http://www.pbs.org/wgbh/pages/frontline/shows/credit/interviews/warren.html

You have been studying primarily bankruptcy for the last 20 years. Why bankruptcy?

Because bankruptcy is about financial death and financial rebirth. Bankruptcy is the great American story rewritten. We're a nation of debtors. Why do you think people left Europe to come to the United States? They left because they were in debt. We like to describe it as, "Oh, it was about religious freedom." No, it was about debt. They were looking for a way to escape their debts.

And so they founded this nation, and when they got into financial trouble, you know what they did? They moved west. And they moved west, and they moved west. And by the end of the 19th century, there was no place else to move, and creditors could pretty much reach their debtors ... anywhere around the country, and that's when we finally put our first national bankruptcy law into effect. And we've had one ever since. It's the way that people say: "I got out there; I borrowed the money; I did my best; I used that money to start a small business or to keep myself going in my job. ... You rolled the dice with me. ... It didn't work. You can have most of what I own, and that's it, though. We'll stop there. We'll declare the default. You write off the part of the debt I can't pay, I'll take my human energy ... and go right back into the game again." That's the whole premise behind bankruptcy. It's about death and rebirth.

I haven't had time to read all of this, but Elizabeth Warren had great insight in Maxed Out. This looks like it's interesting too.

My girlfriend's old neighbor spent $30,000 on an addition to their home. Company knocked the wall out and dug up the lawn then declared bankrupcy. All of their cash is gone and they have to pay to get the wall put back and the lawn filled in before they can move out of the hotel and move home. And somehow that is entirely legal.

As with anything there are those that will abuse the system and those that don't.

First rule he shouldn't of paid everything up front for the improvement. Financing is key to protect the home owner from contractors. even if they go BK involuntarily.
It still is no guarantee that even when they finish the job that the supplier wont slap a lien on the house for materials purchased and not paid for by the BK company. Causing a whole other debt burden to the homeowner that very few customers would imagine possible. I feel for your g/f's family Im sure people will read more of these horror stories in the coming spring summer as more construction business fail.

But to the subject at hand interesting article It reminded me of the Russian one I read the other day with how people fled debt.

http://news.yahoo.com/s/nm/20090128/od_uk_nm/oukoe_uk_russia_bailiffs;_ylt=AiXM9tqvuVQYRKhaotsu 1i2dk3QF

I read all of that interview, which, by the way, dates from 2004 (when the bankruptcy bill was before Congress). Things have gotten much, much worse since then, although I'd say that around 2005 was when I realized that I was in significant credit trouble. This (credit card contract changes and usury) has recently affected me directly; after five years of ontime payments to my Chase Visa, I noticed via checking my bank balance a couple of weeks ago that one of my credit card payments had apparently not processed (I noticed this 7 days or so afterwards). I called them immediately and explained that while I remembered putting the payment through online (my fault for not printing out the confirmation sheet, I wrote the info down on a green 4" x 6" card like I do all my bills every month) it hadn't gone through, that I was resubmitting it immediately, and would they please make a notation on my account so that I wouldn't face punitive action?
The clerk was, of course, noncommittal (even Discover, which is usury central, has been much more helpful), but said she'd put a note on the account.

Well, this month's bill came and it should be no surprise to anyone that as a result as a one time six day late payment, my interest rate was jacked up from 16.81% to 29.99%, and my minimum payment more than doubled even though the bill showed the payment ('other' 'thank you') on it. I called them back and expressed my displeasure and explained that I was the one that had reported it to *them* at the time and could they please adjust my interest rate? The agent said that 'because of the late payment my interest had been adjusted to 'default' (said 29.99%) and that there was no way for her to change it, or for me to speak to anyone who had that authority, although I was welcome to write them about it. This I have done, but I'd just like to add that all the available evidence suggests that as people are experiencing trouble making debt payments in the wake of this recession due to job loss, etc, what the credit card companies are doing is... tightening the noose, and whereas you might experience some sympathy or willingness to negotiate with the credit card companies even in the recent past, those days are gone.

It's going to get a lot uglier, and since the 2005 bankruptcy laws have made it much harder to escape this type of debt, expect this to contribute to the foreclosure tsunami (even more than it has) as well, as it is now much easier to walk away from a mortgage.

