where's Our Bailout," that he thinks the government should do for the people that which they have done for Wall Street. If there was any credibility to your statement, then the massive bailout that just went to Wall Street--who I might add were truly unconscionably irresponsible with their/our money--would have already driven up the price of everything. As the case is, that never happened. The only consequence of such a jubilee that I can foresee is that in the future credit would be a lot harder to obtain for people who might have serious difficulty paying it back--and that, after all, is exactly the way it should be. That, after all, is exactly the way it has always been.
#44
C8, I'm not comfortable giving investment advice. I suggest you talk with a financial advisor, accountant or tax attorney before trying to reduce your tax liability.
#45
DAnneMarc: I can see the logic of giving the people what the banksters got. And it certainly would be fair (for some people). And the result could be, like you said, making it harder for people who wouldn't qualify for credit ...to get credit...as it should be. But, it wouldn't be fair to those of us who never got ourselves into debt. No one will include us in with any kind of compensation.
And then, there would be a lot of ticked off people who would complain that they cannot get credit anymore. I wonder on which side the liberals would side on that issue? But, we don't know, for sure, that the lending jackals will, all of a sudden, make lending harder for some people. Even after they got bailed out and had a lot of money that they were supposed to lend to businesses, they didn't do it. So, they just might tighten up lending but then that will hurt commerce and the people.
By bailing out the people who have dug themselves in to a credit trap, Moral Hazard will have been extended to everyone...except the ones who never got into debt to begin with. And both banksters and people with debt will continue to believe that they will be bailed out in the future.
Only the people that end up having to pay all the taxes, the fool frugal savers and workers and retired people on fixed incomes mostly, will get stuck with the bill. You don't really think that the debt jubilee will leave the creditors without compensation, do you? They will just get compensation from the government who have the Fed print more money which will cause inflation (but in fact, they don't even have to print it). And prices on everything will skyrocket. Prices have shot up quite a bit since the bankster bailouts, TARP, in early 2008/2009.
I believe a debt jubilee will just increase prices of everything for everyone.
#46
Palindromedary ~ I don't believe a debt jubilee will cause any noticeable inflation because we already have inflation caused by the national debt. All a debt jubilee would do is to consolidate all American debt and thus drive the interest rate down for us all and save money in the long run. However, as long as we have a national debt and print money out of no where to pay off that debt we will have inflation. There is no avoiding it. Even as we speak money printing presses are generating inflation ever higher regardless of what we do.
Certainly, a national debt jubilee would drive up the taxes of everyone, including you and I; and, that would suck big time. However, driving our taxes up anyway just to pay off the gambling expenses of banksters sucks big time even more. Inflation is going to happen no matter what we do. If given the choice on how to use my higher taxes I can assure you I'd rather see them go to pay off the individual necessity debt of my fellow citizens than the corporate financial debt of a bunch of rich Wall Street gambling addicts. You can pay now or pay later my friend. In the end we all pay. So I say, let's pay the people who need it the most first while the dollar is still worth some value.
#47
Well, whatever will be, will be. The future is not ours to see! Debt jubilee will most likely never happen anyway.
#48
If mine eyes would ever see
The likes of a credit debt jubilee,
No one my friend would ever be
More shocked or surprised then you or me.
I think on that we both can agree.
#49
Pal, DAM -- I think Thom's main debt jubilee has the best chance of happening, although be it a very small chance. That is, we should have a student debt jubilee. The moral hazard for that would be people wanting to go to college.
It seems to me you guys are wimps (me too). Economists main concern is that inflation is too small and will become deflation. Deflation will lead us into depression. Robert Reich points out in his book aftershock we need an inflation rate around 4%. He is speaking of the measured CPI. That rate will feel like 10% to us wimps. The reason we need a higher inflation, per Bob R, is that it will put into our minds that we may not want to put off buying something because its price will increase. The forces of the market place are not meant to feel good.
Providing a bunch of money to the supply side of the equation does not cause inflation. As Thom always says demand is what causes inflation. If that demand is kept below the productivity rate, the inflation should be tolerable except to us wimps.
#50
"Hater", you are ignoring one major factor: for-profit healthcare. If you want to stay out of debt in America, don't get sick. That's how lots of people get sucked into our uniquely American debt trap! Last I checked, illness was not a "lifestyle". If this ever should happen to you, you'll change your tune in a hurry. - AIW
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A lot of people need to learn about the benefits of bankruptcy. If your credit rating is already damaged, bankruptcy won't make it any worse. And the relief from the stress caused by being in debt is better for ones health. Yes, bankruptcy will make it difficult to get some types of credit in the future, but that can be a good thing. I personally went through bankruptcy in 2009, and yet I've still been able to get auto loans (2); I still have my house and the original mortgage; and most of my personal belongings; but I can't get a credit card, and I don't want one.
Bankruptcy is not only an end to debt, it's also a new beginning.
Bankruptcy is also your Constitutional right!