economic situation is dire

[snowychap]

If people were offered the following policy:

 

We will cancel all debt, all debt from your credit card, the mortgage, the national debt and what your local hospital owes. We will then all have to live within our means.

 

I think the second half of that policy would kill it dead. We've all got too used to comfort and the idea of money actually being abstract and somebody else somewhere else will settle up at some other time. But not us, here, now.

I'm guessing that for 'live within our means', you mean no debt and no credit?

If so, I'd also guess that those who would complain first and loudest about that idea would be the rich (especially those with no net debt) and then probably business people - perhaps not the intended target groups?

[CVByrne]

 

If people were offered the following policy:

 

We will cancel all debt, all debt from your credit card, the mortgage, the national debt and what your local hospital owes. We will then all have to live within our means.

 

I think the second half of that policy would kill it dead. We've all got too used to comfort and the idea of money actually being abstract and somebody else somewhere else will settle up at some other time. But not us, here, now.

I'm guessing that for 'live within our means', you mean no debt and no credit?

If so, I'd also guess that those who would complain first and loudest about that idea would be the rich (especially those with no net debt) and then probably business people - perhaps not the intended target groups?

 

 

Why would that be?

 

Surely people who need credit to buy a home would be worse off than rich people who have no debt or need for it as they're rich. 

 

Seems a default Rich = Evil generalisation to me. I've no interest in grouping people together based on income or wealth as I know every person is different. 

[chrisp65]

by 'rich' if you mean the vast majority with their mortgages, car loans, credit cards and overdrafts.....yes

 

There was no intended target group, it was a passing idea and an illustration that part of what separates us and our fancy soft western lives from the poor of Mexico or Brazil or Laos is easy access to perpetual unsustainable credit.

[snowychap]

Why would that be?

What would happen to the worth of those with no net debt if all debt were written off in one fell swoop?

Surely people who need credit to buy a home would be worse off than rich people who have no debt or need for it as they're rich.

Why would not being able to take on debt make someone worse off?

Seems a default Rich = Evil generalisation to me.

My post was, indeed, a generalization in that the negative effects of the cancellation of debt ought to be proportionally greater for those with (net positive) assets [than those with the opposite] and those for whom debt and credit are an integral way of conducting business in our current economic system - though I'd like to see what a system that is run without these looks like.

It really isn't a pejorative generalization, though.

I'd have thought it was trivially true that the person who would have the most problem with a debt being cancelled would be a creditor and I don't think it's a wild leap of a generalization to suggest that the rich are more likely to be creditors than the poor.

Edited.

Edited November 21, 2014 by snowychap

[snowychap]

by 'rich' if you mean the vast majority with their mortgages, car loans, credit cards and overdrafts.....yes

I'd have thought that popping especially those with no net debt in brackets after 'the rich' would have given a clue as to what I meant.

There was no intended target group, it was a passing idea and an illustration that part of what separates us and our fancy soft western lives from the poor of Mexico or Brazil or Laos is easy access to perpetual unsustainable credit.

As hinted at here - it's sustainability that is the problem (and that applies to so much more in our current way of living than just credit).

Credit/debt can be a good thing - hasn't peer to peer lending had a positive effect on people in poverty in those countries (and elsewhere)? It's also largely a 'good thing' for those loaning the money (whether that be that they get a return for their loan by way of it being paid back with a premium or they get assets in the event of a default).

When people discuss debt mostly in terms of 'living beyond means' or equate it to being 'in trouble' or suggest that people in net debt are rich (rather than just seem it) then it appears to be a discussion between some who are very confused and some eager to flagellate the populace.

Edited November 20, 2014 by snowychap

[CVByrne]

I'm talking about the people being hurt would be the people who need credit. To buy a home or start a business. The people who benefit are the people who have lots of debt as they don't have to repay it and the people who are so wealthy they don't need credit would still be wealthy. 

 

The actual people who would suffer most are those "living with their means" already. 

 

But this is all silly anyway as obviously wiping out debt everywhere in the world is total nonsense idea, it would bring down the entire system of government and create anarchy. Money would be worthless.

[CVByrne]

In a whole living within your means argument I am a staunch proponent. I have a massive aversion to debt, I've never had any. Ever. I  have struggled with the "bingeing on cheap credit" that people did in Ireland. Your neighbour has bought a second home, he got a 100% mortgage for it, he keeps talking about how much the price has gone up since he bought it. You need to get an "investment property". 

 

The way the whole culture in Ireland went was repulsive, and what's worse is people will not admit their own greed was a key factor that has led them to their "negative equity" and their current "plight". Yes irresponsible lending was like the drug dealer at your street corner, yes pathetic government regulation and indeed corruption was a factor. But really, when it came down to it. Personal greed was what got you. 

[TrentVilla]

You've never had a mortgage? Or bought anything on a credit card? Or had a student loan? Or car finance? Or an over draft?

 

I'm not doubting you, I just find it very hard to believe anyone can go through life without any debt at some point. I mean I'm very debt adverse, I don't generally buy things unless I can do so up front but I still have or have had all the things listed above.

