Croatia just canceled the debts of its poorest citizens
washingtonpost.com
Croatia just canceled the debts of its poorest citizens
1–10 of 307 posts
Re: Croatia just canceled the debts of its poorest citizens
#2The article says the government "convinced" banks and other companies to cancel the debts, but the lenders will not be compensated. It's left as an exercise to imagine how the lenders were convinced.
I can see the benefits of getting a large number of people out of what must be a terrible situation - the numbers suggest most of the people affected probably didn't have enough income to even service their debt.
But I wonder how this will affect the ability of non-elites to borrow in the future. Although we all like to hate our financial institutions, they really have been an incredible force against class structures over the last 100 years or so, allowing the middle class to own property, start businesses, etc, by gradually extending credit to more and more people. (I recognize it's not been perfect .) Reverting to a situation where only the rich and connected can get loans would be a negative consequence. I hope the government of Croatia can counter that.
Re: Croatia just canceled the debts of its poorest citizens
#3If debts are under 35 000 kunas, monthly income is under half of minimum salary ( you know what sucks? Many workers are on minumum salary, yet don't receive salaries for months, whilst company owners drive luxury cars for a salary 3-4x the average one, so those workers are not eligible) and the citizen doesn't own any land or savings.
One of the main problems is that about 10% of our citizens have their accounts frozen. They could change laws to help it, but that would hit their budget. It's absurd that you can get sued by the government for tons of money just for not paying a monthly TV subscription payment, that you are subscribed to by having more than 1 radio frequency receiver, no matter be it a radio, phone or a TV. Or even having an screen in your home. This is like focusing on fighting acne, when your patient is dying of cancer.
Yes, it will help a lot of families, and that's great, but elections are coming up and this is mostly a political points move, since the "right wing" won the presidential elections, the political "left" is now worried.
Re: Croatia just canceled the debts of its poorest citizens
#4In part, I love this idea. However, as someone who struggles with debt, I've worked to the point of causing serious health issues just to keep my head above water, so if Canada were to do this, I'd be more than ticked. The slacker next to me gets a clean slate, and I get an early grave.
Re: Croatia just canceled the debts of its poorest citizens
#5[deleted]
Re: Croatia just canceled the debts of its poorest citizens
#6This is an interesting concept and a really old one to boot. Planet Money recently did a great podcast covering a similar measure (although it was specifically for mortgages) in Iceland:
http://www.npr.org/blogs/money/2014/12/05/368723679/episode-...
Interestingly, Saudi Arabia also did something similar (alongside many other measures) to boost public support for the new king: http://www.arabnews.com/news/696661
Re: Croatia just canceled the debts of its poorest citizens
#7In part, I love this idea. However, as someone who struggles with debt, I've worked to the point of causing serious health issues just to keep my head above water, so if Canada were to do this, I'd be more than ticked. The slacker next to me gets a clean slate, and I get an early grave.
Think of the slacker next to you as having an independent relationship with the state and so do you.
I never understood why some people would happily drag down someone else, that's jealousy in disguise. Simply see this as a plus for society because that debt drags everybody down, including you.
I wouldn't sleep any worse if all the debt for people earning minimum wage or nothing at all were forgiven, that's a much better way to spend money than to enrich a small number of already insanely rich people.
Give it another 3 or 4 decades and a few more rounds of automation and who knows, you just might find yourself in the league of the 'slackers', quite a few of them are not slackers by nature but simply grew up in a time when their skills became surplus and their age forced them out of the productive cycle. Very few people consciously choose to be un-employed and this could happen to all of us.
Re: Croatia just canceled the debts of its poorest citizens
#8In part, I love this idea. However, as someone who struggles with debt, I've worked to the point of causing serious health issues just to keep my head above water, so if Canada were to do this, I'd be more than ticked. The slacker next to me gets a clean slate, and I get an early grave.
I totally understand your sentiment, but to me this reflects one of the biggest scams that has ever been pulled on the "average guy" - the notion that debt has moral weight.
I was taught by my parents, and by the books I read and TV shows I watched, that "paying your debts" made you a good person. If you don't pay your debts you're slacking. We've all heard the parables of the great person who went broke, but managed to pay his debtors later even though he legally didn't have to.
What hogwash. Lenders get paid interest in compensation for the risk that the loan might go bad. They deny credit to people if the risk is too high. That's their business. If you borrow to start a business and the business goes south, that's not a moral issue - it's built into the bank's models. Turning it into a moral issue, rather than "just bizness", is just a way for the lenders to shift the risk - that you're paying for - back to you. It's like buying insurance and then not collecting for your burnt house, because you didn't work hard enough to put out the fire.
OK, sucky analogy, but you can bet that people like Donald Trump don't worry about the morality of debt when one of their companies go broke. It's in the contract.
Re: Croatia just canceled the debts of its poorest citizens
#9In part, I love this idea. However, as someone who struggles with debt, I've worked to the point of causing serious health issues just to keep my head above water, so if Canada were to do this, I'd be more than ticked. The slacker next to me gets a clean slate, and I get an early grave.
Think of the slacker next to you as having an independent relationship with the state and so do you. I never understood why some people would happily drag down someone else, that's jealousy in disguise. Simply see this as a plus for society because that debt drags everybody down, including you. I wouldn't sleep any worse if all the debt for people earning minimum wage or nothing at all were forgiven, that's a much be…
One thing is a rule where you know what happens, and there's a social safety net in place, and everyone knows how it works, and has voted on it, and so on.
One-off actions are kind of another thing, in my book.
Anyway: politics. Article flagged. I'll happy talk politics here in Padova with anyone who wants to stop by and have a drink.
Re: Croatia just canceled the debts of its poorest citizens
#10While i applaud the motivation behind cancelling the debts of Croatia's poorest citizens, the way it was done is likely to hurt them more in the long run.
Forcing banks to absorb the losses of this write-off will likely make it harder for the poorest to access credit in the future. Banks are not social institutions - they're pathological profit making entities. They will have no qualms with raising interest rates or denying credit altogether to compensate for the increased risk of doing business with their poorest customers.
The poorest section of the population do not borrow money for no reason. Borrowing is often required for emergencies (i.e. medical) or short term liquidity (paying bills on time). Just as importantly, it's vital for people who want to improve their economic situation by starting new businesses.
My primary concern is that banks starting to shut/price them out. The least well off will end up resorting to informal lenders (i.e. loan sharks).