The ticking timebomb of strategic defaults

KyussBishop

Welease wrote: »

The long and short of it is.. that WE now own the banks and will be responsible for any funding required..

We can make as many financial gestures as we want... How much are the people of this country prepared to hand over in taxes and charges to fund this debt reduction...

Specifically as you are requesting it.. how much more do you think you should pay in taxes to cover any shortfall I or anyone else may have?

Doesn't matter who owns the banks now, the banks made the loans that should not have been made in the first place, and there are loans requiring restructuring that will not be paid back, and both require restructuring.

If we own the banks, we own the responsibility for their irresponsible loans as well, and are obligated to deal with them in a way that does not screw over the debtors (i.e. a way which has debtors pay their fair share, but acknowledges the banks fault in giving the risky loan in the first place), but which falls on the owners of the banks collectively (and if that happens to be the country overall, then that's how it needs to be).

Welease

KyussBishop wrote: »

Doesn't matter who owns the banks now, the banks made the loans that should not have been made in the first place, and there are loans requiring restructuring that will not be paid back, and both require restructuring.

If we own the banks, we own the responsibility for their irresponsible loans as well, and are obligated to deal with them in a way that does not screw over the debtors (i.e. a way which has debtors pay their fair share, but acknowledges the banks fault in giving the risky loan in the first place), but which falls on the owners of the banks collectively (and if that happens to be the country overall, then that's how it needs to be).

There are two seperate points there..

1) It can be argued that the banks have already paid for their risky loans . The owners of the banks no longer own those banks, their investment has gone.. The were taken into public (or primarily public) ownership. We now own the banks, and we are not obliged to do anything.. It is a matter of personal/political/economic opinion if we want/need to do any debt reduction.

2) Regarding the coverage of debt reduction.. Once again, people avoid the question, how do we pay for this? Most people are willing to discuss the option of debt reduction if people are willing to provide detail on how this is funded, and can be provided for given our current economic situation. As per my previous question, do you feel that the country is willing to pay considerably more in taxation to allow debt reduction? I don't.. considering the complaints of current rates of taxation and the mass failure of many to pay the household charge etc. If someone has a plan on how this can be done then lets hear it.

(and to clarify my position I am one of the (seemingly few) people who believe we should be paying more tax.. Most feel we pay too much already.. so where the funding comes from is a key economic and political decision that most people in this country won't like the answer to).

liammur

KyussBishop wrote: »

Doesn't matter who owns the banks now, the banks made the loans that should not have been made in the first place, and there are loans requiring restructuring that will not be paid back, and both require restructuring.

If we own the banks, we own the responsibility for their irresponsible loans as well, and are obligated to deal with them in a way that does not screw over the debtors (i.e. a way which has debtors pay their fair share, but acknowledges the banks fault in giving the risky loan in the first place), but which falls on the owners of the banks collectively (and if that happens to be the country overall, then that's how it needs to be).

If we get away too easily, it'll all happen again.
AIB got bailed out by the taxpayer once before. What did they learn? That they will get bailed out again.
Same applies now.

MysticalRain

Farmer Pudsey wrote: »

Yes but inflation would not be the end of the world it would encourage consumers to buy now as it might be more expensive next week and investors to invest as the money might be worth less in the bank's in the long run. At present what is happening people who have money are keeping it in banks earning around 3% after dirt is taken out inflation is non existance and we still have a bit od deflation so nobody want to spend in case it is cheaper next week.

Inflation was the end of the world when it happened in Germany in the 1930s, or at least the European part of it. For that reason, I highly doubt that the Germans, who control the purse strings will, allow that to happen again.

KyussBishop

Welease wrote: »

There are two seperate points there..

1) It can be argued that the banks have already paid for their risky loans . The owners of the banks no longer own those banks, their investment has gone.. The were taken into public (or primarily public) ownership. We now own the banks, and we are not obliged to do anything.. It is a matter of personal/political/economic opinion if we want/need to do any debt reduction.

2) Regarding the coverage of debt reduction.. Once again, people avoid the question, how do we pay for this? Most people are willing to discuss the option of debt reduction if people are willing to provide detail on how this is funded, and can be provided for given our current economic situation. As per my previous question, do you feel that the country is willing to pay considerably more in taxation to allow debt reduction? I don't.. considering the complaints of current rates of taxation and the mass failure of many to pay the household charge etc. If someone has a plan on how this can be done then lets hear it.

