Arnold Kling  

David Graeber Interview

Robert Solow on Sylvia Nasar... The Latest Nobel...

Worth a listen. In fact, he almost endorses my most wrong view!! He says that currency and markets emerged from plunder. However, he does say that there were early trading nations that were not plundering empires.

He also has provocative things to say about our credit boom. In particular, he argues historically that the political system tends to go easy on debtors, but does not help creditors, but in our society we are doing it the other way around. I am inclined to respond by asking what are all the foreclosure-prevention plans if not an attempt to go easy on debtors?

Thanks to a commenter on this post.

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CATEGORIES: Economic History , Money

COMMENTS (5 to date)
Bryan Willman writes:

Even if our system is different from historical precedent - so what?

Historical societies clearly made a great deal of use of slavery and various forms of servitude and serfdom, I do not think we want to emulate those things.

Why should we be bound by historical standards for resolving debt failure rather than some plan appropriate for the current circumstance?

Becky Hargrove writes:

Enjoyed the interview and definitely hope to purchase the book.

I really do not know why the foreclosure prevention plans are out there as they have raised a lot of false hopes. But more importantly, it now seems that buying out the loans directly in the beginning might have forestalled the continuing deflation problem. By trying to make the consumer accountable for remaining balances left after foreclosure sales, banks and even municipalities could be weakened by the process in the long run.

Joe Cushing writes:

Foreclosure help is lip service; not help.

Bob Lince writes:

But which foreclosure-prevention plans relieve the debtor of his debt? They don't lower amounts owed; they lower payments while extending the time over which payments must be made.

The purpose of the foreclosure-prevention plans is to allow the creditor to carry its asset, the loan, at it's original value. With foreclosure, the creditor must write-down the asset. This can lead to creditor insolvency.

The foreclosure-prevention plans are for the benefit of the creditor.

John David Galt writes:

I work at a tax practice in the Sacramento area, and I and my boss have been looking hard (and asking other practitioners) for even ONE example of a person who actually got a bank to modify his or her loan. Not only has none ever walked into my employer's office, none of the many CPAs and EAs we've talked to in town has ever seen one either.

So the true answer to "What are foreclosure-prevention plans" is "a sham"! The banks started these so-called plans because of political pressure, but they haven't approved anybody because they're not required to approve anybody, and they have no intention of starting now.

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