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Croatia just canceled the debts of its poorest citizens

washingtonpost.com

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Re: Croatia just canceled the debts of its poorest citizens

#101

Post by tcbawo »

alextgordon wrote: post #40
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…

> 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…

In the United States, there is a huge difference between owning your house outright and through a mortgage. As a leveraged investment, homeowners are more home speculators, requiring ever increasing values to be profitable. Up until the last decade, this had been a great engine of wealth creation for the middle class.

Re: Croatia just canceled the debts of its poorest citizens

#102

Post by rayiner »

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.

Anyone's whose been involved in a corporate bankruptcy would quickly disabuse themselves of the idea that there is or should be any moral qualms about filming for bankruptcy when you're legally entitled to do so.

Re: Croatia just canceled the debts of its poorest citizens

#103

Post by ptaipale »

jliptzin wrote: post #31

Isn't that what declaring bankruptcy is for? Does Croatia have bankruptcy laws?

There are in fact several European countries where personal bankruptcy is not possible, or where only a "Chapter 11" (re-arrangement of debt, not cleaning table altogether) is possible.

Re: Croatia just canceled the debts of its poorest citizens

#104

Post by bsaul »

riffraff wrote: post #60
bsaul wrote: post #52

Earlier quoted context omitted.

Your comment made me realize a more appropriate title would be : "Current croatian government cancels poor citizen's debts one year before election". But that would probably cast a VERY different light on the event. The original intent was probably to give the (positive i guess) impression that the greek trend of not paying debts is spreading.

> the greek trend of not paying debts is spreading. I don't think that trend exists (yet) but _canceling_ debt (creditor) and not paying debt (debtor) are quite different.

I don't know the details but i suppose the debts weren't owned by the state (nobody borrows from a state) but rather by credits corporations or banks.

Re: Croatia just canceled the debts of its poorest citizens

#105

Post by Frondo »

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.

"I believe we should as humans strive to make it as fair as possible."

Agreed. That's why, when the big guy's hoarding 98 of the 100 cookies, I'm not going to fight over it if my neighbor didn't work as hard (in my judgment) for his 1/4th cookie as I feel like I did for mine.

Re: Croatia just canceled the debts of its poorest citizens

#106

Post by byoogle »

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…

Interesting, this quote comes to mind:

“The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.” – Alexis de Tocqueville

Re: Croatia just canceled the debts of its poorest citizens

#107

Post by bsaul »

Moru wrote: post #82
bsaul wrote: post #52

Earlier quoted context omitted.

Your comment made me realize a more appropriate title would be : "Current croatian government cancels poor citizen's debts one year before election". But that would probably cast a VERY different light on the event. The original intent was probably to give the (positive i guess) impression that the greek trend of not paying debts is spreading.

Greek trend? I can remember quite a few american banks doing just this recently.

Debt cancellation indeed has always existed, greeks just bringed it to another level, with their magic combo : fraud the state's accountings, get as much as you can from the eurozone before the crisis, get as much as you can from other european countries after the crisis, and then 2 years later when things start to stabilize, declare unilaterally that you're not going to reemburse people, and party in the streets over that decision.

At least US banks had the decency to not laugh about it publicly.

Re: Croatia just canceled the debts of its poorest citizens

#108

Post by SixSigma »

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…

If you didn't borrow from a bank then banks would charge for you to store your money, making your purchases more expensive

Re: Croatia just canceled the debts of its poorest citizens

#109

Post by bmmayer1 »

byoogle wrote: post #106
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…

Interesting, this quote comes to mind: “The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.” – Alexis de Tocqueville

I love that quote but it should be mentioned that it is actually misattributed to de Tocqueville. Doesn't make it any less true though.

Re: Croatia just canceled the debts of its poorest citizens

#110

Post by vidarh »

TheOtherHobbes wrote: post #79
vidarh wrote: post #73

Earlier quoted context omitted.

> 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 ye…

Here is an example where Lloyds TSB offered to strike off a 100k debt after it became clear they had likely broken the banking code (the banking code is voluntary, but it does not go much further than legal requirements), and it is by no means the only time UK banks have written off loans because they were wrongly given out to people who could not afford them:

http://news.bbc.co.uk/1/hi/business/4528567.stm

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