(and to clarify my position I am one of the (seemingly few) people who believe we should be paying more tax.. Most feel we pay too much already.. so where the funding comes from is a key economic and political decision that most people in this country won't like the answer to).

It's not about 'punishing' the banks for the risky loans, it's about making the banks accept responsibility for their role in providing the risky loans, and writing those loans down appropriately.

There is a definite moral obligation to write down those loans where they cannot be repaid in full, as it was completely wrong to give them out in the first place, and such lax credit is a significant part of what overheated the housing market (contributing to the high prices).

liammur wrote: »

If we get away too easily, it'll all happen again.
AIB got bailed out by the taxpayer once before. What did they learn? That they will get bailed out again.
Same applies now.

Eh? How would people be 'getting away' with anything? People are saddled with debts that should not have been given to them, debts that were given out so excessively that they significantly raised the price of houses and greatly contributed to the bubble.

People need to be responsible for their debts, and I am not advocating that their debt is gotten rid of entirely; I am saying, the banks bear huge (and generally understated) responsibility in those debts being so high, they bear the primary responsibility for the risk from those loans (as it is the banks purpose to correctly determine risk, and they utterly failed), so it is only right that those debts are written down.

It is not a matter of punishing banks, it is a matter of properly balancing the responsibility for the debt, and also simultaneously of avoiding the upcoming wave of defaults and foreclosures, by making those debts more manageable.


For starters, much of that debt is money that will never be repaid, so no matter what, that money is either (in the future) going to be written off as part of the national debt (and some of our national debt will have to be written off down the line), or it will come somewhere from the public purse.
That leaves the rest of the debts that don't end up in eventual default, which are simultaneously overburdened, with banks not propping their share of responsibility for the size of the debt, and are a burden on the rest of the economy by fueling debt deflation.

Farmer Pudsey

MysticalRain wrote: »

Inflation was the end of the world when it happened in Germany in the 1930s, or at least the European part of it. For that reason, I highly doubt that the Germans, who control the purse strings will, allow that to happen again.

You are talkin about uncontroled inflation where it is at above 10%. I know that controling inflation is hard but deflation is worse. If we had accross europe an inflation rate running at 3-5% it would help all economy's a lot.

This German fear of inflation is not helping the European economy. Between 2008-2011 it was this fear that is putting Europe back into recession. There is nothing we can do about the main source of inflation ''energy prices''. It may well be too late when Germany relise that we can no longer live in a 2% inflation economy, if every time we start to hit it they increase intrest rates and thereby stamp out economic recovery.

The only hope for Europe is that Inflation will help to reduce personnel debt and encourge consumer's/investors to spend money as opposed to kepping it in banks earning 3%. Look at Irish government bonds paying 5.5% pension funds are swallowing them up as they cannot relise this yeild in the general economy and banks are probally doing the same. Why lend money for houses at 4% or buisness at 7%+ or personnel loans @9% when without any cost you can take deposits in at 3% and stick in bonds at nearly 6%.

Dob74

If you declare bankrupt you should never get a loan again.

But being ireland the small fry will be punished while the big fish are aloud back to stick there snouts in the troff.

We still dont know who the biggest creditors are to the state owned banks. My guess it would be a list of the great and the good of business and politicial circles.

Welease

KyussBishop wrote: »

It's not about 'punishing' the banks for the risky loans, it's about making the banks accept responsibility for their role in providing the risky loans, and writing those loans down appropriately.

And .. the owners of the banks have accepted responsibility for those mistakes... They no longer own the banks...

The "banks" which we now own do accept primary responsibility.. If the loan is not repaid, then the bank has to cover that shortfall in funding.. That is already happening, we have and will continue to pump billions into the system to cover that responsibility.. Don't continue to pretend it hasn't happened. Why do you think we already paid out so much money?
The homeowner has to also accept responsibility, and continue to pay their part of the deal.

KyussBishop wrote: »

There is a definite moral obligation to write down those loans where they cannot be repaid in full, as it was completely wrong to give them out in the first place, and such lax credit is a significant part of what overheated the housing market (contributing to the high prices).

