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

Re: Croatia just canceled the debts of its poorest citizens

#181

Post by TeMPOraL » Sun, Feb 01, 2015, 8:57 PM UTC

jfoutz wrote: post #111

davorb wrote: post #87

Earlier quoted context omitted.

The problem is more that some of the politicians should go to jail, but don't.

Hmm. Perhaps the line can be drawn a little closer to the truth, but i'm happy with the bias toward false negatives over false positives. In death penalty cases, when you'd expect the justice system to work its absolute best, 5% were overturned when DNA evidence became reliable. 1 in 20 on they way to die because of false positives.

Cynic in me would say that if we jailed all top-tier politicians, we'd have less than 5% false positives. I honestly don't believe that in an established democracy (as opposed to freshly formed) you can get to the level of a minister or above without doing something illegal or immoral. The dynamics of the system clearly shows that.

Re: Croatia just canceled the debts of its poorest citizens

#182

Post by ZenoArrow » Sun, Feb 01, 2015, 9:05 PM UTC

Yetanfou wrote: post #53

reqres wrote: post #10

While 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…

With a bit of luck the least well off will end up seeing the truth in the money game - they can't win, no matter what they do. This actually goes for many (maybe even most?) people, except for the small_number%. The best way to play the game is not to play it at all - avoid loans, avoid debt, avoid a dependency on money whenever possible. Use the money you make to reduce your dependence on future money by acquiring m…

> If you have money, use it to reduce your dependency on future money.

Spot on.

People talk about the rat race. Just like any race, the idea is to finish first, but that doesn't mean working your arse off until you pop your clogs, it means stopping running first, or at least that's how I see it.

The financial game is rigged. Consider, a bank wants to lend money to help you start a business, because it thinks you'll be successful. The benefits to itself if you're successful are twofold, you pay back the loan with interest, and the money you've used to pay off the interest has come out of the pocket of savers, so less interest to pay out to them too. A term you'll hear in the banking world is 'liquidity', which describes how easily money flows through the system. The goal isn't to make other people rich through savings, the goal is to get everyone spending, and make sure they get their cut. If their plan backfires and people stop spending and start saving, we have a deflationary recession, governments start implementing austerity measures, and all that's really happened is people being more careful with their money.

Then there's the whole game of infinite growth on a finite planet, but I imagine that's backwards enough for everyone to see.

There will be another economic revolution, within this century I'd imagine, Jah knows what it'll look like but we won't keep our current system forever.

Re: Croatia just canceled the debts of its poorest citizens

#183

Post by ahomescu1 » Sun, Feb 01, 2015, 9:15 PM UTC

karmacondon wrote: post #164

bmmayer1 wrote: post #116

Let's just look at the predictable consequences of this move: 1) Banks and other corporations will never lend money to poor people again. Full stop. If there is a chance that the government will write off that debt (effectively stealing future earnings from banks) for these loans, banks just won't issue them. Say goodbye to educational loans, healthcare loans, car loans. Say goodbye to home loans and mortgages. If yo…

Others have pointed out some of the flaws in this reasoning, but I want go over some of the obvious critiques again: 1 & 2) There will be no "full stop" on lending money to poor people. If you're a bank and you're managing say $1B, some percentage of that is allocated to high risk loans. Your job is to make money from lending money, and there are only so many borrowers. Banks don't lend money to poor people out of al…

> In short, the Croatian government and their finance ministers/advisers probably aren't stupid. They have actual data and a knowledge of their own people and situation to go on. They aren't just playing armchair economist. And though I couldn't name one of them, I'm willing to bet that they thought this move through. Doesn't mean that there won't be any of the dire consequences that you've predicted here, but they've probably weighed the odds more carefully than you think.

Or they're a bunch of politicians trying to score a win in the next election, by any means necessary.

Re: Croatia just canceled the debts of its poorest citizens

#184

Post by JamisonM » Sun, Feb 01, 2015, 9:17 PM UTC

swatow wrote: post #180

JamisonM wrote: post #173

Earlier quoted context omitted.

The debts have to be over a year old, by any reasonable banking standards (even unreasonable ones) those are NPAs, by any accounting standard they are deemed receivables that will not be recovered. They've been written off. This is why I contend that Mr. Baker's statements are likely incorrect. The fact that these receivables/debt would be written off is essentially written into the law. Most here also do not note th…

Where are you getting your claims about the recovery rate on these debts? >Most here also do not note that the balances here are also, by design, small as well. Can you explain how you think that relates to this discussion? If the debt is small, wouldn't that imply that the person was more likely to pay it off, at least in part?

