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(Daily Kos)   What hare-brained scheme is OWS up to now? Buying debt in order to forgive it. That's so crazy it just might work   (dailykos.com) divider line 145
    More: Cool, Occupy Wall Street, Health Care, International, bad debts, debt relief, Saul Alinsky  
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3518 clicks; posted to Politics » on 09 Nov 2012 at 2:24 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-11-09 10:46:29 AM
meanwhile, at tea party headquarters, a group of concerned citizens spend hours discussing the finer points of how to bedazzle a jean jacket in red white and blue on a budget.
 
2012-11-09 10:49:40 AM
also, why not, instead of just forgiving the debt, you offer to let the people purchase the debt, either for the $500 you paid for it, or with 20 hours of volunteer service at an OWS phone bank. or by fighting another debtor in a backyard brawl that will be live-streamed on a pay-per-view channel.
 
2012-11-09 10:59:11 AM

thomps: or by fighting another debtor in a backyard brawl that will be live-streamed on a pay-per-view channel.


I would completely do that to get rid of my Student Loans. EIP if anyone wants to take me up on that.
 
2012-11-09 11:03:01 AM
Wait, the "occupy movement" was founded by shiftless art majors who couldn't afford to pay their student loans.
But now somehow they've come up with money to buy other peoples' debts?
Did I miss something or is this just another example of millennial financial irresponsibility, paying down other peoples' debt instead of their own?
 
2012-11-09 11:05:39 AM

serial_crusher: Wait, the "occupy movement" was founded by shiftless art majors who couldn't afford to pay their student loans.
But now somehow they've come up with money to buy other peoples' debts?
Did I miss something or is this just another example of millennial financial irresponsibility, paying down other peoples' debt instead of their own?


i think your problem might be in your premise.
 
2012-11-09 11:06:21 AM

serial_crusher: Wait, the "occupy movement" was founded by shiftless art majors who couldn't afford to pay their student loans.


this is a false assumption. You were told it was a false assumption when you originally made it during OWS protests, and it still hasn't sunk in that this is a false assumption.

serial_crusher: Did I miss something


yes. the part where your entire post is based on a faulty assumption.
 
2012-11-09 11:19:34 AM

serial_crusher: Wait, the "occupy movement" was founded by shiftless art majors who couldn't afford to pay their student loans.
But now somehow they've come up with money to buy other peoples' debts?
Did I miss something or is this just another example of millennial financial irresponsibility, paying down other peoples' debt instead of their own?


Read - you might learn something (charts explaining what OWS was pissed about.. anyone intelligent should be pissed about these facts)
 
2012-11-09 11:25:39 AM
In no way will this scheme increase the value of the debt on the secondary market.

Laws of supply and demand, how do they work?
 
2012-11-09 11:30:10 AM

halfof33: In no way will this scheme increase the value of the debt on the secondary market.

Laws of supply and demand, how do they work?


it would have to scale way past what i'm sure their goals are in order to move the market, but even then i'm sure it would only marginally increase the cost to the average distressed debtor - most of the increase would be absorbed in the margins of the credit vultures.
 
2012-11-09 11:37:24 AM

thomps: it would have to scale way past what i'm sure their goals are in order to move the market, but even then i'm sure it would only marginally increase the cost to the average distressed debtor - most of the increase would be absorbed in the margins of the credit vultures.


That is an assumption that I would not be willing to make.

Although, I would assume that what they are buying is worthless uncollectable junk anyway.

They'd probably be better off buying the debtors a turnip, rather than worrying about someone trying to squeeze blood out of one.
 
2012-11-09 11:37:35 AM
More power to them. It may not have a huge impact, but it's certainly better than sitting around hoping the bankers grow a collective conscience.
 
2012-11-09 11:41:03 AM

halfof33: That is an assumption that I would not be willing to make.


I would. The secondary market is huge. They're not going to be a large enough market-actor to have any impact, especially because they're going to be buying that debt it dribs and drabs. It'd be one thing if they were to enter the market with a $1B check. But they're not going to.
 
2012-11-09 11:41:46 AM

Kazan: serial_crusher: Wait, the "occupy movement" was founded by shiftless art majors who couldn't afford to pay their student loans.
But now somehow they've come up with money to buy other peoples' debts?
Did I miss something or is this just another example of millennial financial irresponsibility, paying down other peoples' debt instead of their own?

Read - you might learn something (charts explaining what OWS was pissed about.. anyone intelligent should be pissed about these facts)


This chart, which I see a lot and is concerning to an extent:
CEO pay is now 350X the average worker's, up from 50X from 1960-1985.

