The GFC Can be Solved.....

ILW

Really2 wrote: »

If you can't see the wrong in that you should have no problem seizing savings in reality.

Just as harsh, but easier to implement and at less cost.

Not what I want to happen, but if you have no problem jailing people for debt a similar society would have no problem taking from those not in debt as well.

If it would be hardly used, how does it get us out of the current situation? the problem is not more debt but current levels.

The difference is that many of those in debt are there through being f eckless. I do believe that those that have just fallen on hard times through no fault of their own should be treated leniently, but those who have run up 20 or 30 grand on designer shoes and countless foreign holidays should be punished.

Really2

ILW wrote: »

The difference is that many of those in debt are there through being f eckless. I do believe that those that have just fallen on hard times through no fault of their own should be treated leniently, but those who have run up 20 or 30 grand on designer shoes and countless foreign holidays should be punished.

How do you distinguish the two, £30K loss failed business and £30K on shoes are still both £30K debtors.

Conrad

Generali wrote: »

I don't see where the economic growth can come from under conditions of demand destruction. What are businesses going to supply to?

Much of the world has been putting on good growth, there is a vast supply to be made to these nations, everywhere from Vietnam to Morocco.

Also we have the next industrial revolution underway - bio-technology which really is going to bring the greatest change Mankind has ever experienced - forget a hearing aid, instead your own marrows stem cells can be encoded to go to the ear and fix it, no surgery required. Within 50 years bio computers will be able to be uploaded with your brain contents - immortality. Designer babies will become the norm and engineered organisms will totaly change our lives - organisms that expell ethanol as thier waste is one of thousands of new technologies.

Remember we faced 'certain oblivion' according to dozens of respected academics in the 1970's with theories such as 'the population bomb' - 1970's best seller, but the experts forgot to factor in Human chaos - billions fo brains dreaming up new ideas that ensured the armaggedon never came. One of those ideas was the green revolution, another was home computing - both pretty much unforseen as growth rescuers.


It all seems bleak today, but I try not to linearly extrapolate from any current setting as such a methodolgy is bound to fail.

We have low interest rates and people are paying down debt, we also have many new growth areas comming on stream and many nations very much in growth spurt phase. We also have a Commonwealth to trade with.

You guys laugh at this I'm sure, but lets see what happens in the comming years - it wont be nearly as bad as you think.

Joe_Bloggs

Conrad said:-

organisms that expell ethanol as thier waste is one of thousands of new technologies.

Freshers do this on the first day.
J_B.

ILW

Really2 wrote: »

How do you distinguish the two, £30K loss failed business and £30K on shoes are still both £30K debtors.

And a judge can decide who bought it on themself and deserves to be punished.
Simple really.

Joe_Bloggs

And a judge can decide who bought it on themself and deserves to be punished.
Simple really.

The punishment of judges is a serious matter.
J_B.

Kennyboy66

Generali wrote: »

..
Ultimately, again IMO, the mistakes have been made already. The choices are between what is least worst. Would you rather lose half of your savings or your job for example? I suspect that depends on your age. I suspect retirees are going to have a hard time of it in the near future.


I don't wish any of this on anyone but it's the only way out I can see.

Possible flaws

1) one of the the drivers in the 1930's US depression was the fact that so many banks went bust and there was no depositer insurance.
More than 40% of banks went bust

2) US GDP contracted by 30% between 1929 & 1933
Industrial production fell by 45% - I can't see why that level of GDP fall should possibly happen.

3) Governments were committed to high interest rates because of the gold standard.

4) Trader barriers went up (could happen again) in the 30's.

5) Private debt although high is certainly manageable under current interest rates - although I have always thought the OBR forecasts for increases in household debt were fanciful to say the least.

It is pure tin hatter nonsense - and neither would it be sensible.

There would arguably be more demand destruction though loss of savings than by the writing off of debt. Why ? Well who would ever keep their savings in a bank again. It would be kept under the mattress or in precious metals.

It will be long grind of low interest rates, Sterling devaluations and relatively high (3-5%) inflation.

Your conclusion that retirees are going to have a hard time of it seems correct. Inflation plus negative real interest rates coupled with low annuity rates as life expectancy continues to increase is guaranteed to be painful.

StevieJ

Thrugelmir wrote: »

Which banks are you referring to?

The banks where collapse would have a disproportinate effect on the economy (too big to fail).

pqrdef

Two big flaws in this scheme.

One is the difficulty of deciding what kind of obligation counts as a debt exactly. For instance, if I have money in a unit trust, do I own a share of some assets or a liability of the trustees? Economists, of course, can cheerfully talk all day about debt without knowing what it is. Well they haven't worked out what money is yet.

Second, capitalism will be fatally undermined. After the great debt write-off, it'll be impossible to restart a system that depends on people saving and investing their spare cash, so what are we going to do instead?

Kennyboy66

I should have added that I was fairly amazed to see something more daft than potty Polly Toynbee's idea of a 20% confiscation of wealth from the top 10% posted within 24 hours.

In fact if you were going for the least worst option would it be;

a) The middle class lose half their savings as per Steve Keen & Generali.
b) The rich and super wealthy lose 20% of their wealth (I realise that plenty in this group would not consider themselves rich).

Maybe Steve Keen has as much clue as the hapless Steve Kean at Blackburn rovers.