There is no "definite moral obligation" to do anything.. This is an economy forum not some religious cult forum. Any appropriate measures can be taken (up to an including debt write off), but the appropriateness of many will depend on the ability to fund such a measure.
I assume your "definite moral obligation" extends to equal treatment of all involved with the credit boom? And you support the writedown of loans to Developers/Bankers/Sean Quinn etc. and the return of their wealth.. repayment of Junior bondholders.. and general handing out of non existant tax payers cash too all and sundry who took out loans they couldn't (and in the case of strategic default in this thread have no intention of repaying)?
How about the moral obligation to assume responsibility for ones own decisions, and stop expecting everyone else to cover your mistakes?

KyussBishop

Welease wrote: »

And .. the owners of the banks have accepted responsibility for those mistakes... They no longer own the banks...

You seem to have pretty much ignored everything I said in my post.

The punishment of the bank owners not owning the banks anymore, does not rectify the irresponsible loans; to rectify that means restructuring the loans, so that the bank (not the owners or whoever might be personally responsible for the banks decisions) bears proper responsibility for their rightful share of the burden of debt, for their failure to manage risks properly in giving out the loan in the first place (which contributed to raising house prices and thus loans as well).

Welease wrote: »

KyussBishop wrote:

There is a definite moral obligation to write down those loans where they cannot be repaid in full, as it was completely wrong to give them out in the first place, and such lax credit is a significant part of what overheated the housing market (contributing to the high prices).

There is no "definite moral obligation" to do anything.. This is an economy forum not some religious cult forum. Any appropriate measures can be taken (up to an including debt write off), but the appropriateness of many will depend on the ability to fund such a measure.
I assume your "definite moral obligation" extends to equal treatment of all involved with the credit boom? And you support the writedown of loans to Developers/Bankers/Sean Quinn etc. and the return of their wealth.. repayment of Junior bondholders.. and general handing out of non existant tax payers cash too all and sundry who took out loans they couldn't (and in the case of strategic default in this thread have no intention of repaying)?
How about the moral obligation to assume responsibility for ones own decisions, and stop expecting everyone else to cover your mistakes?

I'd appreciate you not putting words in my mouth, thanks, or misrepresenting my words to engage in a rhetoric-based ad-hominem attack; the concept of comparing moral obligation to a 'religious cult' also seems quite silly (especially since you then go on to, unironically, posit your own moral obligation).

Also, what has anything I've said got to do with returning wealth to developers, bankers or bondholders, or of handing out of cash?
You seem to have thrown completely random, condescending attacks at my post, which are far removed from the actual content/context of my post.

Welease

KyussBishop wrote: »

You seem to have pretty much ignored everything I said in my post.

The punishment of the bank owners not owning the banks anymore, does not rectify the irresponsible loans; to rectify that means restructuring the loans, so that the bank (not the owners or whoever might be personally responsible for the banks decisions) bears proper responsibility for their rightful share of the burden of debt, for their failure to manage risks properly in giving out the loan in the first place (which contributed to raising house prices and thus loans as well).

And you seem to ignore everything that is posted in response...

There is no obligation or single solution to the issue at hand, especially when it comes to strategic defaults i.e. we don't have to rectify via "restructuring the loans" as you continually propose, we could force the homeowner into bankruptcy and pay the remainer of the loan back via the banks, we could pay off the full extend of the loans, we could continue on the present course, we could default and burn everyone, there are numerous possibilities... It your opinion that restructuring should be the solution, but yet you continually refuse to comment on how/where this funding would come from..

KyussBishop wrote: »

I'd appreciate you not putting words in my mouth, thanks, or misrepresenting my words to engage in a rhetoric-based ad-hominem attack; the concept of comparing moral obligation to a 'religious cult' also seems quite silly (especially since you then go on to, unironically, posit your own moral obligation)..

If you are going to cite "moral obligations" in a economic discussion then I don't see the issue woth comparing it to a cult of grouped morals.. If you take offense I apologise, it was not meant as an attack, but you seem to indicate that because people don't subscribe to your belief on debt restructuring that they are immoral.. They are not, then just don't believe you solution, becuase you refuse accept that the banks have accepted responsibility (although not to the level you required), and you refuse to detail what it is you actually require (via restructuring and the funding for).