My claims on recovery rates of debt are based on my experience in the banking industry. There are many public sources of information on this topic that you can refer to with respect to expected recovery rates of debts based on age. Provisions for these loses are written into regulations (national and international ones like Basel II/III).

Small overdue amounts are very expensive to recover, if a letter costs you $1 and a phone call $1.50 you don't need very many contact attempts to make an overdue loan of $80 worth less than the cost to recover it, you certainly can not afford to send a lawyer after someone. (Again, this is from my experience related to debt collection work.)

Re: Croatia just canceled the debts of its poorest citizens

#185

Post by adventured » Sun, Feb 01, 2015, 9:25 PM UTC

ptaipale wrote: post #162

adventured wrote: post #154

Earlier quoted context omitted.

The US is not regarded internationally as a low tax economy, it's regarded as a medium tax economy. There are about 110 countries with lower tax takes per GDP than the US. Singapore (14% of GDP) and Hong Kong (13% of GDP) are low tax economies. Japan and Australia are similar to the US, and are not considered low tax countries. The US and Japan also share the distinction of having among the highest corporate tax rate…

You are right, but in comparison to European countries, U.S. taxes are low. There's only one European country (Lithuania) where tax per GDP is clearly lower than U.S. E.g. in Scandinavia, the horrors of U.S. are attributed to its "extremy low" tax status. Horrors like that rich people only live in compounds surrounded by walls and armed guards, and the poor are dying because of no health care and no food, and the mid…

What are you talking about?

"Horrors like that rich people only live in compounds surrounded by walls and armed guards, and the poor are dying because of no health care and no food, and the middle class does not exist."

The poor have essentially universal free healthcare in the US and have for a long time. I should know, I've used it before, and it's very easy to use. The poor also have the benefit of the one of the largest welfare states on earth, including the largest food and subsidized housing programs.

The US has the world's largest true middle class, with a median income among the highest of any country. A mere 1% of US labor earns the minimum wage, and the majority of those people are below the age of 25. The US also has a higher labor force participation rate than nearly all of Europe - while simultaneously having a high median income.

The US has a lower unemployment rate than: Sweden, Finland, Denmark, the Netherlands, Belgium, France, United Kingdom, Spain, Portugal, Greece.

And while Europe rolls around in a near depression, with Europe's GDP still at 2007 levels (since 2007 the US has added $3.5 trillion to its GDP) and high unemployment, US wages are expanding at the fastest pace in a decade, while unemployment keeps falling, which will drive even faster wage growth in the next few years.

Re: Croatia just canceled the debts of its poorest citizens

#186

Post by ptaipale » Sun, Feb 01, 2015, 9:35 PM UTC

adventured wrote: post #185

ptaipale wrote: post #162

Earlier quoted context omitted.

You are right, but in comparison to European countries, U.S. taxes are low. There's only one European country (Lithuania) where tax per GDP is clearly lower than U.S. E.g. in Scandinavia, the horrors of U.S. are attributed to its "extremy low" tax status. Horrors like that rich people only live in compounds surrounded by walls and armed guards, and the poor are dying because of no health care and no food, and the mid…

What are you talking about? "Horrors like that rich people only live in compounds surrounded by walls and armed guards, and the poor are dying because of no health care and no food, and the middle class does not exist." The poor have essentially universal free healthcare in the US and have for a long time. I should know, I've used it before, and it's very easy to use. The poor also have the benefit of the one of the…

I'm talking about rhetoric that's used, particularly in the countries you mentioned in the unemployment list. I didn't say I believe the rhetoric. I just say that elections are never far away, and that kind of talk - how bad the U.S. is - gets votes.

Re: Croatia just canceled the debts of its poorest citizens

#187

Post by pbhjpbhj » Sun, Feb 01, 2015, 9:42 PM UTC

ZenoArrow wrote: post #168

_cudgel wrote: post #148

Earlier quoted context omitted.

Cities old enough they were designed for foot-traffic, not car-traffic; modern-ish train systems and other public transit; the high price of fuel... My guess is less need.

