Well, I worked in finance for quite some time and was interested in it before that. So ask me whatever you want to know and I'll try to answer it (I don't know everything either obviously).

Of course people can agree on things but what should they agree on? How would you propose saving pension savings from the debt jubilee?

Just as an example, Dutch pension scheme associations (PSA) have invested about 25% in low risk bonds from countries like the Netherlands and Germany and they hold riskier ones as well.

Banks have to hold high quality liquid assets to meet regulatory obligations; mostly leverage ratio and capital requirements. They mostly hold that in bonds as well. So a debt jubilee will wipe out their capital base, making them much less safe vehicles for financing activities in the real economy. So you need to relax those rules or think of something else.

It also doesn't solve, in my view, the resulting inequality of the debt fueled asset inflation. The rich got richer (especially those in the financial industry) and they'll stay rich. The debt jubilee would only solve one part of the equation. As you see in the German example capital has a much lower exchange rate to the DM.

This is all to say that a debt jubilee is a good idea but with resulting problems you need to solve but also with the realisation the existing system that resulted in this situation continues afterwards. A debt jubilee every 50 years is going to create tremendous moral hazard so if you're going to do this, you'd better fix the system in such a way it doesn't happen again.

I'm not saying not to do it. I'm saying you need to solve this problem. — Benkei

OK, in order to understand what we are talking about, let's look at the case of the US and what they could do and how their debt is owned, who are the lenders. First the size of public, private (household) and corporate debt compared to each other:


Note that the above is the aggregate debt as a percentage of the GDP starting with the US Government being the huge expender with fighting WW2, then it's portion decreased as the total debt increased. Let's divide the above into the different categories.

Then here's how the private household debt is divided. Notice that the vast majority of this debt is mortrages and then student loans. And notice the deleveraging that took place once the financial crisis of 2007-2008 hit home, then finally went back to the same levels before the pandemic:



Then there is the national debt, carried by the federal government of the United States. Only a third of the lenders are private people and institutions. This means that the haircut that ordinary people take (or ordinary pension funds take who's assets are made up of ordinary people's pensions) can easily take a smaller haircut while the fed and the US, and also those untrustworthy foreigners can get shafted. Who cares about those foreign investors stupid enough to invest in US Treasuries etc! A 2/3 debt jubilee certainly have an effect.



And last there is the corporate debt. Now this is very interesting as in my view NOTHING explains better the business cycle than corporate debt. Notice that this ends in 2018, two years ago.


This above ought to tell that this isn't just the pandemic, but a natural situation where an economic downturn would happen. The first credit cycle peak was the roaring 80's, next one was popping of the Tech bubble, then the popping of the Housing bubble and finally the popping of the bubble with the corona virus. The pandemic will put the corporate sector to deleverage again (I assume). And this is why I've said that the pandemic to be the perfect trigger of the next economic downturn. There will be a massive deleveraging if nothing is done, just look at the situation of household debt and corporate debt.

Large PSAs and banks are large holders of government bonds that they hold on behalf of pensions for everybody. Especially low paying jobs that don't naturally manage to save money will be hit hardest if their pensions are wiped out. So what's your solution to this? — Benkei

First, pension schemes aren't piggy banks. Especially the state versions simply pay with the contributions of the working the pensions of the present pensioners. And even private pension schemes can quit well make schemes to pensions that will be only paid decades from now.

Banks have to hold high quality liquid assets to meet regulatory obligations; mostly leverage ratio and capital requirements. They mostly hold that in bonds as well. So a debt jubilee will wipe out their capital base, making them much less safe vehicles for financing activities in the real economy. So you need to relax those rules or think of something else. — Benkei

You think after a debt jubilee there wouldn't be customers for banks? Financial sector would prevail. I'm sure of that.

Again the "German debt jubilee" is a great example just why the Western Allies would agree to this: the debt was mainly in the hands of Nazis or bankers close to the Nazis, hence when West Germany was established, the Western Allies had no desire to have those people having a say in the country's economy (as bankers do). Yet I agree that one thing that could be relaxed is things like mark-to-market. I don't know, perhaps have the ability just like now I can to deduct from capital gains taxes investment losses for some years. The debt jubilee is already quite spectacular accounting phenomenon. And then again, we have a fiat monetary system.

