[drgonzo]

OWS has taken a lot of hits from all around but any honest person anywhere along the political spectrum has got to admit: this is brilliant.

Dubbed the "People's Bailout" basically it solicits donations to buy bad personal debts, then rather than acting as a collection company, it forgives the debt. The return on investment (donations) is tremendous and the effect on the economy is huge in comparison to its costs.

The companies who end up taking the brunt of the loss 1) would be taking the same loss no matter what happened to the debt afterward and 2) represent the segment of the economy that profited most from the debt bubble. So, it's pretty much win all around.

Wealthy progressives would do well to look into donating to this initiative, as it cuts right to the people's bottom line.

[Drex17]

that.....is actually pretty awesome......

[TheSilentAssassin]

I can dig it.

[custar]

This appears to be a good thing.

custar

[drgonzo]

Okay so. Let's take it a step further to get a little controversial. The government's response to both the S&L crisis and the great recession included a program sort of like this to assist financial institutions. Would the money have been better spent at the individual debtor level like this? Imagine if the TARP program instead went to buying up "toxic assets" at the debtor level? The economic benefits would have been multiplied, benefiting both the debtors and the lenders.

Actually this method was suggested by some people at the time.

[licence2kill]

Federal Reserve should announce a nominal GDP target and should print money and give it to citizens until they hit it.

[$h@key J0nEZ]

Just throw money at the problem until it goes away.

[custar]

Originally Posted by drgonzo

The economic benefits would have been multiplied, benefiting both the debtors and the lenders.

I will bite. Without arguing over WHETHER to TARP or not, it is clear that we should maximize the bang for our taxpayer bucks spent in this. Why would buying up individual debt and graciously retiring it have had an economic benefit multiple times stronger. I am not saying it would not; I am just asking for an explanation of the mechanism.

Along the same lines, would you have been comfortable with the government attaching some strings to such a buy back of debt to discourage a repeat of such conduct in the future?

Originally Posted by licence2kill

Federal Reserve should announce a nominal GDP target and should print money and give it to citizens until they hit it.

1. That would be a tad bit inflationary, wouldn't it?

2. How would you allocate the Obama bucks? Ability to fog a mirror, pro rata to current income, what?

3. Don't you think that would have long term consequences?

4. How do you keep that newly minted money from going overseas considering our trade deficit?

custar

[licence2kill]

Originally Posted by custar

1. That would be a tad bit inflationary, wouldn't it?

2. How would you allocate the Obama bucks? Ability to fog a mirror, pro rata to current income, what?

3. Don't you think that would have long term consequences?

4. How do you keep that newly minted money from going overseas considering our trade deficit?

custar

1. No. Nominal growth = xRGDP + yInflation. When we're operating on the supply curve, meaning output is maximized, a 5% increase in NGDP wil = a 5% increase in inflation. When we're away in a disequilibrium away from the supply curve, meaning we have lots of unused resources, a 5% increase in NGDP will show up as likely more RGDP.

Also keep in mind in the event that we are constrained by supply the worst that we would have to endure is 5% a year inflation, which was the average under Reagan.

2. Equally or by income progressively. The beauty of announcing a hardtarget, however, is that the central bank probably wouldn't even have to do all that much. Expectations would do the rest.

3. Yes, we would never have another recession again like Australia.

4. It's an NGDP target, which means we're targeting total national income. Keep printing money until we hit the target. It doesn't matter if some of it goes oversees.

If you never hit your target then...well, that would be the greatest thing to ever happen to this country. We would essentially be trading an infinite supply of bits of paper for real goods and services. We could all quit our jobs and live off imports for the rest of our lives. It would be amazing.

[Murph1329]

Originally Posted by drgonzo

OWS has taken a lot of hits from all around but any honest person anywhere along the political spectrum has got to admit: this is brilliant.

Dubbed the "People's Bailout" basically it solicits donations to buy bad personal debts, then rather than acting as a collection company, it forgives the debt. The return on investment (donations) is tremendous and the effect on the economy is huge in comparison to its costs.

The companies who end up taking the brunt of the loss 1) would be taking the same loss no matter what happened to the debt afterward and 2) represent the segment of the economy that profited most from the debt bubble. So, it's pretty much win all around.

Wealthy progressives would do well to look into donating to this initiative, as it cuts right to the people's bottom line.

do you not think this could lead to a nation of irresponsibility?
The whole premise of our nation is assuming risk. This allows anyone to make it or not. If you have nothing you can make millions and if you have millions you can lose everything.

This sort of freedom is what made america what it is today and by removing that mentality don't you think it would make for a nation of complacency?

I realize that we're already headed down this road when we started the first bailouts. But I think a social bailout like this would forever change the psyche of the americans getting it.

We've gotten where we are in a little over 200 years. Put a man on the moon, have the strongest military, and we've created more wealth than any nation. Why would anyone want to try and fundamentally change that?

[Matt.is.back2011]

Originally Posted by Murph1329

do you not think this could lead to a nation of irresponsibility?
The whole premise of our nation is assuming risk. This allows anyone to make it or not. If you have nothing you can make millions and if you have millions you can lose everything.

This sort of freedom is what made america what it is today and by removing that mentality don't you think it would make for a nation of complacency?

I realize that we're already headed down this road when we started the first bailouts. But I think a social bailout like this would forever change the psyche of the americans getting it.