The thing I hear is though, and does make some sense, is that the very highly paid CEO's, are of these companies that are much larger than companies were 20, 30, 40 years ago (because of mergers, conglomeration, which is another separate issue to be sure, with monopolies and such). But, it would be interesting to see not how much CEO's are getting paid as a multiplier of the average employee salary, but, how much CEO's are getting paid per employee within the company for example, or the CEO's pay as a percentage of the total salaries within the company. That to me seems to be more meaningful. If a CEO is getting paid $10 million for a company that has 120k employees, and we are angry because the equivalent CEO's were being paid $1-2 million years ago, but, those companies were 10-20k employees, actually, that makes more sense to me then.
 
2012-11-09 11:42:43 AM

halfof33: thomps: it would have to scale way past what i'm sure their goals are in order to move the market, but even then i'm sure it would only marginally increase the cost to the average distressed debtor - most of the increase would be absorbed in the margins of the credit vultures.

That is an assumption that I would not be willing to make.

Although, I would assume that what they are buying is worthless uncollectable junk anyway.

They'd probably be better off buying the debtors a turnip, rather than worrying about someone trying to squeeze blood out of one.


Did you not read the article? They aren't trying to squeeze anything. They are FORGIVING the debts that they buy. This is not an attempt at making money.
 
2012-11-09 11:44:43 AM
And all I am doign is proving that I can't read. I missed the word "someone" and it was the one word that set the tone for the entire sentence.

My apologies, halfof33, I am a moran.
 
2012-11-09 11:46:28 AM

t3knomanser: I would. The secondary market is huge. They're not going to be a large enough market-actor to have any impact, especially because they're going to be buying that debt it dribs and drabs. It'd be one thing if they were to enter the market with a $1B check. But they're not going to.


The assumption to which I was referring is the assertion that the "vultures" would take a hit on their margins.

That this will have little impact, I have no quibble with, because at the end of the day it is kind of a stupid idea.

If $10,000 worth of debt is worth $500, it is worth $500. You'd get more mileage buying $500 worth of perscriptions for the debtors.
 
2012-11-09 11:50:48 AM

halfof33: If $10,000 worth of debt is worth $500, it is worth $500. You'd get more mileage buying $500 worth of perscriptions for the debtors.


It's worth $500 on the market- to the individual debtor, it might be worth significantly more.
 
2012-11-09 11:55:42 AM

t3knomanser: It's worth $500 on the market- to the individual debtor, it might be worth significantly more


Of course, but you can't solve a macro-problem by pricing it on a micro-basis. They'd be better off offsetting costs that caused people to go into debt in the first place.

Give me the $500 bucks, I'll buy $450 worth of prescriptions for people, and $50 bucks worth of beer.
 
2012-11-09 11:59:32 AM

halfof33: t3knomanser: It's worth $500 on the market- to the individual debtor, it might be worth significantly more

Of course, but you can't solve a macro-problem by pricing it on a micro-basis. They'd be better off offsetting costs that caused people to go into debt in the first place.

Give me the $500 bucks, I'll buy $450 worth of prescriptions for people, and $50 bucks worth of beer.


if their issue was $450 in prescriptions, they wouldn't have $10,000 in debt.
 
2012-11-09 12:00:11 PM

Kazan: serial_crusher: Wait, the "occupy movement" was founded by shiftless art majors who couldn't afford to pay their student loans.
But now somehow they've come up with money to buy other peoples' debts?
Did I miss something or is this just another example of millennial financial irresponsibility, paying down other peoples' debt instead of their own?

Read - you might learn something (charts explaining what OWS was pissed about.. anyone intelligent should be pissed about these facts)


So, the 30-something bullet points on that list basically boil down to two gripes: "I'm unemployed" and "my boss makes more money than me", repeated ad nauseum. Neither of those really helps answer my original question about where they're getting all this money to buy debt with. I guess the employed ones, despite making less than their bosses, still have some disposable income to spend on other people. Life is rough.

dletter: it would be interesting to see not how much CEO's are getting paid as a multiplier of the average employee salary, but, how much CEO's are getting paid per employee within the company for example, or the CEO's pay as a percentage of the total salaries within the company. That to me seems to be more meaningful. If a CEO is getting paid $10 million for a company that has 120k employees, and we are angry because the equivalent CEO's were being paid $1-2 million years ago, but, those companies were 10-20k employees, actually, that makes more sense to me then.


Agreed. Though, there might be something to be said for preferring 5 CEOs employed at $2 million vs 1 CEO employed at $2 million. You know, job creators, small businesses, and other political buzzwords all rolled into one.
 