Here's Michael Hudson about the subject:

America’s 2008 bank crash offered a great opportunity to write down the often fraudulent junk mortgages that burdened many lower-income families, especially minorities. But this was not done, and millions of American families were evicted. The way to restore normalcy today is a debt write-down. The debts in deepest arrears and most likely to default are student debts, medical debts, general consumer debts and purely speculative debts. They block spending on goods and services, shrinking the “real” economy. A write-down would be pragmatic, not merely moral sympathy with the less affluent.

Critics warn of a creditor collapse and ruinous costs to government. But if the U.S. government can finance $4.5 trillion in quantitative easing, it can absorb the cost of forgoing student and other debt. And for private lenders, only bad loans need be wiped out. Much of what would be written off are accruals, late charges and penalties on loans gone bad.

In his town hall on Sunday, Trump also returned to promoting those drugs for malaria — hydroxychloroquine and chloroquine — as a coronavirus treatment even though his own administration has warned it carries dangerous side effects. He went so far as to claim without evidence that his rivals are pushing negative findings about the medication to hurt him politically.

“The Democrats — the radical left, whatever you want — would rather see people, I'm going to be very nice. I'm not going to say 'die.' I'm going to say, 'would rather see people not get well,' because they think I'm going to get credit if, you know, hydroxychloroquine works,” he said.

The FDA has cautioned that hydroxychloroquine should not be used by patients with heart problems because it make them worse, and other studies have shown that the drug can react badly with diabetes medication." — Politico

Punshhh
1.7k
↪ssu That's quite a reefer he's smoking. — Punshhh

That ain't no reefer...it is a spliff.

I did many of those down in Jamaica, Mon.

I was admittedly disappointed with Trump's response to a question in his most recent town hall.

The question from a woman about not receiving her federal relief aid while she edged closer to bankruptcy and eviction was met with the typical Trump speak about how good the economy once was and will soon be. I don't blame Trump for her not receiving the aid—it is probably lost in the black-hole of American nanny-state bureaucracy—but the president should have taken her number, stood over the desk of the bureaucrat whose job it is to send those payments, and made it happen. It was a lost opportunity.

You don't get it. and I wonder if you could be that naive. Trump has, and has had, many opportunities daily to do the right thing, and with only one exception I can think of, he not only doesn't do them, but does as many mean rotten low-down, & etc., things as he can in the time he has. For him it's his full-time job it seems: who can he hurt. This is just plain a very bad man. And you were disappointed?

You don't get it. and I wonder if you could be that naive. Trump has, and has had, many opportunities daily to do the right thing, and with only one exception I can think of, he not only doesn't do them, but does as many mean rotten low-down, & etc., things as he can in the time he has. For him it's his full-time job it seems: who can he hurt. This is just plain a very bad man. And you were disappointed?

I try not to confuse poor speaking with poor action, and I cannot see why anyone would unless one was fooling himself through blind hatred. But I am open to being convinced otherwise. If, as you say, his full-time job is to hurt others, perhaps you can provide some examples of who he has hurt and how he has done so?

... the president should have taken her number, stood over the desk of the bureaucrat whose job it is to send those payments, and made it happen. — NOS4A2

Ah, you do have a sense of humor.

Starting c. day two of his presidency. Read the news. It does not occur to you that blocking legal immigration by people who had already gone through the years'-long trials of getting all of their ducks in a row, including Iraqi allies who needed asylum, might have hurt some people, not to speak of hurting me and us, by making our word a joke! And that day what? Two?

C'mon! You pass from being annoying to merely absurd and ridiculous - but that just a different flavor of toxic.

It might hurt their feelings, sure. It would certainly be awful to have a visa revoked. But the ban on terror-prone countries was done in the interest of protecting American citizens, not for any malicious reason as you pretend.

So it appears you’re fooling yourself, Tim.

It might hurt their feelings, sure. It would certainly be awful to have a visa revoked. But the ban on terror-prone countries was done in the interest of protecting American citizens, not for any malicious reason as you pretend.
So it appears you’re fooling yourself, Tim. — NOS4A2

Sorry, nos4, I'm not a buyer. And are you suggesting that Trump is not racist?

