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Thread: Why are we rescuing the Banks when we should be rescuing the Borrowers?

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    Politics.ie Member clearmurk's Avatar
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    Default Why are we rescuing the Banks when we should be rescuing the Borrowers?

    I’ve been reading about some economic modelling which has looked at how a recession might be managed. For the specific model developed, the findings were stark

    - If the banks are rescued, unemployment peaked at 13% and the economy returns to equilibrium after 10 years
    - If the debtors are rescued, the recession is over in less than 2 years and unemployment peaks only at 10%.

    Steve Keen, “Declaring Victory at Half Time”, Real World Economics Review, No 52 (10 March 2010), pp 63-66
    http://www.paecon.net/PAEReview/issue52/whole52.pdf

    So why have we been so eager to rescue the banks? What are the linkages between the banks and our political parties that have led to this deference and subservience?

    One approach to rescuing the borrowers was outlined by Karl Deeter of Irish Mortgage Brokers on radio this morning (Today with Pat Kenny). This would involve an (unconditional) write-down of mortgage debt to the current value of the property (presumably in line with the property tax valuation). I might add that this should only be applied to properties which are the Principal Private Residence, as in my view the “buy to let” sector involved much commercial speculation and should therefore be treated as any other business failure.

    Would those in the know care to cost such an approach?

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    Politics.ie Member H.R. Haldeman's Avatar
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    Why are we rescuing either of them?

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    Politics.ie Member Socratus O' Pericles's Avatar
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    The bankers are influential the borrowers aren't.
    The truth of an idea is not a stagnant property inherent in it. Truth happens to an idea. It becomes true, is made true by events.

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    Politics.ie Member Ren84's Avatar
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    I've always felt a debt rightdown at the start of this whole crisis was the only real solution. That remains my opinion, although its effects probably wouldn't be as pronounced at this stage.

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    Politics.ie Member Aindriu's Avatar
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    Quote Originally Posted by Ren84 View Post
    I've always felt a debt rightdown at the start of this whole crisis was the only real solution. That remains my opinion, although its effects probably wouldn't be as pronounced at this stage.
    Well, my europhile friend, dream on cos it aint gonna happen anytime soon.
    If you continue to elect idiots in elections, don't be surprised when the result is an idiotic government.

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    Politics.ie Member H.R. Haldeman's Avatar
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    Quote Originally Posted by Ren84 View Post
    I've always felt a debt rightdown at the start of this whole crisis was the only real solution. That remains my opinion, although its effects probably wouldn't be as pronounced at this stage.

    I do not accept a direct transfer from wider society to write off the debts of mortgage holders.

    Moreover, I am SICK of being told - constantly, non-stop - that it is a self-evidently moral thing to do. It is not moral that poor people, pensioners, the working poor, the renting poor (indeed, renters in general), those paying their mortgage and struggling to do so, and everyone else in between has tax money used to pay for other people's costs of abode.

    I do not know what kind of moral universe we live in whereby every commentator, politician and columnist can insist this is somehow "the right thing to do" and there's hardly a word of dissent. It's not even questioned. When these people say "We have to keep people in their family homes", what they actually mean is: "We have to keep some people in their family homes." It's not moral and I will not longer accept being told it is. I am perfectly capable of deciding for myself what I consider moral. And this ain't it.

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    Moderator Cato's Avatar
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    Quote Originally Posted by H.R. Haldeman View Post
    Why are we rescuing either of them?
    I may be wrong but I seem to recall you (or someone looking like you!) coming out with a solution of sorts before where the bailout to the banks wasn't directly given to them but divided across every household in Ireland. The money would have to go towards paying down debt where there were debts and otherwise go into some long term savings plans in the banks.
    “I would rather be exposed to the inconveniences attending too much liberty, than those attending too small a degree of it." - Thomas Jefferson (yeah, I'm aware of the irony)

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    Politics.ie Member Socratus O' Pericles's Avatar
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    When he says rightdown he probably means write down.
    The truth of an idea is not a stagnant property inherent in it. Truth happens to an idea. It becomes true, is made true by events.

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    Politics.ie Member Ren84's Avatar
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    Quote Originally Posted by H.R. Haldeman View Post
    I do not accept a direct transfer from wider society to write off the debts of mortgage holders.

    Moreover, I am SICK of being told - constantly, non-stop - that it is a self-evidently moral thing to do. It is not moral that poor people, pensioners, the working poor, the renting poor (indeed, renters in general), those paying their mortgage and struggling to do so, and everyone else in between has tax money used to pay for other people's costs of abode.

    I do not know what kind of moral universe we live in whereby every commentator, politician and columnist can insist this is somehow "the right thing to do" and there's hardly a word of dissent. It's not even questioned. When these people say "We have to keep people in their family homes", what they actually mean is: "We have to keep some people in their family homes." It's not moral and I will not longer accept being told it is. I am perfectly capable of deciding for myself what I consider moral. And this ain't it.
    You're quite right of course. Charity should only be extended to banks.

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    Politics.ie Member Ren84's Avatar
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    Quote Originally Posted by Socratus O' Pericles View Post
    When he says rightdown he probably means write down.
    /pedantry/

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