KyussBishop wrote: »

Also, what has anything I've said got to do with returning wealth to developers, bankers or bondholders, or of handing out of cash?
You seem to have thrown completely random attacks at my post, which are far removed from the actual content/context of my post.

If you are going to cite moral obligations, then surely those moral obligations apply to all of society and not a subset (homeowners)? If loans provided to homeowners for overpriced property was irresponsible, then wouldn't loans provided by developers to build said property also be irresponsible? shouldn't they have their debts restructured and paid by the state?Should't Seanie and his cohorts have their wealth returned as loaning colossal sums for share value propping was also irresponsible (and arguably illegal)?
It's not an attack.. its a question on how far you believe these moral obligations to extend.. If you want to cite moral obligations, then surely people can question the detail?

Nody

KyussBishop wrote: »

Also, what has anything I've said got to do with returning wealth to developers, bankers or bondholders, or of handing out of cash?
You seem to have thrown completely random, condescending attacks at my post, which are far removed from the actual content/context of my post.

Tell us also what do you plan to do for the people who had enough backbone and moral fibre to stand up to societies push to get on the property ladder with an over expensive loan? Since we did the right thing we'll get 2x the average amount of negative equity that's written off given to us as cash right? Because that's the morally right thing to do; help the once in need and reward those who took appropriate precautions after all...

KyussBishop

Welease wrote: »

And you seem to ignore everything that is posted in response...

There is no obligation or single solution to the issue at hand, especially when it comes to strategic defaults i.e. we don't have to rectify via "restructuring the loans" as you continually propose, we could force the homeowner into bankruptcy and pay the remainer of the loan back via the banks, we could pay off the full extend of the loans, we could continue on the present course, we could default and burn everyone, there are numerous possibilities... It your opinion that restructuring should be the solution, but yet you continually refuse to comment on how/where this funding would come from..

You're misrepresenting my posts, that's not what I unconditionally propose, I am making the distinction of the banks partial responsibility for these loans, the very idea of which you seem to reject, I'm not mandating that this means restructuring all loans is the solution.

I don't need to spell out every step of a plan to make that distinction, and to say there is a moral obligation to take that distinction into account when dealing with the debt.

Welease wrote: »

If you are going to cite "moral obligations" in a economic discussion then I don't see the issue woth comparing it to a cult of grouped morals.. If you take offense I apologise, it was not meant as an attack, but you seem to indicate that because people don't subscribe to your belief on debt restructuring that they are immoral.. They are not, then just don't believe you solution, becuase you refuse accept that the banks have accepted responsibility (although not to the level you required), and you refuse to detail what it is you actually require (via restructuring and the funding for).

You're applying your own totally undefined interpretation of 'moral obligation' to the discussion, and (coupled with misrepresenting my posts) are using it as an ad-hominem attack in slurring my arguments as 'cultish'.

Here is the context of what I said:
"There is a definite moral obligation to write down those loans where they cannot be repaid in full..."

Even when you consider that in a purely practical manner, it's not just morally obligated to write down part of that loan due to banks partial responsibility, but in order to get some kind of manageable return out of it rather than a default.

Welease wrote: »

If you are going to cite moral obligations, then surely those moral obligations apply to all of society and not a subset (homeowners)? If loans provided to homeowners for overpriced property was irresponsible, then wouldn't loans provided by developers to build said property also be irresponsible? shouldn't they have their debts restructured and paid by the state?Should't Seanie and his cohorts have their wealth returned as loaning colossal sums for share value propping was also irresponsible (and arguably illegal)?
It's not an attack.. its a question on how far you believe these moral obligations to extend.. If you want to cite moral obligations, then surely people can question the detail?

Again, that's stretching and misrepresenting my arguments, with a made up, unspecified definition of 'moral obligation', and trying to straw-man it as a defense of fraud, and writing down money lent to business; what has that got to do with money lent out personally, for mortgages?

Nody wrote:

Tell us also what do you plan to do for the people who had enough backbone and moral fibre to stand up to societies push to get on the property ladder with an over expensive loan? Since we did the right thing we'll get 2x the average amount of negative equity that's written off given to us as cash right? Because that's the morally right thing to do; help the once in need and reward those who took appropriate precautions after all...

