Re: Guest Post: haha fuck you, sincerely, rolling jubilee

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I love you so much, Sifu.


Posted by: FL | Link to this comment | 11-14-13 10:57 AM
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You really need to crosspost this over at LGM.


Posted by: ajay | Link to this comment | 11-14-13 11:17 AM
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I feel vaguely guilty that I allowed my normal doubts about Loomis's contentions to be overridden in this case.

Thanks for updating, Sifu.


Posted by: Witt | Link to this comment | 11-14-13 11:24 AM
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So, buying and retiring debt is cool, but $15 million is a pittance, compared to the scope of the problem. How do you get that to scale?


Posted by: Spike | Link to this comment | 11-14-13 11:29 AM
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I thought the point was not to solve the problem, but as a publicity stunt to show that debt was being traded for pennies on the dollar, and so failing to pay it wasn't dishonest or immoral.


Posted by: LizardBreath | Link to this comment | 11-14-13 11:35 AM
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A publicity stunt is well and good, but what I'd really like to do is figure out how to solve the underlying problem.

I mean, when companies take a loss on debt, they write that off and it helps them save money on their taxes, right? But it seems like, if they are selling debt at 10 cents on the dollar, for example, they only get to get the tax credit for 90% of the value. How do you get them to write off that additional 10% as well, instead of selling it, so that they aren't leaving some poor schmuck with 100% of the debt in his liability column?


Posted by: Spike | Link to this comment | 11-14-13 11:43 AM
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Or maybe what needs to happen is that, every time a debt gets sold, the indebted person needs to be notified of the price it was sold at.


Posted by: Spike | Link to this comment | 11-14-13 11:49 AM
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I don't even see columns. A problem in parking garages.


Posted by: Moby Hick | Link to this comment | 11-14-13 11:49 AM
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I seem to remember that when this effort was not being pooh-poohed as illegal, or pooh-poohed as inept, it was being deplored by those who said it would be worse than nothing because the people whose debt was forgiven would suddenly have to pay a gift tax on the entire amount. What happened to that?


Posted by: Cryptic ned | Link to this comment | 11-14-13 11:53 AM
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7 would be a wonderful way to kill certain types of lending while innocently claiming to be making a minor reform.


Posted by: Moby Hick | Link to this comment | 11-14-13 12:02 PM
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4,5: Judging by the end of the Guardian article, one key outcome is simply publicizing how little the debts actually get sold for -- and thus giving debtors more confidence to push back against debt collectors.

I thought I was reasonably well informed about this stuff, and even I was shocked at how paltry the amounts were.


Posted by: Witt | Link to this comment | 11-14-13 12:03 PM
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You know what the world needs? A national I Was Wrong day. It could start on blogs. Everybody looks back at the posts they've written over the previous year, and does a public accounting of a few cases where they screwed up.

You don't get amnesty (that is, we'll all still remember that you believed in the Iraq War) but you'll get credit for allowing reality to change your mind.

I'd pay real money for journalists and pundits who did that.


Posted by: Witt | Link to this comment | 11-14-13 12:06 PM
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9- They claim to have consulted with the "#1 tax attorney in America" who said that no gift tax would be owed. Unfortunately the title "#1 tax attorney in America" sounds like something you'd find on a bench at a bus stop.


Posted by: SP | Link to this comment | 11-14-13 12:23 PM
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no gift tax would be owed

If that's the case, how are rich people not already using this loophole to cheat on their taxes?


Posted by: Spike | Link to this comment | 11-14-13 12:26 PM
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already using this loophole one weird trick to cheat on their taxes?


Posted by: LizardBreath | Link to this comment | 11-14-13 12:35 PM
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Couldn't they just sell the people their debt for a penny?


Posted by: Natilo Paennim | Link to this comment | 11-14-13 12:39 PM
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Creditors adhere fervently to the infallible doctrine of Moral Hazard (applied to everyone but themselves).


Posted by: Bave | Link to this comment | 11-14-13 12:48 PM
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So the Unfoggedatariat loves Sifu and Waifu, despises and holds Loomis and Yves Smith, FDL and people like them in complete contempt, and is indifferent to Lemieux and Heavy Metal Farley.

Got it.

I read the Smith, and wrong it may be, but deserving of much more respect than "ha ha fuck you sincerely"

Is anybody going to read the Smith? Was it really closet Republicanism? Who the fuck are you people?