I think people who have been harasssed by debt collectors for the past 3 years, saw their homes confiscated from them, jobs lost, mortgage values and credit ratings plummit have suffered enough, do you disagree? These people are victims of a very conviluted financial industry that nobody truly understood; not the regulators or the finance gurus on Wall-Street.

This program is simply giving the little guy a break. I think after all they've been through, I doubt they want to get back to debt-ridden and homeless, if they can avoid it.

[drgonzo]

Originally Posted by custar

I will bite. Without arguing over WHETHER to TARP or not, it is clear that we should maximize the bang for our taxpayer bucks spent in this. Why would buying up individual debt and graciously retiring it have had an economic benefit multiple times stronger. I am not saying it would not; I am just asking for an explanation of the mechanism.

Along the same lines, would you have been comfortable with the government attaching some strings to such a buy back of debt to discourage a repeat of such conduct in the future?

The mechanism is the same that always makes "trickle up" investments work better than trickle-down -- the money ends up with the "up" entity anyway, and the benefit to the "down" entities is additional economic benefit. This allows the economy to get moving on a wide scale from the bottom up.

The prevention of the same conduct is inherent in a one-time program like TARP. But also either through regulation, industry self-regulation, or both, lending standards would necessarily tighten up, which would discourage reckless debt loads in the future.

Originally Posted by Murph1329

do you not think this could lead to a nation of irresponsibility?
The whole premise of our nation is assuming risk. This allows anyone to make it or not. If you have nothing you can make millions and if you have millions you can lose everything.

This sort of freedom is what made america what it is today and by removing that mentality don't you think it would make for a nation of complacency?

I realize that we're already headed down this road when we started the first bailouts. But I think a social bailout like this would forever change the psyche of the americans getting it.

No, not really, for a couple of reasons:

1) As mentioned above these programs would be a one-time thing, so they would not be forming another social safety net. They are strictly in response to the financial crisis.

2) The effect on individuals' credit would not change, i.e. they already take the credit hit for having the bad debt in the first place.

Your concern is largely misplaced and rooted in the same mentality about the poor that leads to false ideas and subsequently bad policy. A vast majority of Americans don't want to be in financial ruin. Most people by far want to make things work out. Financial security and self-sufficiency is the American dream. Most people will be grateful for a program like this and see it for the chance to do better that it is.

[Matt.is.back2011]

This is actually a pretty cool idea. I'll donate some money to the cause. I wonder if donations are tax deductable?

[drgonzo]

Originally Posted by Matt.is.back2011

This is actually a pretty cool idea. I'll donate some money to the cause. I wonder if donations are tax deductable?

It would be interesting to see if a debt collection agency could be registered as a charity.

[Matt.is.back2011]

Just donated. Hopefully this goes to help a few people in need.

[drgonzo]

Originally Posted by Matt.is.back2011

Just donated. Hopefully this goes to help a few people in need.

[marcozombie]

Originally Posted by drgonzo

OWS has taken a lot of hits from all around but any honest person anywhere along the political spectrum has got to admit: this is brilliant.

Dubbed the "People's Bailout" basically it solicits donations to buy bad personal debts, then rather than acting as a collection company, it forgives the debt. The return on investment (donations) is tremendous and the effect on the economy is huge in comparison to its costs.

The companies who end up taking the brunt of the loss 1) would be taking the same loss no matter what happened to the debt afterward and 2) represent the segment of the economy that profited most from the debt bubble. So, it's pretty much win all around.

Wealthy progressives would do well to look into donating to this initiative, as it cuts right to the people's bottom line.

How do you apply for this program? Saw how to donate but how to sign up...wifes got some student loans we are working on and any bit will help...

[drgonzo]

Originally Posted by marcozombie

How do you apply for this program? Saw how to donate but how to sign up...wifes got some student loans we are working on and any bit will help...

Are they government loans? If they are unfortunately you are stuck, there's almost no way to retire government student loans.

EDIT: Though it is an interesting consideration who will be beneficiaries. I highly doubt anyone will be able to "apply" for debt relief any more than you can control who buys your defaulted debt ... they say they will target communities in need and then it's just up to them what debt to buy (and what debt is available to buy).

[Spock]

Originally Posted by drgonzo

OWS has taken a lot of hits from all around but any honest person anywhere along the political spectrum has got to admit: this is brilliant.

Dubbed the "People's Bailout" basically it solicits donations to buy bad personal debts, then rather than acting as a collection company, it forgives the debt. The return on investment (donations) is tremendous and the effect on the economy is huge in comparison to its costs.

The companies who end up taking the brunt of the loss 1) would be taking the same loss no matter what happened to the debt afterward and 2) represent the segment of the economy that profited most from the debt bubble. So, it's pretty much win all around.

Wealthy progressives would do well to look into donating to this initiative, as it cuts right to the people's bottom line.

It kinda boggles my mind why the Fed. Gov. gave billions in bail out money to the banks, instead of doing something more like this.

[AlphaNeo36]

Lending is the cornerstone of the modern economy.

[Snake13]

Originally Posted by Spock

It kinda boggles my mind why the Fed. Gov. gave billions in bail out money to the banks, instead of doing something more like this.

Because like it or not "normal people" going bankrupt/losing their homes may hurt the economy, but the chain reaction of our nation's financial institutions imploding not only totally ****ing tanks it, but starts a credit freeze which destroy's its ability to regrow itself.