Croatia just canceled the debts of its poorest citizens • Hacker News Board

Re: Croatia just canceled the debts of its poorest citizens

#71

Post by a3n » Sun, Feb 01, 2015, 4:53 PM UTC

raverbashing wrote: post #16

rfrey wrote: post #2

The 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 w…

" allowing the middle class to own property, start businesses, etc," Well, there's this crazy concept called "saving money" where you don't borrow from a bank but rather put some money aside every month to be able to afford something expensive I wonder what would happen to property prices if lending was severely restricted, maybe then the value would actually be affordable and not a lifelong debt that becomes unservi…

> Well, there's this crazy concept called "saving money" where you don't borrow from a bank but rather put some money aside every month to be able to afford something expensive.

Capital idea. I think we should outlaw all lending, to individuals and to corporations. If poor people are expected to save, then it should be even easier for those of much better circumstance and financial ability.

Imagine. No more mortgages.

Re: Croatia just canceled the debts of its poorest citizens

#72

Post by MichaelGG » Sun, Feb 01, 2015, 4:54 PM UTC

failed_ideas wrote: post #55

Frondo wrote: post #48

Earlier quoted context omitted.

There are much bigger things that aren't "fair" to be judgmental about than your neighbour on pogey. If you want to worry about other people ripping off society in some way, it might be a good idea to worry about the people who are pulling the big cons, not the hypothetical lazy neighbour.

I worry about that too, but that isn't the topic being discussed. Life isn't fair, but I believe we should as humans strive to make it as fair as possible.

And it is making it more fair, by bringing some people out of a crushing situation. Did you know some places give food to the poor, too? How unfair is that to the parent that worked hard to put food on the table? Or all sorts of other relief that aren't available to people whose work paid off.

Re: Croatia just canceled the debts of its poorest citizens

#73

Post by vidarh » Sun, Feb 01, 2015, 4:54 PM UTC

rfrey wrote: post #2

The 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 w…

> the numbers suggest most of the people affected probably didn't have enough income to even service their debt.

Consider the analogue of the UK, where the banks have a duty to consider the ability of a persons ability to service a debt before letting them take out the loan.

Failure to do so will let the person who have taken out the loan get the debt stricken off, as the bank will have broken the law...

In that light this doesn't seem terribly shocking to me.

Re: Croatia just canceled the debts of its poorest citizens

#74

Post by paulhauggis » Sun, Feb 01, 2015, 4:54 PM UTC

sgift wrote: post #49

failed_ideas wrote: post #42

Earlier quoted context omitted.

Just to respond to all at once, I'm looking for fairness here, not to punish those that couldn't pay debts. There isn't anything 'bad' about not being able to manage debt in and of itself. However, if you took 3 jobs to make ends meet and the neighbour simply took a third mortgage and smoked pot all day on pogey, it isn't fair. And this action doesn't install any sense of responsibility. All this does is encourage th…

You somehow seem to equate debt with guilt. That is not what debt is, although lenders love it when you believe that. You also seem to think that the main reason people cannot pay of their debt is that they "smoked pot all day" - the notion of debt as guilt shines through here again. Debt is debt. Nothing else. It is not some moral failing if you cannot pay it back, it can have many reasons. And the idea that just be…

So here is another example. If I start a Kickstarter campaign and raise $100,000 from multiple backers and never deliver on the product but keep the money. Should I feel guilty? After all, it's just debt..right? Or does this only apply to "evil" bankers?

If everyone had this thinking, nobody except the rich would get loans. As a bank, why would I ever loan someone money if they felt like they were entitled to it and never had any intention of paying me back?

Wiping away debt is just a bad idea. My cousin declared bankruptcy around 10 years ago. She had accumulated $100,000 in credit card debt with nothing to really show for it. This wasn't even school loans, just big name electronics and a multitude of other things she really didn't need.

After her debt was wiped clean, she promptly got right back into debt again and had to declare bankruptcy a second time this past August. The over-spending continued (and still continues to this day).

If someone knows they can spend all they want with no consequences, they will treat it like free money. The only people that will hurt are the rest of us that will suffer with an increased difficulty in getting a loan and increased interest rates and fees.

We shouldn't reward irresponsibility.

