Occupiers Battle Hurricane, Debt

The Occupy movement ain't dead yet.

When I blogged Tom Frank's essay on Occupy Wall Street last week, I had a feeling I might regret my description of the movement as "pretty much over." Sure enough, I must tip my hat to the Zuccotti Park veterans who started Occupy Sandy, a post-hurricane grassroots relief effort that by every account I've seen is doing excellent work. And now some Occupiers are launching the Rolling Jubilee, a voluntary effort buy up people's debt and forgive it. We have yet to see if that one takes off as much as Occupy Sandy has, but it is attracting a fair amount of attention and it'll be holding a charity telethon (er, streamathon) next week. Apparently you don't need an encampment to keep a movement going.

Comments

[Fist of Etiquette]

...the Zuccotti Park veterans who started Occupy Sandy, a post-hurricane grassroots relief effort that by every account I've seen is doing excellent work.

Apparently the committees haven't formed yet.

[LTC(ret) John]

Uptwinkles?

[Zeb]

Well, good for them. If they want to do nice things and encourage others to do nice things voluntarily, that's great. Pity they didn't come up with something decent and productive like this before, instead of being obnoxious dirty hippies.

[aix42]

exactly. Some, but not all, forget you can help others without the government.

And people would still help with less governement.

Even though hard left and right feel humans are monsters waiting to drug themselves and society into obvivian or gorge on the production of the prolitariet until death in a vomitorium.

[HazelMeade]

You have to credit the anarchist wing of the movement. While the social democrats bitch about how people won't get with the program and get engaged with politics, the anarchists just go do shit and ignore the government.

It's one reason why a clan of aranchists could live down the street from an objectivist enclave and happily co-exist. It's the progressives and social democrats who try to force their views on everyone else via federal elections.

[Loki]

If they want to use their own money or get others to give charitable donations to pay off people's debt, more power to them.

I'm curious to see how long the project stays strictly voluntary though. I expect them to go running to the federal government for a subsidy any day now.

[Heroic Mulatto]

. And now some Occupiers are launching the Rolling Jubilee, a voluntary effort buy up people's debt and forgive it.

What Is The Rolling Jubilee?

Quotes from the video:

"Since real wages haven't gone up since the 70s, we've had to use credit cards and debt to make ends meet."

No, you haven't. You chose to use credit cards and debt to keep up with the Jones's instead of compromising on your "lifestyle". You made that choice. No one held a gun to your head.

"The debts we have aren't legitimate. We shouldn't be forced into debt to cover basic needs, like health care, housing and education."

Fuck you. Health care is not a basic need. Throughout human history people have lived their whole lives without medical care.

Likewise, while protection from the elements is a basic need, we are prevented from building our own shelters by the Federal government sitting on homesteadable land and not allowing development, thus raising the price of already existing real estate. Furthermore, the housing bubble was driven my innumerate morons who felt they were entitled to buy houses they couldn't afford.

Education is not a basic need. No one has ever died from not going to school. If you chose to put yourself in debt to pursue education, again that was your choice, not "Wall Street". I will not allow you to enslave me because, as a professor, I have knowledge you wish to possess.

[Heroic Mulatto]

"It's time for a bailout of the people, by the people."

Yes, go ahead with your cockamamie debt forgiveness scheme! Provide perverse incentives for banks to do this all over again.

I hope all these assholes die a long slow painful death from bone cancer.

[The Hammer]

This is a drastic improvement over demanding that the government do all of this by force. Stop being a dick.

[Heroic Mulatto]

Yes, handing out methadone is a drastic improvement over locking heroin addicts up, but that doesn't mean I have to be supportive of opiate abusers.

[LTC(ret) John]

Down-twinkles! Down-twinkles!

/Occupy

[Juice]

Hey, if they eventually put even a small dent into the bottom lines of collections companies, then it was all worth it.

[Enough About Palin]

"And now some Occupiers are launching the Rolling Jubilee, a voluntary effort buy up people's debt and forgive it."

Aren't there tax implications with this?

[Ska]

Debt forgiveness is taxable income though I don't see a lot of 1099-C forms being issued in this case. Or if I paid your debt, it may be a taxable gift for me as the donor.

[nicole just can't even!]

"also make a profit from our monthly payments"

HAHAHHAHAHAHAHAHHAHAfuck

[ant1sthenes]

Whatever we think of their attitudes and goals, shouldn't we be applauding them using persuasion rather than force to achieve their goals?

[HazelMeade]

It's good to see that the "anarchist" wing of the moment has suceeded and is directing their efforts towards private charity. Instead of wasting their time fighting to win elections, ignore the political process and just DO what you think should be done. It's what I've always said to people on the left who start talking about co-ops: What's stopping you?

[nicole just can't even!]

So have any of you guys read the David Graeber book? I have a copy on my Kindle but I couldn't make it page the first few pages. Though I don't think it's completely terrible. Thoughts?