2012-11-09 12:07:52 PM

serial_crusher: So, the 30-something bullet points on that list basically boil down to two gripes: "I'm unemployed" and "my boss makes more money than me", repeated ad nauseum. Neither of those really helps answer my original question about where they're getting all this money to buy debt with. I guess the employed ones, despite making less than their bosses, still have some disposable income to spend on other people. Life is rough.


it's almost like people recognize a systemic issue and would like to change it, even if it doesn't directly affect them. so weird.
 
2012-11-09 12:15:50 PM

serial_crusher: there might be something to be said for preferring 5 CEOs employed at $2 million vs 1 CEO employed at $2 $10 million


FTFM. I didn't intend to adjust those numbers for taxes.
 
2012-11-09 12:17:04 PM
Now this is what you call class
 
2012-11-09 12:45:26 PM

serial_crusher: dletter: it would be interesting to see not how much CEO's are getting paid as a multiplier of the average employee salary, but, how much CEO's are getting paid per employee within the company for example, or the CEO's pay as a percentage of the total salaries within the company. That to me seems to be more meaningful. If a CEO is getting paid $10 million for a company that has 120k employees, and we are angry because the equivalent CEO's were being paid $1-2 million years ago, but, those companies were 10-20k employees, actually, that makes more sense to me then.

Agreed. Though, there might be something to be said for preferring 5 CEOs employed at $2 million vs 1 CEO employed at $2 million. You know, job creators, small businesses, and other political buzzwords all rolled into one.


But, that goes back to allowing companies to gobble each other up and become these super huge companies that own 80% of the market in 4-5 different industries, and grow to 6 figure employee levels. If you don't allow that, then, yeah, you are back to the $2 million CEO's. But, if you are going to allow that, I'm not sure you can complain too loudly about the CEO pay as compared to the "average workers" pay, if he is "overseeing" a company that makes 20x in profits and has 10x as many employees as those "old" companies.... any company is always going to have a "CEO" at the top, no matter how big it is. You might have "department" heads, or "sub-corp" heads that probably make those $2-3 million/yr salaries the old CEO's made, so, effectively, the issue isn't that the people at the same "CEO" levels are making more, it is that you've combined the 5-6 companies into a "super company", that now has ANOTHER layer of CEOs at the very top, making even more money.
 
2012-11-09 12:47:20 PM
$14,000 worth of debt for $500? Why didn't the lien holder just offer that to the debtor in the first place?

Oh! Excuse me, I forgot. About a couple of hundred businesses have popped up capitalizing on the miseries of folks in order to make a major profit. They're usually operated by folks with major money, eager to make more money and probably have the political and status connections with other very well off folks, who let them get their foot in the door.

I grew up after WW2, when the Great Depression was still fresh in the minds of my parents and grandparents. I heard about homes being auctioned off for as little as $20. People lucky enough to have a little money often bought high end items from others for anywhere from 5 to 10 cents on the dollar. (Depression era dollars were often akin to $100 today.)

Though banks, as banks will, foreclosed on a lot of homes and farms, tossed the folks out and then wound up letting the properties rot. I figured back then that it might have been wiser to let the folks stay. At least they'd keep the properties in good shape until a buyer could be found. If not, then as the economy strengthened, the lien holder could begin charging them a small rate so as not to take a total loss.

In finances, I tend to have a simple grasp. Borrow $1000 at 5% and pay back $1050. Set the terms for a reasonable repayment time with a reasonable penalty of, say, 1% additional for every delayed payment. Maybe not even that, depending on the circumstances of the debtor.

Credit cards were just catching on when I became an adult. Within a decade, they were everywhere and credit became a confusing, complex, nearly living thing.

I understood the monthly compounded interest on an active card. I didn't understand the monthly compounded interest on an inactive card with a balance. I didn't like the increased interest on cash advances and the fact that most credit card companies held those balances back, not allowing them to be paid off until everything else was, so they could pile on even more interest. Then came the late fees, assorted penalty fees, account maintenance fees, interest rates that could explode if you were 10 seconds late making a payment or, apparently, for no reason at all.

Of course, any penalty fees were added to the balance, so they could accumulate interest also.

I found it astounding that you could 'borrow' $5000 on a credit card and, paying the minimum monthly payment, wind up repaying $24,000.

When credit card companies, crying about hard times and bad debt, jacked their interest rates up beyond what the Federal Government used to consider the legal limit, I found out that many major cards charge stores for the PRIVILEGE of using their cards to purchase items -- a thing the credit card companies wanted you to do anyhow.

