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The People's Bailout

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Re: The People's Bailout

#201

Post by elemenohpee »

dmix wrote: post #94
subsection1h wrote: post #68

Earlier quoted context omitted.

Debt isn't some random accident like getting hit by a car while crossing the street. The leading cause of personal bankruptcy is medical expenses. So yeah, debt can be some random accident like getting hit by a car. OWS, to me, represents an entitled generation. Which post-WW2 generation can't be described as an entitled generation?

The issue is using "generation". There's always been an entitiled subset of each generation. The question has it grown and are they more vocal?

The issue is also, is it really entitlement to ask for a level playing field and a functioning democracy?

Re: The People's Bailout

#202

Post by elemenohpee »

mseebach wrote: post #116
paulhodge wrote: post #39

Earlier quoted context omitted.

You can read their whole explanation, it's an interesting read: http://strikedebt.org/debt/ Short answer: various methods of systematic trickery and financial booby-trapping perpetrated by, you guessed it, the 1%.

In shock revelation, OWS blames all ills of world on "the 1%". Film at, you guessed it, 11. One of the reasons OWS isn't more popular is that 99% of the 99% understands that the vast majority of personal debt was and is incurred by regular people living beyond their means, and not by nefarious schemes by nefarious monocle-wearing capitalists. Unsympathetic as it might be, they merely provided the rope.

Yeah, no. http://assets.clearbankruptcy.com/infographics/leading-cause...

Re: The People's Bailout

#203

Post by elemenohpee »

justindocanto wrote: post #43
MattGrommes wrote: post #15

Earlier quoted context omitted.

This is "a" problem, not "the" problem. For a large number of people, getting $5k or $10k of debt erased would at the very least a large weight off their back, at the most a life changer. Living paycheck to paycheck means cherishing every extra dollar you get to keep. Getting to keep $50 or $100 a month in your pocket instead of sending off to some credit card or debt collection agency is a big deal sometimes. Most p…

But if theyre making payments on the debt, the debt collector won't sell it because theyre actually getting their money. The only debts OWS is going to be able to buy are the ones not making payments and the ones that havent made payments in a very long time. So, as cool as not having to pay 50/100 a month sounds, that wont happen to anybody because the ones paying are not the kind of people that would be getting rel…

> People need food, shelter, clothes, toiletries, warmth

That's exactly what Occupy Sandy provided, in some cases better than the Red Cross or FEMA could: http://interoccupy.net/occupysandy/

This is an action by Strike Debt. OWS didn't go away, it's evolved into these different platforms.

Re: The People's Bailout

#204

Post by scrumper »

washedup wrote: post #32
scrumper wrote: post #18

Earlier quoted context omitted.

Generally, any time there is more demand for something the will increase. OWS entering the market for certain kinds of distressed debt would be expected to increase the price of that debt - the group of buyers in the market has increased by one, so there is more competition for the asset. There is absolutely nothing wrong with this at all. The creditors are simply selling the debt to try and recover something from th…

True, nothing wrong with this, but a repercussion would be increasing interest rates, which would undoubtedly drive some debtors to default on their loans.

How so? Making the creditor's loan pool more profitable (by increasing the resale price of defaulted debt) reduces their overall risk, which leads to either more loans being made or a reduction in rates.

Re: The People's Bailout

#205

Post by elemenohpee »

stickfigure wrote: post #141
justindocanto wrote: post #43

Earlier quoted context omitted.

But if theyre making payments on the debt, the debt collector won't sell it because theyre actually getting their money. The only debts OWS is going to be able to buy are the ones not making payments and the ones that havent made payments in a very long time. So, as cool as not having to pay 50/100 a month sounds, that wont happen to anybody because the ones paying are not the kind of people that would be getting rel…

This seems like the key insight about this issue. The debts OWS buys on the cheap are debts that were never going to be paid off in the first place. The net practical effect of this action is to transfer money from well-meaning people into the hands of debt collection agencies. Seems like the only people being bailed out are debt speculators. Doesn't sound like a worthy cause to me.