I’m not saying you have to believe it, but you suspiciously leave it out. I do not believe Trump is racist.

Doesn't trouble you that Trump lumps all these people together as terrorists, notwithstanding that of those that have their paper work done, we have said they weren't (and don't neglect the issue of our allies). That's like me saying your mother is a terrible person because she had you. Do you see a problem there? Category errors, or anything like that? Applied to classes of people by race, that's called racism. And it's called that because it is that. Trump's actions are a matter of record. But you say he isn't. Please reconcile.

Of course you say you do not believe he is. A little disingenuous maybe? Why would you - such an intelligent person - be that? .

I try not to confuse poor speaking with poor action, and I cannot see why anyone would unless one was fooling himself through blind hatred. But I am open to being convinced otherwise. If, as you say, his full-time job is to hurt others, perhaps you can provide some examples of who he has hurt and how he has done so? — NOS4A2

I accept your view about Trump's words being irrelevant to you, but do you understand that his words are extremely off-putting and sometimes offensive to others? Even though you don't care what he says, don't you think it's fair to judge his character based on the things he says?

IMO, If he does not get reelected, it will be because of these things. Do you agree?

don't you think it's fair to judge his character based on the things he says? — Relativist

I'm not nos4, to whom your question is addressed, But I'd like to note that yes, it's fair to judge on what's said, but as well on what's done.

And to nos4 @NOS4A2 there are a couple of questions me-to-you that you have ignored. Gosh. I wonder why? Not too far above; you can find them if you look, or if you look through my comments. Tch, But you won't look and you won't answer. and that makes you, in terms of how you handle yourself here, unworthy to be here.

Ras! Me nah know you cool dat way, breddah Francis. Irie, mon! :cool:

I accept your view about Trump's words being irrelevant to you, but do you understand that his words are extremely off-putting and sometimes offensive to others? Even though you don't care what he says, don't you think it's fair to judge his character based on the things he says?

IMO, If he does not get reelected, it will be because of these things. Do you agree?

Most of his words are not irrelevant to me. The ones that are sensationalized by a belligerent press are irrelevant. For instance I doubt anyone can remember any of the important information he gave before or after he wondered about injecting disinfectant. This isn’t because he didn’t say anything relevant—he did—but they were selectively omitted by those who are tasked with informing you.

I understand that some of his words may be off-putting and offensive to others, yes. But I think offensiveness is a common trait among human beings. Most people, right left, of all races and creeds, cannot stand political correctness. So who is more out of touch? History is replete with people who say offensive things. I don’t think they’re evil. Often they are necessary.

Doesn't trouble you that Trump lumps all these people together as terrorists, notwithstanding that of those that have their paper work done, we have said they weren't (and don't neglect the issue of our allies). That's like me saying your mother is a terrible person because she had you. Do you see a problem there? Category errors, or anything like that? Applied to classes of people by race, that's called racism. And it's called that because it is that. Trump's actions are a matter of record. But you say he isn't. Please reconcile.

Of course you say you do not believe he is. A little disingenuous maybe? Why would you - such an intelligent person - be that? .

He does not lump them all as terrorists, and he does not apply anything to any group of people by race. Why can’t you prove your accusations, Tim Wood?

No shit, down our way we call one like that a Camberwell carrot.

I unfortunately don't have a lot of time these days to react in depth to your considerate posts. Just a few quick snippets where you'd have to think of some other approaches.

This means that the haircut that ordinary people take (or ordinary pension funds take who's assets are made up of ordinary people's pensions) can easily take a smaller haircut while the fed and the US, and also those untrustworthy foreigners can get shafted. Who cares about those foreign investors stupid enough to invest in US Treasuries etc! A 2/3 debt jubilee certainly have an effect. — ssu

Good idea but unfortunately totally illegal and no national law is going to set it aside. No discrimination between types of bond holders. Since this is laid down in the various human rights treaties and often enshrined in constitutions you can't do it this way.

First, pension schemes aren't piggy banks. Especially the state versions simply pay with the contributions of the working the pensions of the present pensioners. And even private pension schemes can quit well make schemes to pensions that will be only paid decades from now. — ssu

That's only partially true. It's usually a mix of piggy bank and contributions from the active work force. Suffice is to say that for Dutch people it would wipe out about 25% of their savings (as a society as a whole). For Italians it's close to 80%. Not an acceptable outcome.