[Graphite]

I actually think it's pretty good and he has some interesting criticisms to make of the standard economics storyline about barter economies giving way to exchange via hard currency. His discussion of the imperial nature of the USD exchange system (with the dollar backed by oil and tribute extracted via Treasury bonds) is also an interesting take, IMO. You might try just skipping to that part and see what you think.

There's a lot of smarmy left-anarchist stuff in it to be sure, and Graeber reads more import into his criticisms of the barter-currency thought experiment than I think is warranted.

I do think he has a good point about the double standards being applied to debt nowadays, and the fact that lenders should bear some of the burden for the existence of bad loans. A homeowner defaulting on a mortgage is often vilified as a deadbeat, but if a corporation defaults on its bonds that's "just good business."

[LTC(ret) John]

Oh, and alt-text WIN!

[The Late P Brooks]

some Occupiers are launching the Rolling Jubilee, a voluntary effort buy up people's debt and forgive it.

On the surface, I see nothing monumentally objectionable, but I suspect there are some devilish details.

Where does the money come from?

What are the mechanics of this "forgiveness"?

[Heroic Mulatto]

For really troublesome debt, sometimes that value can shrink to pennies in the pound ? hence the Rolling Jubilee's plan, to buy $16,000 of debt for every $500 they raise (that is, $32 for $1).

That's how it works. But will it work? Maybe.

The legal mechanics of what they are doing are pretty clearly in their favour. Debt collectors really can cancel the debt if they want.

The problem is that if you try to actually do that, you may find very quickly that people stop selling you debt.

A similar idea was proposed a while back by an organisation called American Homeowner Preservation. It also deals with distressed debt, but focuses exclusively on mortgages, buying up pools of bad loans, and restructuring them to make it easier for the homeowners to pay them off. ...

There's not really any cold hard economics at play here. The banks have no reason to care what happens to a house after they've sold the mortgage for it, but they do. The best explanation for their stubbornness is that they fear that organisations like American Homeowner Preservation are creating a sort of moral hazard by reducing the penalties for defaulting on mortgages

.

[HazelMeade]

While I see not reason to object to the Rolling Jubilee from a libertarian perspective (they aren't forcing anyone to participate),
it raises the same moral hazard issues as any bailout.

Yglesias pointed out on his blog that it's less problematic to just write everyone a check for $300, because if you focus on debt forgiveness, you are favoring people who ran up debts in the past over those who havn't.

Progressives might respond that on average poor people tend to have more debt, but then you have this tricky issue that on an individual level, there are some poor people who had NOT rung up debt, and consequently enjoyed a LOWER standard of living and had a harder time than those who have. So you turn those people into suckers.

[Loki]

As others here point out, there is a potential moral hazard at play here, but my question is what does "debt forgiveness" do to one's credit score? I know that a lot of the debt consolidation firms that you sometimes see advertised on late night TV will trash your credit score if you use them.

I think that a lot of those outfits are essentially negotiating debt forgiveness from your creditors, paying them all off and then you pay off the debt consolidation firm in one lower monthly payment (+ interest, which is how they make money from it). I'm not sure. I've never had to go through that, but I've known people who did and I think that's how it works.

Anyway, the point being having your credit score trashed for several years (almost as bad as bankruptcy) would alleviate some of the moral hazard, if that is in fact how this debt forgiveness works.

[nicole just can't even!]

The debt being forgiven is stuff that's already in collections, so whoever it belongs to already has credit problems.

What bothers me, though, is that the response to the moral hazard argument is that there is no moral obligation to pay debt in the first place. I've read this in Graeber's work, but I've also seen the argument from some of the folks here. His position, at least, is that default is already factored into the interest rate, so there's no reason you should even feel like you have to pay.

[Graphite]

"Capitalism without bankruptcy is like Christianity without Hell." I feel like debt defaults used to be a pretty standard feature of the free market, but now they're really despised by a lot of otherwise laissez-faire folks. If a lender makes a bad choice and hands money to a deadbeat, why shouldn't he suffer some losses?

Unless we want to go back to using debtors' prisons, writeoffs, modifications, and defaults are the only way of dealing with unpayable debt that doesn't involve screwing over lots of people who weren't involved in the transaction (either by inflating the currency or directly bailing the lender or borrower or both).

[The Late P Brooks]

So, they are basically posing as debt collectors to buy distressed debt?

If they buy the paper outright, fine. I don't think this idea will scale; the sort of people who ordinarily pool their money to buy distressed debt expect a return. Well-meaning suckers offering up their own money to be flushed down the toilet are not that plentiful.

As for the banks not wanting to play ball, when they sell that paper they have to take the writedown. I'm guessing that has more to do with it than moral indignation.

[tagtann]

Kinda crazy when you think about it.

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