Posted by: bob mcmanus | Link to this comment | 11-14-13 1:03 PM
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9 et al.: Presumably the individual debt forgiveness gifts are under the threshold amount ($14k I think?) and thus not subject to gift tax? I have no idea but that's my guess (and the numbers in the linked article work out to an average gift of ~$5k).


Posted by: potchkeh | Link to this comment | 11-14-13 1:04 PM
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How does knowing your debt was sold for pennies on the dollar help you in negotiations with collection agencies? I mean the debt has already been bought on the cheap and it's the collection agency's job to maximize profit in any way possible. And of you don't pay or settle, regardless of what the debt was sold for you're still facing the same credit history type problems you'd face anyway. Maybe it helps to break the sense of debt as a moral obligation but I don't see it helping actual debtors in negotiations with creditors very much.


Posted by: Robert Halford | Link to this comment | 11-14-13 1:06 PM
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"JL" at the end of the Loomis thread

An update: @StrikeDebt responded to my own tweet with the same message that they're preparing media material and planning to release everything on November 15, and that they didn't release numbers in something like a quarterly report because then the November 15 release would make less of a splash.

I thanked them for responding, let them know (they have probably noticed this on their own) that a lot of people are unhappy with them because of the Smith article, and that some people assumed that they'd just stopped functioning and the pile of money was sitting around with nobody responsible for doing anything with it. I pointed out that people thinking they are incompetent or committing malfeasance undermines their ability to get their message out just as releasing partial info before they're ready would (I would, in fact, say it's a lot worse, but, character limits) and suggested that in the future it might benefit them to at least send out more frequent reports explaining what they are doing, even if the reports don't have numbers for strategic reasons.

This is how decent sane people behave.


Posted by: bob mcmanus | Link to this comment | 11-14-13 1:09 PM
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20: from my small involvement with the anti-foreclosure movement, I've seen that it makes a huge difference when people learn about how creditors view debt, which is very different from how normal people in debt view debt. It really decreases the paralyzing shame of being in foreclosure, for one thing. But it also gets people thinking about strategies for changing the situation. Organizing and exerting group pressure on the bank, for example, to sell the foreclosed home to a third party who will sell or lease it to the former homeowner. Or getting politicians to exercise eminent domain over the mortgage debt. It's true that an individual who is negotiating with a bank or a collection agency isn't necessarily going to have a lot more power if they know how much the debt is being sold for, but that's not the end of the story.


Posted by: Bave | Link to this comment | 11-14-13 1:23 PM
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Maybe it helps to break the sense of debt as a moral obligation but I don't see it helping actual debtors in negotiations with creditors very much.

You make is sound as if that's insignificant. It's not. I believe E. Warren has done a lot of research on the percentage of people that bankruptcy would clearly help who don't declare bankruptcy, for example. Removing the moral stigma helps there. Beyond that, even in terms of actual one-on-one negotiations outside of bankruptcy, it's extraordinarily helpful to know that you can tell a debt collector that you'll pay $0.20 on the dollar in exchange for them taking no further enforcement actions against you and discharging the debt, and they're likely to accept (since they'll likely have made 4x what they bought it for, if not more). Especially if you convince them that the alternative is you filing bankruptcy and them getting probably nothing. Most people aren't even aware that sort of thing is a possibility.


Posted by: urple | Link to this comment | 11-14-13 1:32 PM
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I dunno. I had an unpaid bill that I refused to pay, basically out of pique with a doctor who I thought had tried to fraudulently bill me, and my experience is that collection agencies aren't really in the negotiation business, they're in the hounding people to pay their debts or threatening credit consequences business. Also I don't think the collection agencies are generally the debt holders; they're third party servicers hired by the vulture companies. Anyhow, I don't think for consumer debt obligations (mortgages are different, but of course mortgages are also secured) there's much practical room for the kind of negotiation you're talking about. The kinds of things Bave mentions in 22 are important and politically very significant, though.


Posted by: Robert Halford | Link to this comment | 11-14-13 1:37 PM
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20: Right. The collection agency isn't buying $100 of debt for $1 because they think they can collect $2. They're doing it because they think they have 2% chance of collecting $100.

Still, I don't think many people who don't work with statistics all the time think that way. If knowing the debt was bought for pennies on the dollar emboldens them, then it's good .


Posted by: Moby Hick | Link to this comment | 11-14-13 1:39 PM
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20: Dude, urple is being much nicer than I feel. I think your professional experience is severely warping your understanding here.

Here's the baseline issue: Many people feel powerless to negotiate.

