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

Re: Croatia just canceled the debts of its poorest citizens

#191

Post by jqm » Sun, Feb 01, 2015, 9:50 PM UTC

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…

Maybe it was the banks idea? Keep the society banking rather than seeing it destabilize and Russia come in with an "answer". 31 Million isn't much.

Re: Croatia just canceled the debts of its poorest citizens

#192

Post by ptaipale » Sun, Feb 01, 2015, 9:54 PM UTC

AnthonyMouse wrote: post #169

reinhardt wrote: post #56

Earlier quoted context omitted.

> Unlike the developing world, the developed world is perfectly capable of building a house for every man, woman and child. If it did, poverty would all but disappear; it's hard to be poor when you have your own house. If only that was true. The top countries by home ownership are Romania, Lithuania and Hungary, while UK and US are in the 33st/34th position and Germany/Switzerland 10 positions below: http://en.wikipe…

> The top countries by home ownership are Romania, Lithuania and Hungary, while UK and US are in the 33st/34th position and Germany/Switzerland 10 positions That has very little to do with the question. Housing costs the same amount to construct whether it's rented as apartments or sold as condominiums and the amount people are paying in rent is generally sufficient for the owner of the apartment to turn a profit. Th…

> The reason renters can't buy is that they have bad credit and no down payment.

At least over here, the reason is not bad credit nor need for down payment. The reason is that they do not have enough regular, stable income.

Their rents are subsidized, but the same subsidy is not available for buying property. Which does make some sense, of course.

> Making housing affordable is easy: Subsidize the construction of high density housing

No. Generally, in European countries and areas with high demand for housing, subsidizing construction is not necessary, and could be counter-productive. Making land available for construction is enough.

In areas of high demand, housing is much more expensive than construction cost, and that is because there is more demand than there is supply. And in areas where there is shortage of housing, supply is limited not by inability to construct, but by unavailability of plots to build.

Give me some land, and I can build a house myself.

Re: Croatia just canceled the debts of its poorest citizens

#193

Post by EpicEng » Sun, Feb 01, 2015, 9:55 PM UTC

kjjw wrote: post #113

nofutureagain wrote: post #95

Earlier quoted context omitted.

Yeah... the thing is, some of us have had a higher standard than that for generations and are now being sucked into the abyss of corruption under the flag of the EU.

FUD. Worse in fact - xenophobic FUD.

Sounds like the parent if from an EU country... so the comment cannot be considered xenophobic.

Re: Croatia just canceled the debts of its poorest citizens

#194

Post by tn13 » Sun, Feb 01, 2015, 10:00 PM UTC

So the people who were responsible enough to pay their debt ended up paying for irresponsible people deep into debt ?

Government did not "cancel" the debt, it simply paid it off using someone else's money.

Re: Croatia just canceled the debts of its poorest citizens

#195

Post by davidw » Sun, Feb 01, 2015, 10:00 PM UTC

Sandman wrote: post #165

ptaipale wrote: post #145

Earlier quoted context omitted.

Just nitpicking one thing: > taxes are very high Doesn't seem so: Croatia's tax to GDP ratio is 26.6 %. Compare that to 46.8 % in Belgium, 43.4 % in Austria, 40.6 % in Germany, 45.8 % in Sweden. 26.9 % in U.S. which is internationally known as a low-tax regime. Surely some taxes are high, and taxation is not necessarily fair, but I'd say that Croatia's taxes overall are not high. I would also expect that the "black m…

What hurts people the most is VAT (Value-added tax), and Croatia has one of the highest VATs of all the EU countries [1]. The US doesn't have a VAT, but it does have a sales tax, which is pretty low compared to VAT in most European countries[2] [1] http://en.wikipedia.org/wiki/Value-added_tax#EU_countries [2] http://en.wikipedia.org/wiki/Sales_taxes_in_the_United_State...

> The US doesn't have a VAT, but it does have a sales tax,

As someone from Oregon... that definitely varies by jurisdiction, as your link shows :-)

Re: Croatia just canceled the debts of its poorest citizens

#196

Post by bsaul » Sun, Feb 01, 2015, 10:08 PM UTC

riffraff wrote: post #175

bsaul wrote: post #104

Earlier quoted context omitted.

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.

yes, but that doesn't change the fact that the croatian government would have persuaded/forced the banks to cancel the debt, it's not the people with a loan who decided not to pay.

Well, then you must agree it's neither the side in debt neither the side who's supposed to get the money that decided to cancel the debt. Which leaves that situation in a very very weird place.

I would say, the government probably expect citizen that got their debt cancelled to vote for them in return (and they'll probably do, because those tricks unfortunately always work). Which makes them both a bit on the same "side" of the transaction.

Re: Croatia just canceled the debts of its poorest citizens

#197

Post by afterburner » Sun, Feb 01, 2015, 10:16 PM UTC

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…

3) The money has to come from somewhere--it isn't free. By canceling $31M in debt, the government is causing $31M in losses to corporations and institutions that were owed that money. That means $31M less in spending, economic growth, job creation, not to mention taxes, which will have to go up to compensate for the loss. These taxes (or inflation) will hit the poorest people while the rich horde more money or offshore it to prevent it being taken away.

Apparently you're not looking at both side of the ledger. The 31 million didn't disappear, it just stayed with the poor. So the poor have (had) 31m more to spend. And poor people do spend all their money, most likely on products that corporations sell. So this was effectively a stimulus measure supported by a tax on lenders.

I also don't see why you can think of raising taxes on the poor, but not on corporations. In fact, the government could easily raise taxes only on corporations. They may even have considered this, but the whole debt forgiveness thing is actually preferable to corporations since it's a one time thing.

Re: Croatia just canceled the debts of its poorest citizens

#198

Post by bsaul » Sun, Feb 01, 2015, 10:17 PM UTC

bobcostas55 wrote: post #189

BSousa wrote: post #132

Earlier quoted context omitted.

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…

Thanks for bringing a bit of reality check to the previous poster.

Now i would disagree a bit with you on d) : The only power the troika had was that the greek government needed to get regular loans to repay part of the interests of their huge debt and the salaries of the greek state workers. That did give the troika the power to keep a bit of pressure on the greek government and ensure it will keep reforming the country a bit.

And the reforms started to work, because now the greek budget is balanced enough for the state to be able to pay their workers without the need for additional loans from the EU.

Unfortunately, it means now that the greeks can effectively say FU to the european troika if they plan on stopping to repay their debt, without risking an internal chaos.

The only persons that will effectively have a hole in their budget as a result are the other EU states (states and not banks, meaning citizens), mostly french and germans.

Re: Croatia just canceled the debts of its poorest citizens

#199

Post by simonh » Sun, Feb 01, 2015, 10:17 PM UTC

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.

Which ones? I know you're not talking about TARP because that was paid back, and the government even made a profit. So what is it you are referring to?

Re: Croatia just canceled the debts of its poorest citizens

#200

Post by gaius » Sun, Feb 01, 2015, 10:19 PM UTC

sigzero wrote: post #170

byoogle wrote: post #106

Earlier quoted context omitted.

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 think that is actually part of the "Cycle of Democracy" by Dr. Alexander Tytler.

Any quote I don't know the origin of, I've taken to attributing to Taylor Swift. It works pretty well.