[MakemineVanilla]

[snowychap]

In a whole living within your means argument I am a staunch proponent. I have a massive aversion to debt, I've never had any. Ever.

One of the themes amongst your posts on this subject seems to be the lack of understanding of the importance of that debt to the prosperity of others, especially those without any (net) debt - and the often disproportionate benefit of cheap credit to wealthier households (as per QE in the UK). Edited November 21, 2014 by snowychap

[blandy]

 

it's sustainability that is the problem (and that applies to so much more in our current way of living than just credit).

Most Definitely. Probably credit is the smaller part of the bigger overall problem. 

 

One of the themes amongst your rants on this subject seems to be the lack of understanding of the importance of that debt to the prosperity of others..

I don't think it's fair to call Conor's post a rant, personally.

But anyway, the level of importance of debt/credit in the current system isn't the same as the level of importance in an altered, better, different system.

The current system, by and large, benefits big business and not so much anyone else.

Peer to peer lending is an exception.

There's nothing intrinsically wrong with having some assets, or some money. And when it's used to help other people also get the same, that's even better.

I don't think it's really the case that the levels of debt that abound are necessary, nor that the mass availability of credit that has been the case for the past 35 years or so has been a good thing. Quite the opposite, really.

And that's where what CVB is saying has some tack, for me.

[snowychap]

I don't think it's fair to call Conor's post a rant, personally.

I edited that to 'posts' as I reconsidered whether it was fair and thought it probably wasn't quite.

I don't think it's really the case that the levels of debt that abound are necessary, nor that the mass availability of credit that has been the case for the past 35 years or so has been a good thing. Quite the opposite, really.

I think they are necessary to keep the current system going and I think the current system has adapted itself to create this kind of thing for that purpose.

I agree with you that they probably aren't a good thing but we'd be living in a vastly different world if they hadn't been so.

We'd also probably be looking at a hugely different world (especially first world countries) without QE/low interest rates of the last half dozen years.

Has it been a good thing? Like you I'd say probably not but one wonders what the level of GDP growth for first world economies would have been over the last few decades without it, for example.

That may lead on to other questions and issues - like how we measure the wellbeing of the economy and so on but I shan't go there for the moment.

...the level of importance of debt/credit in the current system isn't the same as the level of importance in an altered, better, different system...

Again, I agree but I have yet to see where this system is being put forward.

Just the same thing without that level of debt/credit is unlikely to be a different (even if attainable) system.

[chrisp65]

it's a problem

 

We have a whole system based on 'growth' which itself is measured by GDP which itself relies largely on us buying more and more 'stuff' whether we have the money or not.

 

So whilst we don't 'need' that 55" TV or the wrestling action figures that we bought on our card with every intention of paying back at the end of the month (ha!, yeah), we do need to spend that money on something to sustain the system.

 

If we all decide we'd be happier meditating than playing on the xbox, then we need to buy lots of meditation stuff as just sitting at home humming will crash the economy.

 

But by the same token, constantly buying material things to constantly grow the economy is currently being done by stripping out natural resources at an unsustainable rate which is being accelerated because whilst people in Islington are remembering to buy better lightbulbs, people in China are buying 20,000 cars a week.

[CVByrne]

You've never had a mortgage? Or bought anything on a credit card? Or had a student loan? Or car finance? Or an over draft?

 

I'm not doubting you, I just find it very hard to believe anyone can go through life without any debt at some point. I mean I'm very debt adverse, I don't generally buy things unless I can do so up front but I still have or have had all the things listed above.

 

Never had a mortgage but I am sure I will have one at some point in the coming years. I have a credit card but have never paid any interest on it. My account is set up to pay full amount of credit card when bill is due. I never had a student loan, though to be fair I was lucky in that when I went to University all 3rd level fees were paid by Irish government for all citizens, all that was required was a €100 registration fee. Then I got a €7,000 scolarship to do my Masters Degree. I have never had an overdraft.

 

I do accept certain circumastances has meant I've never needed a loan. If I was in England I would have needed a loan for Uni etc.

 

But simple things like I kept using the same computer for years until it finally died on me, then the same netbook until it bit the dust. I have never owned a car due to the fact I believed the costs would outweight the benefits as I lived in the city center in Dublin and so walked to work. 

 

I dislike shopping in general. I go clothes shopping when I need to, when Tshirts are ready for the bin, or my suit a bit shabby. I do not amass pretty useless items. Like a nice ornaments or something. 

 

Even the expensive watches I own are really places to save money that is better than the nothing interest savings would accumulate in a bank. I also do not believe in inheritance beyond a family home. People should work for what they get in life, not benefit from the work of their parents or grandparents. 

 

Look that's just me, but because I happen to have a very well paying job I'm to many people that is in some way bad, being relatively successful due to my own hard work. Despite being a huge contributor to the exchequer and drawing down essentially zero from it in any form of benefit. I have never been to hospital or a doctor in maybe 7 years. 

 

So, I try not to group people by anything like race, income bracket, nationality etc.. which is why I'm quite repulsed by many things that are happening in the politics or Britain at the moment. The word scapegoats for your own problems is how I'd call lots of it. 