Re: Croatia just canceled the debts of its poorest citizens

#75

Post by igravious » Sun, Feb 01, 2015, 4:56 PM UTC

juliangregorian wrote: post #44

> Among economists, the scheme is regarded as unprecedented and exceptional. Couldn't be further from the truth. In times past it was commonplace to cancel debts periodically. Moses and Hammurabi are just two examples off the top of my head.

Yes. I am not an economist but it troubles me that economists would be unawares (or claim to be unawares) about this aspect of the history of debt. As usual Wikipedia (the wise, the all-knowing) has a page[1] about it. Mass debt relief and forgiveness is unexceptional in history and certainly has precedent.

Even as recently as the turn of the century (only a decade-and-a-half ago!) there was an international movement[2] calling for the cancellation of a great deal of so-called third world debt as many countries spend more on debt reparations (just paying off the interest) than on building up the infrastructure of their countries or spending on health or education.

[1] http://en.wikipedia.org/wiki/Debt_relief

[2] http://en.wikipedia.org/wiki/Jubilee_2000

Re: Croatia just canceled the debts of its poorest citizens

#76

Post by MichaelGG » Sun, Feb 01, 2015, 4:57 PM UTC

Frondo wrote: post #17

failed_ideas wrote: post #4

In 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.

It was probably a mistake in judgment to give yourself health problems for anything money-related.

How common a mistake, though. It's not uncommon for people to even suicide over a debt. Even if the debt isn't something legally enforceable.

Re: Croatia just canceled the debts of its poorest citizens

#77

Post by JDiculous » Sun, Feb 01, 2015, 4:58 PM UTC

Now I'm just waiting for them to do this in the USA for student loans

Re: Croatia just canceled the debts of its poorest citizens

#78

Post by kghose » Sun, Feb 01, 2015, 4:59 PM UTC

popee wrote: post #45

Hi, croat here. Just one detail, this year there will be elections in Croatia and current gov didn't do anything useful for our economy, so this is kind of popular measure. Don't get me wrong, it's always nice to help, but situation is little bit complicated, taxes are very high and in some way this is not fair to people that are paying everything. Also, there are huge number of people living and exploiting social me…

Welcome to Democracy! :) As long as you can make fun of the politicians and not go to jail, things are nominal.

Re: Croatia just canceled the debts of its poorest citizens

#79

Post by TheOtherHobbes » Sun, Feb 01, 2015, 5:09 PM UTC

vidarh wrote: post #73

rfrey wrote: post #2

The 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 w…

> the numbers suggest most of the people affected probably didn't have enough income to even service their debt. Consider the analogue of the UK, where the banks have a duty to consider the ability of a persons ability to service a debt before letting them take out the loan. Failure to do so will let the person who have taken out the loan get the debt stricken off, as the bank will have broken the law... In that ligh…

I'm not aware of any situation where a debt has been struck out because of this law.

Debts are usually struck out because of errors in contracts, statutory procedures, and other paperwork.

But courts usually seem to assume that a simple credit check counts as due diligence, and it's the borrower's responsibility to repay debt even if it's offered on an unrealistic basis - e.g. a credit card with a limit equal to a year's income, and an exploding interest rate of 50% or more if a borrower misses a payment or two.

Which is not unrealistic, btw. I know of one credit card company offering rates up to 99.9% compound to individuals with poor credit ratings.

Obviously they know most borrowers will default - and that seems to be the basis of their business model.

Re: Croatia just canceled the debts of its poorest citizens

#80

Post by jljljl » Sun, Feb 01, 2015, 5:10 PM UTC

dingaling wrote: post #69

alextgordon wrote: post #40

Earlier quoted context omitted.

> 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 situ…

> The middle classes throw their weight around to prevent new houses being built Most middle- class folk I know are too busy cutting expenses to clear their mortgage sooner than to care about the ability of other people to buy houses. Why would they care? You pay off your mortgage and you're done.

I'm guessing because:

1) A lot of middle class folk who buy houses see it as an investment, and they hope to seem some return on that investment driven by rising prices.

2) A lot of middle-class folk tap into their home equity to pay for major expenses (see HELOCs and 2nd Mortgages). Rising home values give homeowners more equity to tap into.