More useless straw-manning.

Do the banks share any responsibility for these loans, for not taking adequate risk protections and thus inflating the price of houses along with that?

That's an extremely simple and easy to see distinction I am making there, underscoring banks partial responsibility, yet even where I don't propose any action as a result of it, I'm portrayed as wanting to piss out free money, just through making that distinction.

thebman

Don't think any of the dreaming for free money that is going on will happen.

Wishful thinking on some peoples part.

Most likely, bankruptcy laws will be reformed to be more inline with the UK's so that people don't just go over there to default. Massive increase in defaults here but people lose their homes in the process.

You can't take out a massive loan and then go oh well don't feel like paying it anymore now the house is worth less than I thought it was and expect there to be no serious consequences for those actions.

Don't think a modern society can properly function like that.

Welease

KyussBishop wrote: »

You're misrepresenting my posts, that's not what I unconditionally propose, I am making the distinction of the banks partial responsibility for these loans, the very idea of which you seem to reject, I'm not mandating that this means restructuring all loans is the solution.

I don't need to spell out every step of a plan to make that distinction, and to say there is a moral obligation to take that distinction into account when dealing with the debt..

I am not misrepresenting you posts.. I am asking for details and/or confirmaiton to questions which you continually refuse to supply..

"There is a definite moral obligation to write down those loans where they cannot be repaid in full"

By whose definition do we have a moral obligation? and as per my question if this is your proposal, then shouldn't Seanie, Developers and failed business owners be given the same moral obligations by the banks?(i.e. we write down their loans instead of forcing bankruptcy)

Is there not an equal moral obligation to repay loans that one undertook without expecting someone else to pay for them, cancer services to be cut, welfare benefit to be cut in order to fund etc?

KyussBishop wrote: »

You're applying your own totally undefined interpretation of 'moral obligation' to the discussion, and (coupled with misrepresenting my posts) are using it as an ad-hominem attack in slurring my arguments as 'cultish'.

Here is the context of what I said:
"There is a definite moral obligation to write down those loans where they cannot be repaid in full..."

Even when you consider that in a purely practical manner, it's not just morally obligated to write down part of that loan due to banks partial responsibility, but in order to get some kind of manageable return out of it rather than a default.

And as per my previous responses, it is one solution of many possible solutions.. We are neither morally nor legally bound to any specific solution, and definately not to your proposal.
As per your practicality point.. I have requested several times where you expect to funding to come from.. you continally ignore this practical point..

These are not attacks, there are simple economic questions in an economic forum..and I am beginning to strongly object to continued attempts to portray me as attacking you merely because you don't want to answer the economic questions being asked about your proposal.

KyussBishop wrote: »

Again, that's stretching and misrepresenting my arguments, with a made up, unspecified definition of 'moral obligation', and trying to straw-man it as a defense of fraud, and writing down money lent to business; what has that got to do with money lent out personally, for mortgages?.

Again is not misrepresenting.. its a question on how far you believe this moral obligation extends.. as made quiet clear in the post..
If you believe the irresponsible loans carry a moral obligation to writedown when they can't be repaid, why doesn't that moral obligation extend to those names, or as you wish to propose it.. why does the moral obligation extend only to mortgages..

Once again, I am asking for clarity and details on what you propose.. I am not, not have i attacked anything you have posted.. I am questioning your proposal and reasoning.

liammur

KyussBishop wrote: »

It's not about 'punishing' the banks for the risky loans, it's about making the banks accept responsibility for their role in providing the risky loans, and writing those loans down appropriately.

There is a definite moral obligation to write down those loans where they cannot be repaid in full, as it was completely wrong to give them out in the first place, and such lax credit is a significant part of what overheated the housing market (contributing to the high prices).


Eh? How would people be 'getting away' with anything? People are saddled with debts that should not have been given to them, debts that were given out so excessively that they significantly raised the price of houses and greatly contributed to the bubble.

People need to be responsible for their debts, and I am not advocating that their debt is gotten rid of entirely; I am saying, the banks bear huge (and generally understated) responsibility in those debts being so high, they bear the primary responsibility for the risk from those loans (as it is the banks purpose to correctly determine risk, and they utterly failed), so it is only right that those debts are written down.