I was surprised so many businesses accepted cards, considering that they could loose up to 4 cents on each dollar. Local gas stations just started posting twin prices in response to a hike in their fees by credit card companies. Pay cash and get gas for about $3.50 a gallon. Use a credit card and pay $3.58 a gallon.

The last time I read the small print on a credit card application, I realized that basically, by using their card, you were giving them permission to bend you over a barrel and rape you for bucks anyway they chose.

But then, society has evolved from a cash and check commerce to a high level of credit based function, so not having a credit card can cause you problems.

At least until some clever folks developed the 'rechargeable' OTC debit card with no interest, since it contains only your money. Yes, there is a purchase fee and a reloading fee -- but you aint going to pay back $24,000 on $5000.

Most credit cards are quietly bank based, often through companies they created to get around the federal interest rate limitations. Many moons ago, each store sponsored it's own credit card and banks discovered that, when directly issuing their credit cards, the government capped the interest rate at around 20%. A new financial institution had to be developed to get beyond the limitations and up popped Visa, Mastercard and a host of others.

Now, as folks struggle to pay off major debt, up popped companies who buy the debt from the lien holders, basically for a lump sum in ready cash at a fraction of the listed balance. It's a win-win for them, because anything over the initial purchase cost is profit.

Though, the banks could simply offer the debtor the same small percentage of the total debt to pay off as the debt buying companies paid for it. As a bonus, to make more money, they could even offer to 'loan' distressed debtors the buyout price at a fixed, low interest rate.

So, that $500 buyout for $14,000 worth of debt, could become $500 of income over, say, a year, with 2% interest attached. Thusly, the bank would have a guaranteed income, make a smaller profit, have happier customers and help prevent a glut on the market of foreclosed homes and whatever.

Plus the bone picking, vultures who capitalize on the abject miseries of others in distress would loose a lot of business.

I'm no financial genius, but it seemed like common sense to me. Though, I could be wrong.
 
2012-11-09 12:55:12 PM
I spent all of 2011 saying they were dirty trust fund hippies with lattes and iPhones, and I'm not going to let go of that image no matter how often they prove that they actually give a sh*t about people and making the world a better place!
 
2012-11-09 01:01:10 PM

Rik01: $14,000 worth of debt for $500? Why didn't the lien holder just offer that to the debtor in the first place?

tl;dr


fear of having to deal with debt collectors keeps people honest. So, say you have 10 people who owe $10,000 each. 5 of them pay on time because they're honest people. 4 of them pay a little late once the original company threatens to sell the debt. 1 of them actually slacks off until the debt is sold. End result, company makes $90,500 instead of the $100,000 they should have gotten.

Now, if the company lets it be known that they're willing to settle for $500, they're going to have 5 honest people paying the full $10,000 each because they're honest and/or haven't heard how easy it is to settle, and 5 people who just pay the $500, so they make $52,500 on the deal, which is obviously a bit low.

Basically honest people are subsidizing dishonest people under the current system. If what OWS is doing takes off, companies are just going to raise the original price as well as the cost to buy the debt.
 
2012-11-09 02:26:34 PM
wow, now you're talking OWS.

"They make a 400% profit as they act like vultures on the poor and downtrodden." - Daily Kos remains incredibly stupid, however.
 
2012-11-09 02:26:50 PM
Isn't this the best case scenario for bankers and wall street? Kind of like rewarding them?
 
2012-11-09 02:29:11 PM

Rev. Skarekroe: I spent all of 2011 saying they were dirty trust fund hippies with lattes and iPhones, and I'm not going to let go of that image no matter how often they prove that they actually give a sh*t about people and making the world a better place!


Another step they could take toward making the world a better place would be to step off my lawn.
 
2012-11-09 02:29:48 PM

Ennuipoet: thomps: or by fighting another debtor in a backyard brawl that will be live-streamed on a pay-per-view channel.

I would completely do that to get rid of my Student Loans. EIP if anyone wants to take me up on that.


I'm with you.

Pain is temporary - student loan debt is practically forever...

/and not worth it
//3 BA's, 2 JD's and a MA between the wife and I. Temp jobs without benefits to pay them with...
 
2012-11-09 02:30:22 PM
This is a farking brilliant idea (in the short term, at least).
 
2012-11-09 02:30:51 PM

Kazan: this is a false assumption. You were told it was a false assumption when you originally made it during OWS protests, and it still hasn't sunk in that this is a false assumption.


It is because he is a moron. It is a waste of time to pretend he is capable of being anything but a moron.
 