Most people in the UK buy second hand cars, you can get them ridiculously cheap. The mandatory insurance can cost more than the car itself. And yes, less need as well.

It's complicated though. In the UK, for me, it's cheaper to buy and run a car than it is to use public transport.

We used to use hire cars for special trips and use public transport for other things (for a time having no vehicle by choice); then we got a scooter (as a couple) to help with going out and doing shopping trips and such (definitely cheaper than getting taxis).

Then work necessitated having a van, once you have a vehicle then it's only ever cheaper [where I am] to use public transport for long trips for an individual - once a couple or more travel together it's cheaper in a car (including a proportion allowed for road tax, ongoing license costs, depreciation, repairs and petrol [using Gov mileage allowances; not including learning to drive!]).

Problem is, as with many things when you're poorer, the upfront costs for a car mean that those less well off can be barred from ownership and so barred from the per-mile savings and convenience.

Having a car for our family now means I can't afford to take the bus and watching near empty buses go past as you walk home in the dark, cold and wet, isn't much fun ...

Scrap values being high has pushed the price of the lowest costs second-hand cars up a bit. Not so long ago I had to pay to have a still usable car scrapped to avoid paying the license fee. Bangers then were essentially free.

Re: Croatia just canceled the debts of its poorest citizens

#188

Post by sgustard » Sun, Feb 01, 2015, 9:43 PM UTC

baddox wrote: post #135

stefantalpalaru wrote: post #127

Earlier quoted context omitted.

> Say goodbye to educational loans, healthcare loans, car loans. Say hello to life outside the US. In most of Europe you don't need loans to get an education, healthcare or to buy a car.

How do poor people in Europe get cars? Or are you saying they don't need them?

Per capita car ownership:

http://en.wikipedia.org/wiki/List_of_countries_by_vehicles_p...

shows the US at 809 cars per 1000, vs Italy at 682, Germany 588, and so on. Which I would interpret as "Europe has slightly fewer cars per person", not "Europe has NO NEED for cars". It's hard with a straight face for anyone who's visited Paris or Rome to observe there's not serious traffic. (And, in fact, woe to any pedestrians who get in their way.)

Re: Croatia just canceled the debts of its poorest citizens

#189

Post by bobcostas55 » Sun, Feb 01, 2015, 9:45 PM UTC

BSousa wrote: post #132

bsaul wrote: post #107

Earlier quoted context omitted.

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 ove…

Geesh. I'm no Greek and not fond of Syriza, but god damn, the brainwashing is strong here. a) fraud the state's accountings: True, but the difference was minimal (2.7% or so to 3.07%, and by fraud you mean they accounted for the expenses on arrival and not when ordering, not cook your books). Also, this was well known by all the other countries and none of them made a peep at the time b) get as many as you can before…

This post has no connection with reality, I have no clue why it's upvoted.

a) Regarding the state accounting fraud: first of all, using the past tense ("was") is misleading. As of last year, Greece was still cooking its books[0]. It remains to be seen if they have actually stopped.

You say the difference was minimal. When? When they brought in Georgiou to fix the Greek statistics service, the 2009 deficit was revised from 3.7% to 15.8%. The reaction of the government? Prosecute the guy because he refused to continue lying.[1]

b) You say banks correctly assumed they would get their money. This is nonsense. The banks lost nearly 80% of the value of their loans in the "PSI".[2] The word you're looking for is "incorrectly". They screwed up and paid dearly for it.

c) Pure nonsense. I have no clue where you're getting that from but it doesn't even deserve a response.

d) The troika has zero power when it comes to "ruling" Greece. How do you think Greece has been able to completely avoid structural reforms and pro-growth measures for 5 years now, if the troika is ruling the country? Almost none of the reforms the troika asked for in exchange for the loans have been implemented.

[0] yanisvaroufakis.eu/2014/04/24/greek-statistics-are-back-primary-deficit-presented-as-surplus-with-eurostats-seal-of-approval/

[1] http://www.spiegel.de/international/europe/chief-greek-stati...

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

Re: Croatia just canceled the debts of its poorest citizens

#190

Post by jqm » Sun, Feb 01, 2015, 9:48 PM UTC

I wonder if this has anything to do with attempts to tamp down Russia's influence in the region. Poor people without a lot to loose are destabilizing force in a society. 31 Million is peanuts to help insure order. Maybe banks and corporations were convinced this way?