Just grasping the concept that debt doesn't actually have some inherent, divinely-ordained "value" but is rather a construct of human decisions and as such CAN BE CHANGED is immensely freeing and stunning to many people.

From my discussions over the years with lower-middle-class to middle-class colleagues, it's very clear to me that many people think of Debt as A Number. Period. Either they can pay it or they can't, and if they can't, they often have tremendously sophisticated coping strategies for bobbing and weaving and juggling to deal with the consequences.

But just the IDEA of walking into a hospital and saying you want to negotiate a payment is mindblowing to people. As in: "They LET you do that?"



Posted by: Witt | Link to this comment | 11-14-13 1:40 PM
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Witt, chill out. You have no earthly idea what my professional experience is and I don't see why I should feel particularly nicely towards you, either, but thanks for the haughtiness. The point I'm making is not about "feeling empowered to negotiate." That's fine and good. But the point is that credit collection agencies aren't particularly in the negotiation business -- for most consumer debt, regardless of whether or not you feel "empowered" to negotiate, my belief is that there's little negotiation to be done. It doesn't matter if you feel that your consumer debt is something that CAN BE CHANGED through negotiations with a debt collector if it can't be. Mortgages are different, but as secured debt they're treated differently.


Posted by: Robert Halford | Link to this comment | 11-14-13 1:46 PM
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Why doesn't Occupy cut out the middleman and form their own debt collection agency, buy the debt at a lower rate than existing collectors would demand to discharge, and accept $0.01 from the debtors to discharge? HUH? WHY DON'T THEY SAVE MORE MONEY?????


Posted by: SP | Link to this comment | 11-14-13 1:53 PM
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The collection agency isn't buying $100 of debt for $1 because they think they can collect $2. They're doing it because they think they have 2% chance of collecting $100.

Right, but that's also why if you offer them a 100% chance of collecting $20, they will take it.

But the point is that credit collection agencies aren't particularly in the negotiation business -- for most consumer debt, regardless of whether or not you feel "empowered" to negotiate, my belief is that there's little negotiation to be done.

I agree they don't approach people as if they were in the negotiation business, because why would they? They're in a much stronger position if the other side doesn't even realize there is any room for negotiation. If you offer to pay less because you can't afford to pay the full amount, they'll take your offer, but will then continue to hound you for the balance. What most poeple don't know is that, alternatively, if you offer to offer to pay less on the condition that they forgive the balance, they're also quite likely to take that offer.


Posted by: urple | Link to this comment | 11-14-13 2:11 PM
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Here's the baseline issue: Many people feel powerless to negotiate.

Trying to step into the middle here, I would agree with Witt and urple that "chang[ing] the psychology of the debtor" is a valuable goal. My question would just be that I don't know how much they would have to do to achieve that. I would assume that most people who have heard of Rolling Jubilee are people who would already have been likely to think of debt as something that can be negotiated.


Posted by: NickS | Link to this comment | 11-14-13 2:16 PM
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I had an unpaid bill that I refused to pay, basically out of pique with a doctor who I thought had tried to fraudulently bill me, and my experience is that collection agencies aren't really in the negotiation business, they're in the hounding people to pay their debts or threatening credit consequences business.

It sounds like you're mistaking "they're not in the negotiations business" with "they have all the leverage in this negotiation so they aren't budging". When they know they're dealing with someone with good credit (so threatening credit consequences is a serious issue) and significant assets (so declaring bankruptcy isn't a real possibility--especially not over a minor medical bill), they have enough leverage that they know they can probably get you to pay up in full. As it sounds like they did.

You're not the typical debt collection target.


Posted by: urple | Link to this comment | 11-14-13 2:19 PM
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If you're buying medical debts at cents in the dollar, a licenced professional who is refusing to pay out of cussedness is the kind of gold nugget that you're panning through all the dispiriting hardship cases for. You bet that one would have been given the special treatment by the collections team. Most of the rest, it's one try and then give up (usually selling the debt on to another form so the cycle of irritation can renew)

As an industry, it's not renowned for its geniuses or Albert Schweitzer characters.


Posted by: dsquared | Link to this comment | 11-14-13 2:29 PM
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I agree they don't approach people as if they were in the negotiation business, because why would they? They're in a much stronger position if the other side doesn't even realize there is any room for negotiation. If you offer to pay less because you can't afford to pay the full amount, they'll take your offer, but will then continue to hound you for the balance. What most poeple don't know is that, alternatively, if you offer to offer to pay less on the condition that they forgive the balance, they're also quite likely to take that offer.