It is not a matter of punishing banks, it is a matter of properly balancing the responsibility for the debt, and also simultaneously of avoiding the upcoming wave of defaults and foreclosures, by making those debts more manageable.


For starters, much of that debt is money that will never be repaid, so no matter what, that money is either (in the future) going to be written off as part of the national debt (and some of our national debt will have to be written off down the line), or it will come somewhere from the public purse.
That leaves the rest of the debts that don't end up in eventual default, which are simultaneously overburdened, with banks not propping their share of responsibility for the size of the debt, and are a burden on the rest of the economy by fueling debt deflation.

If you don't punish banks, they'll do it again. If you don't punish a stupid electorate, they'll vote 'um in again'. I agree with Germans, hit us hard, so hard we'll eventually learn. Those banks should have been hit real hard, so hard they went bust.

KyussBishop

Seriously, where are people getting the idiotic idea from about 'free money', when making the distinction about banks partial responsibility for the size of the debt? Note, that I am making the distinction, not calling for specific action, except where there is the inevitability of default.

It's ignorant in the extreme, and shows people either have not bothered to read, or are deliberately misrepresenting my posts; before you make assumptions about my posts and misrepresent my arguments, put your assumptions as questions to save the wasted time correcting misrepresentations.

Welease wrote:

I am not misrepresenting you posts.. I am asking for details and/or confirmaiton to questions which you continually refuse to supply..

You have not 'asked' anything, the only questions you have posited have been condescending rhetoric, based on misrepresentations of my posts.

Welease wrote:

By whose definition do we have a moral obligation? and as per my question if this is your proposal, then shouldn't Seanie, Developers and failed business owners be given the same moral obligations by the banks?(i.e. we write down their loans instead of forcing bankruptcy)

Is there not an equal moral obligation to repay loans that one undertook without expecting someone else to pay for them, cancer services to be cut, welfare benefit to be cut in order to fund etc?

Obviously here you have deliberately ignored my previous post, to continue attacking the same straw man that I specifically addressed.

Welease wrote:

KyussBishop wrote:

"There is a definite moral obligation to write down those loans where they cannot be repaid in full..."

As per your practicality point.. I have requested several times where you expect to funding to come from.. you continally ignore this practical point..

Eh? Where do you expect the money to come after someone goes bankrupt? The whole point is restructuring debt to avoid a default, thus getting maximum return on it.

If you weren't so dogmatically pursuing the made up strawman of 'free money', and other assumptions about my posts (which you are very happy to assume rather than ask about), and actually read what I have been saying, that would be obvious.

Welease wrote:

These are not attacks, there are simple economic questions in an economic forum..and I am beginning to strongly object to continued attempts to portray me as attacking you merely because you don't want to answer the economic questions being asked about your proposal.

Sorry but this doesn't stand when you are making several of the same straw-men attacks as I laid out in my last post, are making continuous assumptions about my posts, and seem to be deliberately misrepresenting them to continue trying to bash my posts rather than address what I'm actually saying.

Welease wrote:

Again is not misrepresenting.. its a question on how far you believe this moral obligation extends.. as made quiet clear in the post..
If you believe the irresponsible loans carry a moral obligation to writedown when they can't be repaid, why doesn't that moral obligation extend to those names, or as you wish to propose it.. why does the moral obligation extend only to mortgages..

Once again, I am asking for clarity and details on what you propose.. I am not, not have i attacked anything you have posted.. I am questioning your proposal and reasoning.

You absolutely are misrepresenting my posts, as you're trying to paint me into a position of defending fraudulent loans, and loans that have been given to business, which makes absolutely zero sense as these are completely separate to personal loans.


Before anyone makes more assumptions about my posts, note that I am making the distinction of banks partial responsibility for those loans, not stating action to be taken, except (the blindingly obvious case) of trying to get maximum returns on a loan that would otherwise default.

southsiderosie

MOD NOTE:

This has been quite a good thread, but the last two pages have turned into a snipe-fest. Let's dial it back, please.

I would like to know, regardless of the legal/moral arguments related to default, what our next steps as a country should or could be given the situation we're facing.

