In the biblical discussion of the year of Jubilee, we come across this parenthetical reminder:
You shall not cheat one another, but you shall fear your God; for I am the Lord your God.
The Jubilee system spelled out in Leviticus creates a framework for sufficiency and justice, but that system also depends on a base level of common decency. The Jubilee laws were vulnerable to exploitation by jerks who wanted to game the system, and that quote above is all it provides as a check against such exploitation. There can be justice and prosperity for everyone, saith the Lord, as long as you people don’t act like jerks. So don’t act like jerks.
People who act like jerks remains the biggest obstacle today to the sort of justice, restoration and sufficiency that some version of a debt-jubilee could otherwise provide. The housing market collapsed in 2008 and hasn’t recovered, dragged down by millions of foreclosures.
We could have fixed that. The billions we’ve spent and given away to “strengthen the banks” weakened by all those shaky loans could have gone to the debtors instead of to the creditors. That would have restored both sides to health. But it also would have meant that millions of families facing foreclosure might have received assistance that others didn’t receive. Bailouts for “undeserving” lenders proved politically possible, but we were assured that any such efforts on behalf of potentially “undeserving” borrowers would provoke a political fight to the death.
The very possibility of such “undeserving” borrowers being helped led Rick Santelli to shriek against being forced “to pay for your neighbor’s mortgage.” To prevent such a thing, the petulant jerk Santelli screamed, we need a new “tea party.” And so the tea party was born.
That tea party petulance continues to prevent us from doing what needs to be done and what ought to be done to restore the health of our housing market:
New analyses by mortgage giants Freddie Mac and Fannie Mae have added an explosive new dimension to one of the most politically charged debates about the housing crisis: Whether to reduce the amount of money beleaguered homeowners owe on their mortgages.
Their conclusion: Such loan forgiveness wouldn’t just help keep hundreds of thousands of families in their homes, it would also save Freddie and Fannie money. That, in turn, would help taxpayers, who bailed out the companies at a cost of more than $150 billion and are still on the hook for future losses.
That’s from a report by Jesse Eisinger, ProPublica and Chris Arnold, “Fannie and Freddie: Slashing Mortgages Is Good Business.”
Reduce the principle, forgive a portion of the debt, proclaim a jubilee. It would save taxpayers money. It would keep hundreds of thousands of families in their homes.
But it can’t happen if we decide to act like jerks.
And, yes, I think that those who oppose this are, quite simply, jerks. Their jerkitude isn’t just hurting others, it’s hurting themselves as well. When you make it your top priority to ensure that you are never involved in having “to pay for your neighbor’s mortgage,” then you wind up living on a block with several homes in foreclosure, and that costs you far more than whatever it was you were petulantly refusing to pay in “undeserved” aid to struggling families.
Right now, arguing for Jubilee isn’t an act of altruism or generosity — it’s an act of self-interest, for debtors, creditors, the indebted and the debt-free.
More Jubilee-related links below the jump.
Debt loads are high on many Americans’ minds. The Federal Reserve Bank of New York reported that total household debt nearly tripled from $4.6 trillion in 1999 to $12.5 trillion in 2008. Though the figure has since fallen to $11.5 trillion as of the first quarter of 2011, it still an impressive figure. “From 1997 to 2007,” writes the Wall Street Journal, citing Federal Reserve Data, “household debt ballooned to 66 percent of economic output to 98 percent.” Three-quarters of this debt is from mortgages. Student loan debt has also ballooned to nearly three times that of the home mortgage debt during the Clinton administration.
These debt levels are dangerous because they drown consumption. Americans, now paralyzed by a fear of debt, are spending and investing less than they did during 2005.
… We need another round of quantitative easing that distributes cash to debtors based on a progressive scale of debt held relative to income.
Karen Weise: “Student Loan Delinquencies Are Worse Than You Think”
Borrowers were late on $85 billion in student loans in the third quarter of 2011, which at face value is about 10 percent of the $870 billion in total outstanding student debt. While that rate is more or less in line with other forms of consumer debt like credit cards and mortgages, it is also “understated,” the team says, because not all student loans can be delinquent.
Specifically, unlike those other forms of consumer debt, students don’t have to pay back school loans immediately. They get a break while they’re in school and in the six months after graduating. Almost half of student debt is in those approved grace periods, dragging down the overall delinquency rate because they add to the total balance but not the amounts past due. Once researchers exclude those loans to more accurately reflect the pool of borrowers who can actually be late, the delinquency rate more than doubled. In the end, 27 percent of the remaining borrowers were late on their payments, totaling about 21 percent of the aggregate loan balance.
Daniel Luzer: “The Secret Rate Hike”
Unbeknownst to many Americans, this summer the interest rate on a very commonly held federally subsidized student loan will double unless Congress takes action.
Ylan Q. Mui: “Durbin targets private student loan defaults”
“It is clear that too many students have been steered into loans that they will not be able to repay and that they will never be able to escape,” [Sen. Richard J.] Durbin said in his opening remarks.
Durbin has sponsored legislation that would allow private student-loan debt to be discharged in bankruptcy, though consumers would still be responsible for paying federal student loans.
Jordan Weissmann: “The Misunderstood Consequences of the Student Debt Crisis” (via zunguzungu)
The growth of student debt is making it harder and harder to enter the middle class, or to stay there. When teenagers are forced to take out loans in order to pay for their education — the median graduate who takes out loans* leaves school $12,800 in debt — it acts as a tax on their future wages. It postpones their ability to settle down, buy a home, and have children. That’s tragic for them, and it’s tragic for us, because it means less money will flow into other, more productive parts of the economy.
In other words, think of student debt as an economic parasite — a tape worm, if you will. It won’t kill the economy quickly, but it will sap the life out of it over time.
Russell @ Obsidian Wings: “Debt”
Walking away from debt obligations has become a reasonable and perfectly acceptable option, for millions of normal middle class working folks. I am quite certain that most folks reading this know, from their own lives, examples of folks doing this. I am quite certain that some number of folks reading this are making that choice, themselves.
What does it mean for our economy, our society, and our culture, that packing it in and walking away from your personal debt obligations has become a reasonable option?
What does it say about the relationship between folks who want and need to make use of credit, and their creditors?
Jeremy John: “When a System Demands Our Allegiance Away From Christ”
We are pulled by a powerful official system that urges us to forget our neighbors’ welfare and ground our economic decision-making in a totalizing framework of profit. The world asks us, when we are in our official capacities, to serve profit instead of God.