Urple said it all much better than I could have. Apologies for the snippiness, Halford. I'll still buy your LA book.


Posted by: Witt | Link to this comment | 11-14-13 2:49 PM
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31 is certainly right. But --

What most poeple don't know is that, alternatively, if you offer to offer to pay less on the condition that they forgive the balance, they're also quite likely to take that offer.

Right, but that's also why if you offer them a 100% chance of collecting $20, they will take it.

Is this actually true? I do not believe that it is, as a practical matter, at least for most forms of consumer debt. Indeed, I thought that most collection agency people were forbidden from negotiating payment totals. I agree that, for medical procedures in particular, you can do well by negotiating up front before the debt is in collections.


Posted by: Robert Halford | Link to this comment | 11-14-13 3:04 PM
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34: I've successfully negotiated down what was essentially bad consumer-level* debt for a small non-profit. Probably could have done better, actually, as everyone agreed pretty much right away.

*I.e. just stuff that an individual might have accrued, no fancy bank loans or whatever.


Posted by: Natilo Paennim | Link to this comment | 11-14-13 3:06 PM
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Indeed, I thought that most collection agency people were forbidden from negotiating payment totals.

I'm really not sure where you got that impression.


Posted by: urple | Link to this comment | 11-14-13 3:09 PM
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The first result from your link says (from Nolo Press):


A collection agency has my debt. Can I negotiate with the original creditor?
Ask the creditor to take your debt back from the collector, so you can negotiate with the creditor.


Posted by: Robert Halford | Link to this comment | 11-14-13 3:11 PM
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Or, further:

If you are ready to negotiate on a debt, you will probably be better off talking to the creditor, not a collection agency. This is because the creditor has more discretion and flexibility in negotiating with you, and may see you as a former and possibly future customer.
Ask the Creditor to Take the Debt Back
If you want to negotiate directly with the creditor, ask the collection agency for the phone number of the collections department of the original creditor. Then call the creditor and ask if you can negotiate on the debt directly with the creditor.
Ideally, the creditor will immediately negotiate with you, and you'll work something out. Unfortunately, that's rare. It's more likely that the creditor will only take the debt back if you negotiate with the collection agency, establish a repayment plan, and make two or three payments under the plan. If this happens, the creditor may eventually give you a new line of credit, helping you rebuild your credit.


Posted by: Robert Halford | Link to this comment | 11-14-13 3:11 PM
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Is this actually true?

As someone said above (and as others have, while I read through the thread, probably reiterated by now): no. Or at least almost certainly not in a case like yours. If the indebted party has good credit and lots of assets, that person has almost no leverage with debt collectors. Counter-intuitively, the more destitute the indebted party is, the more leverage that person has to negotiate.


Posted by: Von Wafer | Link to this comment | 11-14-13 3:13 PM
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Debt collection is basically the same as blackmail. The debtor perceives himself to owe an infinite amount. The only way out of it is murder or suicide, now that you can't run away and start a new life.

"If you owe $40,000, you can pay $5,000 now, and this time next year you'll only owe $40,000."


Posted by: Cryptic ned | Link to this comment | 11-14-13 3:14 PM
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37: If you actually read the article you'll see that they give good reasons for that advice, which do not include "the collector won't be able to negotiate with you."

Regardless, though, you're clearly talking about a collection agency that is hired by someone who hasn't yet sold the debt. (That's what that Nolo article is referring to.) Basically, that's just an outsourced company collections dept. So I'm sure they do typically have some sort of limits on their ability to negotiate settlements (although I'm positive they will almost always still have significant leeway to negotiate). Everyone else in this thread is talking about debts that have actually been sold to collectors, which now own them and are trying to collect on their own behalf.


Posted by: urple | Link to this comment | 11-14-13 3:17 PM
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41 without seeing 38, so sorry for the snark.


Posted by: urple | Link to this comment | 11-14-13 3:19 PM
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If the indebted party has good credit and lots of assets, that person has almost no leverage with debt collectors.

It's true that your leverage is much less if you actually have assets, but bear in mind that collectors are rational business actors (most of the time). If your debt is purchased for $2 and extracting $100 from you is going to be a big fight but extracting $20 can happen easily right now, you can very likely convince them to take that deal. You have to be willing/able to take a credit hit in the meantime (although you can require that they clean that up as part of the settlement). Unless it's a very large debt, actually taking you to court to seek a judgment is absolutely not cost effective for them.