You're still only thinking in terms of the market. This action is about raising social capital.

Re: The People's Bailout

#206

Post by scrumper »

malandrew wrote: post #31
scrumper wrote: post #18

Earlier quoted context omitted.

Generally, any time there is more demand for something the will increase. OWS entering the market for certain kinds of distressed debt would be expected to increase the price of that debt - the group of buyers in the market has increased by one, so there is more competition for the asset. There is absolutely nothing wrong with this at all. The creditors are simply selling the debt to try and recover something from th…

Question: If OWS does this often enough to the point it becomes expected by debtors (i.e. "I won't pay because maybe I'll win in the OWS debt lottery"), wouldn't that in effect reduce the number of people that would actually pay back the $14k? And assuming it does have a global effect that should depress the market value of distressed debts further, right? How can OWS depress the probability that creditors will get t…

Moral hazard for private debtors, in effect? It's interesting, but OWS would need to be buying a LOT of debt for it to have an effect. It's also quite a bad trade from the point of view of the debtor: if OWS doesn't buy their particular obligation, they are in a world of trouble.

Re: The People's Bailout

#207

Post by tptacek »

benmmurphy wrote: post #180
rprasad wrote: post #88

Earlier quoted context omitted.

if you buy $10,000 of an individual's debt for $500 and then forgive the debt, they have just incurred income of $10,000 and are obligated to pay taxes on it exactly as if you had handed them $10,000 in cash for services rendered. It could alternatively be characterized as a gift, in which case it is not income to the recipient (but could incur gift taxes to the "gifter"). If you don't inform the IRS that you forgave…

Forgetting the law but looking at this from the governments tax collecting point of view the bank has incurred a loss which they deduct from their taxes and this needs to be offset by income from the person who has their loan forgiven. If this doesn't happen then the government loses revenue and it also opens up the possibility of people using loan forgiveness to dodge taxes.

'rprasad is a tax lawyer.

Re: The People's Bailout

#208

Post by zanny »

tsotha wrote: post #174
zanny wrote: post #159

Earlier quoted context omitted.

> 18 year olds aren't very good at this kind of reasoning, but that's what parents are for. It is a dangerous assumption to think it is the place for a parent to judge if their children should incur the equivalent of half a decades debt when they themselves may have no comprehension of the value of a degree their kid is thinking of.

I'm not sure what you mean by "half a decades debt". At some point people have to be treated as adults. If your parents aren't up to advising you on financial matters you have to get outside help. Or you figure it out yourself. I refuse to accept the notion we should alter agreements freely entered into by adults in an effort to protect them from themselves.

I don't think so either, I just don't think its an excuse to say colleges and universities (especially since they are all federally funded) can practice extremely predatory financing expecting a kids parents to know better for them.

I agree you should not alter open agreements, but those agreements are already biased by federal dollars in the form of guaranteed stafford loans. We need to get rid of federal loan and grant guarantees that are not merit based limited funding that happens after acceptance (so that schools can't focus target anyone getting a federal scholarship).

Re: The People's Bailout

#209

Post by mkr-hn »

I wasn't surprised by the examples of the just-world fallacy running amok in this thread, but I was surprised by how many people made counterarguments. Is HN finally getting a broader worldview?

Re: The People's Bailout

#210

Post by ChristianMarks »

Firehed wrote: post #103
patio11 wrote: post #64

Earlier quoted context omitted.

sigh No. If you buy $10k of debt for $500, the debt buying business' basis in the debt is $500. If they cancel it, they can deduct $500. If $10k of your debt is forgiven, you get 1099-C'ed for $10k in income. Net-net, this would cause $9.5k in income if you went through with it.

Still, taxes on $9500 are way lower than the $10000 you originally owed, so it sounds like a win. Until everyone starts doing this and the whole system collapses, at least. That money isn't coming from thin air.

Sure it is: it's called fractional reserve banking.
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