Regards,
Nydia

On the note of 'walking away' from a mortgage vs bankruptcy - this is becoming a very hot topic in very depressed markets (such as Phoenix or Southern California) where people who bought in the last bubble are now not only out their down payment equity but much (hundreds of thousands of dollars) more, and was the topic of a recent Freakonomics column:

http://freakonomics.blogs.nytimes.com/2009/02/09/our-daily-bleg-a-real-estate-dilemma/

Consider the factors that went into making this an arguably sensible decision for him, and the strong moral/ethical resistance from many of the respondants even in the face of the fact that this guy is going to be upside down for a very long time. One of them posts that if it's all about money, why not just pimp out his wife for a few years to make up the difference ;), but the issue remains - what's to stop the snowball of abandonment as well as foreclosure as people get deeper and deeper into the hole and see it as a no-win situation despite their intentions, thus creating a deeper hole as neighborhoods get blighted and there's more toxic asset waste, etc?

Regards,
Nydia

They're having to do a bit of fancy footwork to avoid a taste of their own medicine: http://www.nypost.com/seven/02092009/news/nationalnews/dirty_deeding_154268.htm

'Why do you think people left Europe to come to the United States? They left because they were in debt. We like to describe it as, "Oh, it was about religious freedom." No, it was about debt. They were looking for a way to escape their debts.'

- Erm...many of the original settlers were wealthy people. You had to be, as much of the expedition was funded by private enterprise. Those on the Mayflower, for example, paid an expensive price for the hiring of their ship, for provisioning the colony and for recruiting further colonists back in Europe. The debtors came later, much later. Early colonial movements were expensive operations, it isn't as though a load of poor beggers jumped in a dingy and sailed to the Promised Land.

Just an annoyance I spotted. Do carry on.

- Erm...many of the original settlers were wealthy people.


I think you'll notice here in the USA the percentage of wealthy people filing bankruptcy to absolve themselves of debt exceeds the percentage of middle class or poor.

I think you'll notice here in the USA the percentage of wealthy people filing bankruptcy to absolve themselves of debt exceeds the percentage of middle class or poor.

The wealthy didn't get to reach that status and maintain it without a good understand of how to manipulate the system. A system that seems to be built on that ideal to begin with. The only way it will end is if the US goes to a regulated economy like Germany or France or even China where the government takes the risks on the people's behalf and creates almost a hive mind where you don't have the degree of innovation as if you would if you could gamble it all on a few risky ideas. Even then, you can still probably dig yourself into the hole pretty deep if you had the right contacts.

I can already hear Osg groaning that we are going this way now, which is true. One thing though is that this is what the majority of the people want and its not surprising. The government and the law were doing a very good job of looking out for the top 10% of earners to assure the frame work remained for them to continue to take the lion's share at the poker table when they went "all in", while at the same time hoping that this elite caste does whats in the best interest of the unwashed mass that is the wage slave and salaried 90% that is left. Well, they weren't. Hence the guy passing out torches and pitch forks at the steps of the Capitol and hence a big backlash against the wealthy, who have now taken more value out of the system then what has to remain to keep it afloat.

As the whole saying goes about a few bad apples spoiling the whole damn bunch....

I can already hear Osg groaning that we are going this way now, which is true. One thing though is that this is what the majority of the people want and its not surprising. The government and the law were doing a very good job of looking out for the top 10% of earners to assure the frame work remained for them to continue to take the lion's share at the poker table when they went "all in", while at the same time hoping that this elite caste does whats in the best interest of the unwashed mass that is the wage slave and salaried 90% that is left. Well, they weren't. Hence the guy passing out torches and pitch forks at the steps of the Capitol and hence a big backlash against the wealthy, who have now taken more value out of the system then what has to remain to keep it afloat.

As the whole saying goes about a few bad apples spoiling the whole damn bunch....


This is basically the premise of Reagan's trickle down economic policies. I am simply unable to understand how there are so many who never could grasp that it did not work. By providing all the tax breaks and freeing up more money for those in the higher levels of business, it simply made it easier for them to move their operations off shore for even greater monetary gain, leaving behind a larger group of unemployed. Even with evidence to the contrary, both Bush administrations pursued this idea even further, looking at ways to expand the wealth of that top 5 - 10%; the jobs they gave us in return were at Taco Bell, McDonald's and WalMart. Our manufacturing base died in large part because of those economic policies.

Now, we have such small pools of revenue with a service based economy as compared to manufacturing that we have cities and states looking at bankruptcy. It is truly sad, yet people keep voting for those that follow the Reagan approach.