Posted by: urple | Link to this comment | 11-14-13 3:27 PM
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Basically, that's just an outsourced company collections dept.

Yes, but isn't this who everyone, including the vultures, farms out the collection to. What I suspect is that the people who've bought the debt at $.05/dollar simply hand over the books to the same kinds of collection firms, which in turn don't have either the time or authorization to engage in negotiation, because that way lies disaster.


Posted by: Robert Halford | Link to this comment | 11-14-13 3:28 PM
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If your debt is purchased for $2 and extracting $100 from you is going to be a big fight but extracting $20 can happen easily right now, you can very likely convince them to take that deal

Again, I don't really believe this as a practical matter, at least for ordinary consumer debt.


Posted by: Robert Halford | Link to this comment | 11-14-13 3:31 PM
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Ok.


Posted by: urple | Link to this comment | 11-14-13 3:33 PM
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43: I'm willing to believe you, because it sounds like you know what you're talking about. But I'm also inclined to think that a) it helps if the indebted party is a lawyer who knows the relevant law; b) the indebted party views the difference between the total debt and negotiated payment as more significant than the amount of time it would take to birddog whether the credit problems were cleared up, as per the agreement you suggest; c) adding a and b together means that for all practical purposes what I said was right. Regardless, if you'd like to represent me next time I get sick of paying my debts -- which are considerable -- that would be awesome. I'll be happy to pay you in whatever currency works best for you: old eggs, copper pipe, Confederate regalia.


Posted by: Von Wafer | Link to this comment | 11-14-13 3:40 PM
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I mean, I could be wrong. But the only people I've known (Im thinking of 3 cases, all folks pretty close to insolvency) who were able to get out of substantial consumer debt with cutting down principal payments had to do so through either the bankruptcy courts or some sort of debt consolidation service. Individual negotiations with collection agencies went nowhere.


Posted by: Robert Halford | Link to this comment | 11-14-13 3:45 PM
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it helps if the indebted party is a lawyer who knows the relevant law

This, absolutely. Even moreso if the indebted party is the friend of a lawyer who is willing to work for free on his or her behalf.


Posted by: urple | Link to this comment | 11-14-13 3:47 PM
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(Although really being a lawyer is not necessary. Any well informed debtor can fight this fight on his or her own behalf. But there are very few well informed debtors.)


Posted by: urple | Link to this comment | 11-14-13 3:50 PM
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49: when you work for me, you'll never work for free. Like I said, I'll pay you in the coin of the realm. Assuming the realm is Urpleistan.


Posted by: Von Wafer | Link to this comment | 11-14-13 3:50 PM
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Another point worth noting is that 99% of debt collectors violate the law in their debt collection practices. Documenting this and threatening them can help the negotiations quite a bit.


Posted by: urple | Link to this comment | 11-14-13 3:52 PM
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I feel like 49 and especially 52 are actually supporting my argument here.


Posted by: Robert Halford | Link to this comment | 11-14-13 3:55 PM
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53: I guess I must have been misunderstanding your argument.


Posted by: urple | Link to this comment | 11-14-13 4:00 PM
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If it takes intensive lawyering and threats concerning various debt collection acts to get these guys to negotiate, they're probably not "rational businessmen" interested in an ongoin negotiation for you to pay off at $.20 on the dollar.


Posted by: Robert Halford | Link to this comment | 11-14-13 4:05 PM
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it takes intensive lawyering and threats concerning various debt collection acts a debtor who is aware of his or her legal rights to get these guys to negotiate

Fixed.


Posted by: urple | Link to this comment | 11-14-13 4:08 PM
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I think Halford is right. Front line debt collectors are not rational businessmen, they are harried customer services representatives who have to make a quota, and management generally doesn't trust them with the leeway to negotiate off-script.


Posted by: Spike | Link to this comment | 11-14-13 4:13 PM
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I mean, sure, they could pass you on up the management chain to someone with a bit more flexibility, but then they have to split their commission with the boss. Much less trouble to keep harassing you with the phone calls.


Posted by: Spike | Link to this comment | 11-14-13 4:16 PM
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Halford, did you see the Dinovember FB post from today?


Posted by: Natilo Paennim | Link to this comment | 11-14-13 4:31 PM
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To the OP: I approve of this.

