The ethics of debt and the creation of debt-serfdom
Posted on February 19, 2012 by IanPJ
There is an interesting guest post over at Zero Hedge today, from which I quote the teaser.
When Debt Is More Important Than People, The System Is Evil.
The ethics of debt, at least in the officially sanctioned media, boils down to: nobody made them borrow all those euros, and so their suffering is just desserts. What’s lost in this subtext is the responsibility of the lender.
Yes, nobody forced Greece to borrow 200 billion euros (or whatever the true total may be), but then nobody forced the lenders to extend the credit in the first place. Consider an individual who is a visibly poor credit risk. He would like to borrow money to blow on consumption and then stiff the lender, but since he cannot create credit, he has to live within his means. Now a lender comes along who can create credit out of thin air (via fractional reserve banking) and offers this poor credit risk $100,000 in collateral-free debt at low rates of interest. Who is responsible for the creation and extension of credit? The borrower or the lender? Answer: the lender.
In other words, if the lender is foolish enough to extend huge quantities of credit to a poor credit risk, then it’s the lender who should suffer the losses when the borrower defaults. This is the basis of bankruptcy laws–or used to be the basis. When an over-extended borrower defaults, the debt is cleared, the lender takes the loss/writedown, and the borrower loses whatever collateral was pledged. He is left with the basics to carry on: his auto, clothing, his job, and so on. His credit rating is impaired, and it is now his responsibility to earn back a credible credit rating….The potential for loss and actually bearing the consequences from irresponsible extensions of credit was unacceptable to the banking cartel, so they rewrote the laws.
Now student loans in America cannot be discharged in bankruptcy court; they are permanent and must be carried and serviced until death.
This is the acme of debt-serfdom.
The whole rather detailed article can be read here.
This is the new debt-serfdom being thrust upon Europe by the Troika, The EU, the IMF and the ECB, with the added threat of a loss of democracy and the installation of puppet technocratic governments headed by bankers.
Are you prepared for that? Are you prepared to accept that?
As I keep saying over and over, this is not a failure of Capitalism, it is a failure of its sick and twisted twin, Creditism.