Edited November 21, 2014 by CVByrne

[TrentVilla]

Thanks CV for the answer and taking the question in the way it was intended. In general, I strongly agree with you.

[chrisp65]

and you two can **** right off if you're going to be reasonable to each other

[DanishVillan]

You've never had a mortgage? Or bought anything on a credit card? Or had a student loan? Or car finance? Or an over draft?

 

I'm not doubting you, I just find it very hard to believe anyone can go through life without any debt at some point. I mean I'm very debt adverse, I don't generally buy things unless I can do so up front but I still have or have had all the things listed above.

I´ve never had any of these but then I live in one of the best cycling cities with decent public transport and more or less free education.

Also, I was lucky to buy my first apartment before the housing market really took off.

I see a future with debtor prisons as more likely, than with debt write-offs.

[CVByrne]

Thanks CV for the answer and taking the question in the way it was intended. In general, I strongly agree with you.

 

What is more difficult to articulate is how I fall into a strange no camp when it comes to politics though. I do have an annoyance that politics has become about whirlwind rhetoric and single issues rather than the breadth of issues that actually matter to most people. Also protest voting is based on emotion and not logic, and as such is also stupid.

 

I strongly believe in capitalism as the most governable system available. But what is important is giving people to opportunity to achieve in such a system. So 3rd level education should be completely funded by the taxpayer and open to all, this way if you want to be a doctor and you have the skills and drive to achieve that. Then the system will not bar you from that due to the lack of money to pay for it. I believe the right to healthcare is a human right and should be funded by the state. Also that the state should provide a decent pension to the elderly. 

 

I strongly believe in the European Union and freedom of movement. Why should someone who wants to work hard and provide for their family be denied that because they were born in a different country? If someone wants to come here to work they should be allowed to do that. If we didn't have this we would have businesses forced to employ from a limited pool of labour, and as such stuck with many lazy disinterested people which would damage the economy and how it competes with other countries in the world. 

[dont_do_it_doug.]

 

You've never had a mortgage? Or bought anything on a credit card? Or had a student loan? Or car finance? Or an over draft?

I'm not doubting you, I just find it very hard to believe anyone can go through life without any debt at some point. I mean I'm very debt adverse, I don't generally buy things unless I can do so up front but I still have or have had all the things listed above.

Never had a mortgage but I am sure I will have one at some point in the coming years. I have a credit card but have never paid any interest on it. My account is set up to pay full amount of credit card when bill is due. I never had a student loan, though to be fair I was lucky in that when I went to University all 3rd level fees were paid by Irish government for all citizens, all that was required was a €100 registration fee. Then I got a €7,000 scolarship to do my Masters Degree. I have never had an overdraft.

I do accept certain circumastances has meant I've never needed a loan. If I was in England I would have needed a loan for Uni etc.

But simple things like I kept using the same computer for years until it finally died on me, then the same netbook until it bit the dust. I have never owned a car due to the fact I believed the costs would outweight the benefits as I lived in the city center in Dublin and so walked to work.

I dislike shopping in general. I go clothes shopping when I need to, when Tshirts are ready for the bin, or my suit a bit shabby. I do not amass pretty useless items. Like a nice ornaments or something.

Even the expensive watches I own are really places to save money that is better than the nothing interest savings would accumulate in a bank. I also do not believe in inheritance beyond a family home. People should work for what they get in life, not benefit from the work of their parents or grandparents.

Look that's just me, but because I happen to have a very well paying job I'm to many people that is in some way bad, being relatively successful due to my own hard work. Despite being a huge contributor to the exchequer and drawing down essentially zero from it in any form of benefit. I have never been to hospital or a doctor in maybe 7 years.

So, I try not to group people by anything like race, income bracket, nationality etc.. which is why I'm quite repulsed by many things that are happening in the politics or Britain at the moment. The word scapegoats for your own problems is how I'd call lots of it.

 

I'd say my debt history is similar, except I didn't do the Uni thing. Between me and my business I contribute a [bad word deleted]ton of money a year to the exchequer. That's not accounting for NI, the tax paid by the staff we employ nor the contractors we use.

The business has no debt aside from that owed to suppliers, which could be cleared down at any given moment. I personally have a £200 credit card and a £200 overdraft, just to put me on the credit map basically. They're necessary evils.

4 years ago I was living and sleeping on my sisters sitting room floor and was on job seekers allowance. I used that money to mobilise myself. The idea of taking on large amounts of debt for frivolities like holidays doesn't sit well with me nor will it ever. I know where I've come from. A mortgage will arrive soon, maybe, but I'm in no rush. I will slap a large deposit down and if necessary my quality of life will have to take a "hit" while I pay it off as quick at I can. It has never occurred to me, not even once in my life, to twist the system, take out a 100% mortgage and gamble with somebody else's money. Society as a whole should be looking at itself rather than placing the blame solely to the banking sector. Otherwise we learn nothing.

Anyway, I am sufficiently braced. Why? Because I learnt.

Edited November 21, 2014 by blandy

[mockingbird_franklin]

Parliament finally have a debate on probably one of the most serious issues currently regarding our financial difficulties and hardly any f*%#@rs turn up

 

Edited November 25, 2014 by mockingbird_franklin