Are we really not sure how fucked we got from the gw or can we start ma new thread about how we are are gwttingt fucked for 13k trilllion dollqarx

It all depends on where those trillions are coming from. China is probably loaning us some, since they have the world's largest liquid reserve of dollars and its in their best interest for their biggest customer to not fold. The rest will have to be paid for by issuing bonds. It all has to be paid back, which implies that whatever this is spent on has to lend itself towards raising the countries GDP and government tax revenue for the next 30 years. It would be nice to see more government belt tightening measures instead of taxes, which means the past 8 years can never be repeated even by mistake. One can only hope.

You have to be willing to fail quite often if you want to really succeed. Making failure too prohibitive is a sure recipe for homogeneous mediocrity.

http://www.nytimes.com/2009/02/12/world/middleeast/12dubai.html?_r=3&hp

Sofia, a 34-year-old Frenchwoman, moved here a year ago to take a job in advertising, so confident about Dubai’s fast-growing economy that she bought an apartment for almost $300,000 with a 15-year mortgage.

An abandoned car in a parking garage in Dubai. One report said 3,000 cars were sitting abandoned at the Dubai Airport.

Now, like many of the foreign workers who make up 90 percent of the population here, she has been laid off and faces the prospect of being forced to leave this Persian Gulf city — or worse.

“I’m really scared of what could happen, because I bought property here,” said Sofia, who asked that her last name be withheld because she is still hunting for a new job. “If I can’t pay it off, I was told I could end up in debtors’ prison.”

Yikes.

It all has to be paid back, which implies that whatever this is spent on has to lend itself towards raising the countries GDP and government tax revenue for the next 30 years.


By putting a significant amount of dollars into infrastructure projects, people are put to work, which in turn results in taxes being paid on materials purchased for the projects, and income taxes being collected from the paychecks of those employed on the projects.

Whether school construction/refurbishing, bridge and road rebuilding, etc., there will be materials required which will provide a boost to those industries, and this too leads to more employment and taxes paid.

By putting a significant amount of dollars into infrastructure projects, people are put to work, which in turn results in taxes being paid on materials purchased for the projects, and income taxes being collected from the paychecks of those employed on the projects.

Whether school construction/refurbishing, bridge and road rebuilding, etc., there will be materials required which will provide a boost to those industries, and this too leads to more employment and taxes paid.

That is assuming the workforce is 100% US and that all the supplies come from the US, which Obama clearly stated is not possible with our trade agreements. Not that I have a better solution, obviously. If we can jump start US manufacturing and get a few exports other than simply American entertainment and culture, then the balance might shift back into our favor.

Imagine if we didn't have a jacked up, corrupt monetary system and we didn't have to have conversations about these kind of impossible compromises between saving and spending.

There is no reason why the government couldn't issue its own real, debt-free money instead of letting the FED have a monopoly over it. If they needed to pump liquidity into the system, they just "print" money to pay their debts/employees, then remove that inflation by destroying an equivalent amount of tax revenues.

Of course, if we had real money, we wouldn't be in this mess to need fixing in the first place.

It's frustrating to see everyone thinking within the confines of this false dichotomy between debt based "liquidity" and government spending as the only options to stimulate growth.

Google "Marshall Plan wiki" and "Bretton Woods System wiki" and you will get some amazing insight. Also, the Chinese currency, the yuan, was pegged to the US dollar much like the US dollar once upon a time was pegged to gold. But not any more, but alas alot of currency ARE still pegged to the dollar. When the dollar tanks, look out.

And now it comes full circle:

Well, this isn't good (http://www.marketoracle.co.uk/Article8320.html)

Don't forget:

And this sucks too (http://www.cbfeature.com/site/news/from_petrol_dollars_to_petrol_rmb/)

Time for some smart money managers to really use their heads! Granted there is some speculation here. It only took one little tap on the house of cards and the housing bubble did it. "Bankruptcy" is such an abstract theory in reality, because you must have strong nations run a deficit to keep the global economy going. China is now at the SAME point economically that the USA was right when the Marshall Plan was enacted. Granted the global infrastructure is intact, but it could also be bought at fire sale prices in much the same manner as if it were bombed flat and then had to be rebuilt. There is a decent chance that they could rebuild the global economy under the guise of defending their customer base and usher in Pax Chinana. It will be their turn to be the ruler of the roost, and with it will come the responsibility of running a deficit in order to maintain a viable economy to purchase Chinese goods and services. Until they too get fat, lazy corrupt and eventually...bankrupt.

Sorry, gang. The party is over. It was fun while it lasted. And I am sure this post will kill this thread.

Sorry, gang. The party is over. It was fun while it lasted. And I am sure this post will kill this thread.


Gawd, but I do love optimism! :p

Its not that =P. Its just there might be more posted there than is what tends to be a quick read which could kill the momentum.