Given that very many people are set to be unwilling or unable to continue to repay their mortgages given the looming property tax, water rates, general tax increases, and variable rate rises which are due to hit over the next 24 months, and the fact that there are a number of options of varying legitimacy and legality available for those affected to take advantage of, how do we proceed in policy terms to prevent things deteriorating into a situation where people simply begin to take the law into their own hands?

If the banks, for whatever reason, are not being paid, what do we do?

MysticalRain

Deleted User wrote: »

I would like to know, regardless of the legal/moral arguments related to default, what our next steps as a country should or could be given the situation we're facing.

Given that very many people are set to be unwilling or unable to continue to repay their mortgages given the looming property tax, water rates, general tax increases, and variable rate rises which are due to hit over the next 24 months, and the fact that there are a number of options of varying legitimacy and legality available for those affected to take advantage of, how do we proceed in policy terms to prevent things deteriorating into a situation where people simply begin to take the law into their own hands?

If the banks, for whatever reason, are not being paid, what do we do?

Restructure the mortgages for those who can't pay i.e. spread the payments out of a longer duration. Let them pay off a 40 year mortgage in 60 years if they have to. Failing that, let the bank reposes the house or let the bank rent it back to them.

As for those rogues who are unwilling to pay - let the revenue sort them out if they are found to be defrauding the taxpayer and the banks.

Godge

KyussBishop wrote: »

You seem to have pretty much ignored everything I said in my post.

The punishment of the bank owners not owning the banks anymore, does not rectify the irresponsible loans; to rectify that means restructuring the loans, so that the bank (not the owners or whoever might be personally responsible for the banks decisions) bears proper responsibility for their rightful share of the burden of debt, for their failure to manage risks properly in giving out the loan in the first place (which contributed to raising house prices and thus loans as well).

This is the heart of your argument and it is built on a heap of sand.

Society demands the punishment of wrongdoers but it does not demand the redress of wrongs, not only on philosophical grounds but also because it is impractical and/or impossible.

A murderer is sent to jail but the murdered person is not resurrected.
A fraudster is sent to jail but if the money is gone, it is not repaid.
A driver who causes an accident may get penalty points, anyone injured may get some compensation, but they will continue to suffer with whiplash.

In many many of those type of cases, the person who does the wrong suffers less than those who suffer the wrongdoing.

In this case, the onwership of the banks has been taken away from the owners, criminal cases are proceeding against those who may have done wrong but that it all that our society in its normal functioning requires. We do not demand retribution or restoration of the status quo ante and many many times the victims of crime, the victims of fraud and the victims of wrongdoing continue to suffer after the event.

We should feel sorry for those caught by the collapse of the banks but there is no obligation on us, moral, legal or political to do anything about it except ask that they pay their debts.

Bullseye1

Isn't it funny how much we defend the banks once we own them yet they are a major player in creating the mess we now find ourselves. They should have been allowed to stand and fall on their own feet. If they collapsed so be it. Whatever about trying to protect deposit banks like BoI and AIB protecting Anglo was madness.

KyussBishop

Godge wrote: »

This is the heart of your argument and it is built on a heap of sand.

Society demands the punishment of wrongdoers but it does not demand the redress of wrongs, not only on philosophical grounds but also because it is impractical and/or impossible.

A murderer is sent to jail but the murdered person is not resurrected.
A fraudster is sent to jail but if the money is gone, it is not repaid.
A driver who causes an accident may get penalty points, anyone injured may get some compensation, but they will continue to suffer with whiplash.

In many many of those type of cases, the person who does the wrong suffers less than those who suffer the wrongdoing.

In this case, the onwership of the banks has been taken away from the owners, criminal cases are proceeding against those who may have done wrong but that it all that our society in its normal functioning requires. We do not demand retribution or restoration of the status quo ante and many many times the victims of crime, the victims of fraud and the victims of wrongdoing continue to suffer after the event.

We should feel sorry for those caught by the collapse of the banks but there is no obligation on us, moral, legal or political to do anything about it except ask that they pay their debts.

Well I agree with you that any wrongs (e.g. irresponsible lending) should not be dealt with by inflexibly righting the wrong where it is impractical; what I am arguing though, is that there is a definite moral obligation to take into account, the wrongful nature of the lending in dealing with the debt (and how that whole system of lax credit increased the price of houses and thus the debt and even rents for everyone else too).

