Writing off debts....why not?

[Four Litre]

In the current situation, everyone is talking about how much we owe 'them' and how much another country owe 'us' etc (not a lot!), but has it got to the point where these debts realistically cannot be paid off as they are just to much to comprehend? $100,000,0000,0000,00000,0000+. If we attempt to pay them back to china for example, they might eventually get some money back but will loose out in trade, therefore would it not be just as easy to say - forget it...lets just start out again? Its not like some of the money ever existed surely as they haven't been shipping gold over to back up the 'money'??

Is this just the best way out - if not - why not, does paying it back make the world as a whole a worse place for a lot longer or am I missing something.

P.S Before the doom mongers say the end of the world is nigh - I always believe there is a way around things..

(P.S I didn't study economics at school, but I do have 2 directorships and a v8!)

[Four Litre]

bump!

[Jasandjules]

Starting again is not perhaps the best option but debts are written off all the time.... Including country debts. Also they can be sold in the markets.

[Four Litre]

'starting again' was hypothetical...sounds a big ghey, but if we all got together and wiped out most of the more ridiculously high debts, wouldnt a significant amount of the current problem be solved?

[theaxe]

A lot of the debt is in government bonds which are held by pension companies. I can't see many people wanting to see those just written off.

[jamesson]

How long before we're back where we are now? And then what? Same thing again? If I had lots of people owing me money, I'm damn sure I wouldn't want to wipe out their debts for them.

[Jasandjules]

jamesson said:

How long before we're back where we are now? And then what? Same thing again? If I had lots of people owing me money, I'm damn sure I wouldn't want to wipe out their debts for them.

Well that also happens a lot, companies go bust, owe lots of people lots of money but those debts are wiped out, then a pheonix appears and the company with the same directors etc starts again with a clean slate.

[jamesson]

Jasandjules said:

jamesson said:

How long before we're back where we are now? And then what? Same thing again? If I had lots of people owing me money, I'm damn sure I wouldn't want to wipe out their debts for them.

Well that also happens a lot, companies go bust, owe lots of people lots of money but those debts are wiped out, then a pheonix appears and the company with the same directors etc starts again with a clean slate.

True, but often some of the debt is recovered through asset sales or agreements to accept 20p in the pound rather than nothing. How many would voluntarily write off the debt versus having the debt repaid though?

[Globs]

theaxe said:

A lot of the debt is in government bonds which are held by pension companies. I can't see many people wanting to see those just written off.

That's OK, Brown damaged (private) pensions so much I'm not sure anyone would notice.

[jeff m]

Debt considered to be uncollectable or least "iffy" was what got us into this pickle. That was just a few house loans improperly colateralised.

You're not Greek are you

[Globs]

Actually writing off debts is the only way to clear them. When you pay someone back you are not actually paying off a debt, you are merely transferring it.

This is because every single £ Pound in existence was borrowed, and so represents a debt. I.e, money _is_ debt. The only time that debt clears is if an entity owing the money to a central bank goes bust. This is why it's such a shame our banks were not allowed to fold, literally hundreds of billions of debt built up in the system would be wiped out.

After all, money is only money, the world stays the same even after a credit crash or a euro-debt-zone crash, and debt does us no good at all.

[Jasandjules]

jamesson said:

True, but often some of the debt is recovered through asset sales or agreements to accept 20p in the pound rather than nothing. How many would voluntarily write off the debt versus having the debt repaid though?

And the same goes for the Bond Markets (i.e. Govt issued debts).

Bad debts can be traded and even repackaged..

[RichyBoy]

I hope they don't default. I was hoping my national savings index linked certificate would be safer than a pension (I was told that you could roll them over for as long as you like).

[groak]

So if the debt's all wiped out do I get to keep all the crap I bought with the irresponsible debt the idiots loaned me? I certainly like the idea of THAT.

[Four Litre]

I wasnt thinking about the DFS debts or flatscreen TV personal debt, more goverment debt...as it seems the whole lot is so out of control how could you pay it back, and based at most banks, financial institutions Ive worked at, who the hell actually keeps tabs on it!! that must be a impossible task in itself?

[groak]

Four Litre said:

I wasnt thinking about the DFS debts or flatscreen TV personal debt, more goverment debt...as it seems the whole lot is so out of control how could you pay it back, and based at most banks, financial institutions Ive worked at, who the hell actually keeps tabs on it!! that must be a impossible task in itself?

So do the governments get to keep all the crap THEY bought with the debt the idiots loaned THEM, but I DON'T?? Hmmm. Not sure I'm so much in favour of THAT.

[thinfourth2]

I have 10K worth of premium bonds.

Should i loose this money because of the red ties stupidity

[12gauge]

thinfourth2 said:

I have 10K worth of premium bonds.

Should i loose this money because of the red ties stupidity

If they printed enough money to cover all their debts (which they'll have to) your £10k of premium bonds would be pretty much worthless anyway.

There is no magic bullet.

You can either be wiped out by having your investments defaulted on, or wiped out by money being printing into oblivion to cover your investments.

The choice is yours.