Bf+
2012-11-09 02:30:52 PM
Just wait until reddit hears about this...
 
2012-11-09 02:31:40 PM

sprawl15: This is a farking brilliant idea (in the short term, at least).


it's a brilliant idea that can't even piss anyone off.
 
2012-11-09 02:32:17 PM
So, they're better Christians than many of the evangelicals?

I am jack's complete lack of surprise.
 
2012-11-09 02:33:47 PM
... this is a fantastic idea. Not the forgiving the debt part. I mean, yes, that's nice, but as far as a massive debt correction system... let some organization buy that debt, and offer to make it poof in exchange for some productive community work. Police up the trash along highways, fix sidewalks, fill in potholes, repaint ghastly looking buildings... all it needs is a catchy name.
 
2012-11-09 02:34:26 PM

skullkrusher: sprawl15: This is a farking brilliant idea (in the short term, at least).

it's a brilliant idea that can't even piss anyone off.


Yes it can. the people that feel that all those who go into debts are deadbeat layabouts who are just trying to weasel out of something (But it's OK for Corporations to walk away from contracts) will be offended and pissed.

I guarantee it.
 
2012-11-09 02:34:59 PM
I'm reminded of the Golems in Discworld, buying their people out of slavery.
 
2012-11-09 02:35:17 PM

Felgraf: skullkrusher: sprawl15: This is a farking brilliant idea (in the short term, at least).

it's a brilliant idea that can't even piss anyone off.

Yes it can. the people that feel that all those who go into debts are deadbeat layabouts who are just trying to weasel out of something (But it's OK for Corporations to walk away from contracts) will be offended and pissed.

I guarantee it.


hehe maybe
 
2012-11-09 02:36:41 PM

Ennuipoet: I would com


I'll take you on. 5'6, 150 lbs. Some martial arts training; scrappy.
 
2012-11-09 02:36:51 PM

quizzical: I'm reminded of the Golems in Discworld, buying their people out of slavery.


media-cache0.pinterest.com
Hotter example of someone buying people out of slavery
 
2012-11-09 02:39:29 PM
It's funny because you think this is a good idea that won't have major long term consequences that are a disaster for the very people you are trying to help.
 
2012-11-09 02:42:44 PM
Not to rain on their parade but isn't forgiven debt considered to be taxable income by the IRS?

Maybe an idea could be to set up debt-exchanges - A buys B's $10k debt while B buys A's $10k debt, both parties charge 0% interest and are really lazy about sending collection notices. Thoughts?
 
Bf+
2012-11-09 02:44:16 PM

randomjsa: It's funny because you think this is a good idea that won't have major long term consequences that are a disaster for the very people you are trying to help.


www.dtvusaforum.com
Please, tell us more of your predictions...
 
2012-11-09 02:44:52 PM
This is a stupid, stupid idea. It's like missionaries buying slaves in order to free them, all it does is increase demand. Ignorant morons.
 
2012-11-09 02:45:42 PM

The Evil That Lies In The Hearts Of Men: Not to rain on their parade but isn't forgiven debt considered to be taxable income by the IRS?


that's a good point - unless it was up to $1,000,000 on a primary residence, it is taxable
 
2012-11-09 02:51:12 PM

JesusJuice: It's like missionaries buying slaves in order to free them, all it does is increase demand.


You mean it might help stimulate lenders into opening their wallets again?

Good.
 
2012-11-09 02:51:44 PM
So I read the Slate article before commenting here. I haven't RTFT yet, but here's a couple of snags;

Some commentors claimed this would increase taxes since debt forgiveness is considered income?

My personal concern is this is debt that people have stopped paying on... How can we be sure that's individual debt and not corporate debt?

Some people might be concerned that this benefits banks especially (since the bad debts are removed from their balance sheets), but I don't necessarily care as long as individuals benefit.
 
2012-11-09 02:53:08 PM

Aidan: So I read the Slate article before commenting here. I haven't RTFT yet, but here's a couple of snags;

Some commentors claimed this would increase taxes since debt forgiveness is considered income?

My personal concern is this is debt that people have stopped paying on... How can we be sure that's individual debt and not corporate debt?

Some people might be concerned that this benefits banks especially (since the bad debts are removed from their balance sheets), but I don't necessarily care as long as individuals benefit.


the debt is already off the original lender's balance sheet. Lender sells the debt to a collection agency for pennies on the dollar and collection agency then attempts to collect for a few more pennies on the dollar than they paid. Either way the debt isn't the originator's problem anymore
 
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