Simply punishing owners of banks (and not just 'any' punishment is enough, the entire financial industry has gotten off practically free from punishment; people are not even in prison), is not enough when the inherent injustice is still in place.

That does not mean a specific, inflexible action must be taken to right that wrong (that's why I don't state a specific action, except where loans would default anyway), but it certainly means that punishment of bankers (and they have not been in any way punished proportional to the law), is not sufficient alone.

KyussBishop

KyussBishop wrote: »

...Simply punishing owners of banks (and not just 'any' punishment is enough, the entire financial industry has gotten off practically free from punishment; people are not even in prison), is not enough when the inherent injustice is still in place...

I agree with this. Justice should be done, and it should be seen to be done, otherwise we're only teaching the financial elite, or the political elite, or any of the other elites who were culpable in this case, that all you have to do to flout the law in Ireland is to make some friends in high places and stay one step ahead of the authorities and any appointed watchdogs, and when things eventually catch up with you you can skip the country and live like a king with no fear of extradition, or simply retire quietly on a six figure pension and leave someone else to clean up your mess.

Iceland successfully brought criminal charges against its former prime minister for his role in the government's negligence during their financial crisis. They are renewing their constitution in open consultation with the public, and their swift and idealistic handling of the crisis has been cathartic for their democracy and has fostered a culture of accountability in their financial and political system. We have had no such catharsis. If we fail to hold those responsible here PROPERLY to account for their part in this mess, we will only teach people that Ireland inc. doesn't punish wrongdoing, and will risk bringing the same problems on ourselves again in the future. It may not be in banking, or in property, but there are many other crucial aspects of our democracy still open to the effects of corruption, and all we're teaching those with the means to take advantage of that opportunity is that the harder a neck you have, the bigger the spoils will be, and that there will be little or no real consequence.

Godge

KyussBishop wrote: »

Well I agree with you that any wrongs (e.g. irresponsible lending) should not be dealt with by inflexibly righting the wrong where it is impractical; what I am arguing though, is that there is a definite moral obligation to take into account, the wrongful nature of the lending in dealing with the debt (and how that whole system of lax credit increased the price of houses and thus the debt and even rents for everyone else too).

Simply punishing owners of banks (and not just 'any' punishment is enough, the entire financial industry has gotten off practically free from punishment; people are not even in prison), is not enough when the inherent injustice is still in place.

That does not mean a specific, inflexible action must be taken to right that wrong (that's why I don't state a specific action, except where loans would default anyway), but it certainly means that punishment of bankers (and they have not been in any way punished proportional to the law), is not sufficient alone.

Many dangerous drivers get away with a couple of penalty points or a short driving ban while the people they killed still lie cold in their grave, their living victims sit in wheelchairs and the friends and relatives of both grieve.

That is not right but it is what we have decided upon as a normal society since we gave up lynching and respected the law. Unfortunately, applying the same rules to the current crisis means there is no moral obligation.

KyussBishop

Godge wrote: »

Many dangerous drivers get away with a couple of penalty points or a short driving ban while the people they killed still lie cold in their grave, their living victims sit in wheelchairs and the friends and relatives of both grieve.

That is not right but it is what we have decided upon as a normal society since we gave up lynching and respected the law. Unfortunately, applying the same rules to the current crisis means there is no moral obligation.

I understand what you're trying to say, but the analogy there doesn't fit. Those are single events where the wrong imposed on the other person has an immediate and irreconcilable effect; the wrong imposed by the banks has a current and continuing effect, and is thus reconcilable (maybe only partially, but reconcilable nonetheless).

The important point, is that it's not about punishing (I'm not saying people shouldn't be punished though, those responsible should), it is about righting the wrong (or at least mitigating or taking it into consideration), and acknowledging shared responsibility.

In your example (victims of car accidents), the wrong cannot be righted, the injuries are already sustained and the person responsible can only be punished; in the case of banks, the 'injury' is ongoing and it can be righted or mitigated.

Also, the responsibility for those improper loans lies on the entire bank/company and they are liable for that, so when these banks were nationalized the ownership of that responsibility was taken on as well.
Same way a company can't avoid being sued for wrongful/negligent actions, just by firing individuals directly involved, and selling on the company; the liability lies with the company itself, not the individuals.