Of course, the easy solution I hinted to before is using the lower interest burden of the State to make up the difference.

In any case, I don't see the use of doing this without changing the system that caused it. Or you'll just have to do this again in 50 to 100 years.

Or you'll just have to do this again in 50 to 100 years. — Benkei

Just like we used to do in the past, and just as the bible proscribes:

"You shall then sound a ram's horn abroad on the tenth day of the seventh month; on the day of atonement you shall sound a horn all through your land. You shall thus consecrate the fiftieth year and proclaim a release through the land to all its inhabitants. It shall be a jubilee for you" (Leviticus 25:1–4, 8–10)

tim wood
4.3k
↪NOS4A2 You don't get it. and I wonder if you could be that naive. Trump has, and has had, many opportunities daily to do the right thing, and with only one exception I can think of, he not only doesn't do them, but does as many mean rotten low-down, & etc., things as he can in the time he has. For him it's his full-time job it seems: who can he hurt. This is just plain a very bad man. And you were disappointed? — tim wood

Yeah, I gotta acknowledge when I read NOS's words, "I was admittedly disappointed with Trump's response to a question in his most recent town hall"...my thoughts were, I can hardly remember a time when I was NOT disappointed in what the abomination has said.

Damn near everything that comes out of his mouth should make a reasonable person gag!

180 Proof
1k
↪Frank Apisa Ras! Me nah know you cool dat way, breddah Francis. Irie, mon! :cool: — 180 Proof

Loved that comment, 180!

I remember a day way back in the 1960's when I discovered that my much younger sister smoked pot. I was naive back then and had not yet indulged. I was hoping she was not a lost soul, and asked her, "How often do you smoke it?"

She replied, "Just about every day." I damn near died on the spot, figuring she was soon to be dead of what I considered "over-dose." (Like I said, I was naive.")

Then, in my mid 30's I got turned on for he first time. Ended up smoking a forest of dope. One day I'm speaking with a person I had not known was a pot-head and asked, "So, how often do you smoke?"

"Every day," he said.

"Of course every day," says I, "but...I mean...like how often?"

Ahhh...how things change.

Punshhh
1.7k
↪Frank Apisa No shit, down our way we call one like that a Camberwell carrot. — Punshhh

Never heard that one before. Spliffs are build like carrots, though.

:lol: :victory:

But I think offensiveness is a common trait among human beings. — NOS4A2

Commonly known as uncouth and generally frowned upon as meaning deprived in cultural values; not a positive characteristic. Sometimes the word barbarian is a better choice.

Good idea but unfortunately totally illegal and no national law is going to set it aside. No discrimination between types of bond holders. — Benkei

Well, Trump could easily do it, if he was given the option. After all, according to Trump China was behind the pandemic. I think that Trump would be extremely happy to do it and his followers would be ecstatic that finally Trump. But of course, the Trump team is totally against these kind of ideas were rich people would make losses.

understand that some of his words may be off-putting and offensive to others, yes. But I think offensiveness is a common trait among human beings. Most people, right left, of all races and creeds, cannot stand political correctness. So who is more out of touch? History is replete with people who say offensive things. I don’t think they’re evil. Often they are necessary. — NOS4A2

Here's what I infer from Trump's words:

His top priority is his own self-interest. He's arrogant to the point of narsiccism, rude, insensitive, never accepts that he's wrong, he has poor judgment, too often trusting his ill-informed gut over expert opinion, easily duped, he lies frequently - but more often he's just displaying ignorance, he is overly prone to confirmation bias (e.g. accepts fake news that conforms to his biases), fails to take responsibility for his own words and actions. He is divisive.

Can you understand why I'd feel this way? You often challenge others to convince you YOU'RE wrong. Can you convince me I'm wrong?

I get that Trump's base of supporters don't care about the above because he's pushing for things they like, but this "style" is more apt to impassion opposition to him than to win people over. Do you agree or disagree? Even if you disagree now, if he loses - won't that imply I'm right?

I understand why you’d feel that way and agree that his style may “impassion opposition”. The issue I have is I’m not sure that this differs much from routine snobbery.