Tuesday, January 20, 2009

“Jubilee” isn’t the word I’d use…

Biblical debt jubilee may be the only answer

The Treasury's £200bn plan to soak up toxic debt will be followed within days by a US variant from the Obama team. Germany cannot be far behind. There is no guarantee that the measures will succeed. The vast scale of government borrowing may exhaust the stock of global capital. Markets are already beginning to question the credit-worthiness of sovereign states. The Fed may find it harder than it thinks to disengage from colossal intervention in the bond markets. In the end, the only way out of all this global debt may prove to be a Biblical debt Jubilee. Creditors are not going to like that.

Posted by drewster @ 02:20 AM (1071 views)
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13 thoughts on ““Jubilee” isn’t the word I’d use…

  • Reset the date to year Zero and let the State confiscate all assets? I wouldn’t rule it out.

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  • Freewheelin' Franklin says:

    But Jubilee is the word the Bible uses. “a year of emancipation and restoration provided by ancient Hebrew law to be kept every 50 years by the emancipation of Hebrew slaves, restoration of alienated lands to their former owners, and omission of all cultivation of the land” according to Webster’s online…. I thought it also included forgiveness of debts. However I guess if we had one of those there would be a lot of litigation in the months and years before a jubilee.

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  • Savers still outnumber borrowers seven to one.

    And savers will still be able to afford rags, milk bottles and flammable liquid. That’s what it would come to – large scale looting of property and collapse of social order – if debt was forgiven.

    Any solution will have to be uniform and just – you can’t simply reward recklessness without consequence.

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  • Of course the easiest way to wipe out the debts is by printing money…

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  • But printing money doesn’t work! The devil is in the detail of the transmission mechanism.

    How will you get that money into the economy? You can’t simply drop it from a helicpter, as tried some time ago by japan and recently in the US and Taiwan (just to check that those Japanese didn’t just do it the wrong way of course!) – the net effect is zero!

    People keep talking about printing money and how it will negate debt and savings, but its not that simple. When you negate debt, you erode the assets held by financial institutions.

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  • Not sure I understand the terms and conditions of a Biblical Debt Jubilee – is he talking about just wiping out debt!?

    If so, why would anyone pay rent to a landlord that’s been given a property free by the bank? – if they get something for nothing why shouldn’t I would be the question going through tenants minds? What happens then with potential FTBs? – why would they want to take out a mortgage and pay for houses that other people get free? Wipe out debt and the ability to defend one’s property is the only means of ownership. It would bring a new meaning to an Englishman’s home is his castle.

    I liked one of the comments at the bottom:

    “Debt jubilee? Good grief. This problem starts and ends with house prices.

    When the average mid-terrace costs �60,000, the average semi-detached costs �120,000 and the average detached costs �150,000, this problem ends, because then normal people can borrow normal money and live in a normal house.

    And that time is only two or three years away so stop worrying.”

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  • Jubilee Year Definition – “The year of Jubilee in both the Jewish and Christian traditions is a time of joy, the year of remission or universal pardon. In Mosaic law, each fiftieth year was to be celebrated as a jubilee year, and that at this season every household should recover its absent members, the land return to its former owners, the Hebrew slaves be set free, and debts be remitted.”

    Obviously for this to work effectively you’d have to have known that this would occur every 50yrs when you became a creditor.

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  • Paul in fainess savers are hardly the sort of people who would riot. A strongly worded letter to the local newspaper maybe, in red pen even, but not blood on the streets.

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  • bellwether, forced appropriation of wealth commonly provokes rioting and public looting.

    How do you think Zimbabwe (along with a host of other African countries run by dictators) went from stable ownership democracy to outright lawlessness in a matter of months?

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  • “Debt jubilee? Good grief. This problem starts and ends with house prices.
    When the average mid-terrace costs �60,000, the average semi-detached costs �120,000 and the average detached costs �150,000, this problem ends, because then normal people can borrow normal money and live in a normal house.
    And that time is only two or three years away so stop worrying.”

    Absolutely – if we are talking radical solutions, let’s get to the heart of the problem and a fair(er) solution. Rather than cancelling debt, fix house prices at a reasonable level, say 2001 levels , for 2 years. Everyone then knows exactly where they are with regard to the debt they have and the market gets going again.

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  • Money is debt. And vice versa. Wipe out the debt, and your savings in the bank are wiped out too. So far so good. But where does money come from if there is no debt? Real wealth, which probably means gold, or productive assets. There’s not much of either about so living standards would plummet. Mad Max style economy I reckon.

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  • Paul I was part joking but I was making a serious point. There are very people in this country who are debt, most have mortgage debt at least (part of the reason we are in this mess) and writing off of debt, which is not the same as forced appropriation of property, would be welcomed- although not by me I’d add/

    Net savers are generally by nature passive, conservative and risk adverse, hardly the stuff of maurading gangs.

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  • sorry second sentence is a shambles, was making point that most people in uk in debt of some form or another

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