"When an individual person dies with debts, what can be collected from their remaining assets is collected and the rest is written off. Yet the opposite occurs with generational debt. Irresponsible borrowing by past generations is foisted on succeeding generations. The sins of the forefathers are preserved with interest to gouge the quality of life of younger people who neither decided upon nor benefited from irresponsible borrowing. The living should not be beholden to the dead."
The above post is just one of many I see posted all over the web about erasing debt the past few days. As I mentioned yesterday Europe is already in process to forgive debts held by private individuals in Greece and likely Ireland. I expect this under the radar way to solve the debt problem in Europe will spread as governments begin to realize they have no other way out of their mess. When the majority of citizens of a country begin pushing the legislators there not to cut benefits the old style idea of "debt jubilees" begin to take hold. If Obama is reelected and our national debt continues on the current pace consider the fact that a debt jubilee could be coming here as well. Consider that when holding assets that have no hard assets backing other than "full faith and credit".
Italian bonds this morning are trending closer to 8% after a "successful" auction where they had to raise rates to get enough buyers. Fools and their money are soon parted.
The New York Times yesterday reported hat Obama is abandoning the white working class as voters. The first reaction here would be that he believes his coalition of blacks, hispanics, public unions, big education, and upper crust white wealthy are enough to get him reelected. Digging deeper if this is true it means Obama actually wants the economy to get worse adding people to the public dole and thus voters to his coalition. Is this the moment that many had feared that the huge numbers getting government checks outnumber those paying in? If so Europe in effect might have just got abandoned since a collapsing Europe is a big plus for Obama's reelection.
My belief that only non thinking investors place money in high cost up front industries such as airlines and automotive where the payoffs depend almost solely on customer tastes comes to the front this morning with the bankruptcy of American Airlines. Oil, which requires large up front money too is almost guaranteed a nice return as consumer tastes mean little to a necessary product.
Anyone who believes that housing has hit bottom should take a look at this mornings housing numbers. The bottom has yet to found and is only being delayed by the continuing federal housing programs that hold up foreclosures. On my trip to the beach last week I noticed the continuing decline of prices there. Most homes there are priced around 25% or more off purchase prices of 2007. Even at that price they are not selling since most people expect prices to continue downward in markets that were inflated so much. Most of North Carolina avoided this housing bubble.
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