Tangentially related, someone's perfectly matched The Secret-style bullshit to consumer demographic. From my local event listings:

Are you a spiritual or creative person, healer or lightworker who has a challenging relationship with money? Do you have trouble making ends meet each month, find yourself juggling which bills to pay, need to negotiate payments with creditors, find yourself paying minimum balances on credit cards, panic when unexpected medical or car expenses pop up unexpectedly, find yourself worrying or losing sleep because of money issues, or wonder how you'll manage during the upcoming holidays? Participants will learn how to release old, negative thoughts about money and prosperity, create new relationships with money through powerful guided meditations, learn practical activations to use daily, create a real vision of abundance and prosperity in life, and feel supported in this new relationship with abundance. Admission is $75.

Posted by: Minivet | Link to this comment | 11-14-13 5:20 PM
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And, cripes, have I been living in Marin or Eugene without realizing it? I would have posted this instead if I'd seen it first:

What if you treated money as though it were a lover you knew the curves of, but did not take for granted -- as though you were excited and turned on by how you saved, invested, and spent money? This day-long retreat invokes sensuality, intimacy, and depth in creating and manifesting financial will and living life on purpose. ... This event is for change makers, radicals, artists, witches, shaman, healers, holistic practitioners and other people who know that the way less traveled is the path for them. The cost of this workshop is $57.

Posted by: Minivet | Link to this comment | 11-14-13 5:26 PM
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So, buying and retiring debt is cool, but $15 million is a pittance, compared to the scope of the problem.

My gut response is simply: it's not a pittance to anyone whose debt was paid. Is this too rosy? It'd be the first time I'd been the glass-half-full-haver. But really, was the point of the program to abolish all debt or help some people?

I wish they'd send me $20 to send my laundry to the wash 'n fold. I just don't feel like doing my laundry. It's a big problem people should know about.


Posted by: Mister Smearcase | Link to this comment | 11-14-13 5:29 PM
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I had an unpaid bill that I refused to pay, basically out of pique

I have done that twice. The first one was Sprint, I don't remember quite why other than pique, and eventually I had to pay it on the doubtless good advice of the guy who was preapproving me for a mortgage loan. The second one was Verizon basically 100% because I felt like they were being dicks, as far as I can remember, and eventually I said to someone at a collection agency "I'm just simply never going to pay this" and they said "it'll effect your credit" and I said "I own my home and I don't fucking care." I later paid it, but it was satisfying to say it.


Posted by: Mister Smearcase | Link to this comment | 11-14-13 5:43 PM
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I have to say I'm a little miffed that Halford, Von Wafer and Spike are just sticking with "I don't believe you", since every single one of the first 30 google hits from the link in 36 says more or less exactly the same thing I'm saying.


Posted by: urple | Link to this comment | 11-14-13 6:05 PM
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E.g., How to Negotiate Settlements With Collection Agencies

Unsecured debt, such as credit card and medical debt, that goes unpaid for long enough is likely to end up owned by a collection agency. Collection agencies purchase old debts for pennies on the dollar and then attempt to collect the full amount from the debtor -- usually with added fees. Fortunately, collection agencies are often willing to settle debts for much less than the original creditor. Because collection agencies purchase debt so cheaply, they still make a profit with a settlement. This is not the case with original creditors, for whom accepting a settlement means taking a loss.
Instructions
1 Check your state's statute of limitations (SOL) to see if the debt held by the collection agency still falls within the time frame for a lawsuit. The statute of limitations dictates how long a debt is legally enforceable. Although a collection agency may still sue for a debt on which the SOL has expired, presenting the expiration as evidence in court will result in suit being dismissed. If your only motivation for paying a collection agency is fear of a lawsuit, knowing the SOL for your state is vital.
2 Budget ahead of time to be able to offer a lump-sum payment. It's your single greatest bargaining tool when negotiating for a settlement. Debt collectors each have a quota that must be met every month. Paying in a lump sum helps the debt collector meet his quota. In return, you are more likely to pay a lower settlement and have your requests honored.
3 Call the collection agency on one of the last days of the month. This is when the debt collectors will be most eager to make a deal with you since they do not have much time left in which to meet monthly quotas. Start your negotiations lower than the amount of money you have to pay. Debt collectors are trained never to accept your first offer and to talk you up as high as they can. Beginning negotiations as low as possible allows the debt collector to come away from the transaction feeling as if he won, and allows you to come away paying no more than what you have.
4 Insist that the debt collector remove all negative information from your credit report in return for your lump sum payment. If this does not occur, your credit score will go down after your settlement is paid. The reason for this is because the more recent a debt is, the greater the impact that debt has on your credit score. By paying the settlement, you are bringing the negative account current and it will count for more than it did when you were not making payments. Collection agencies do not like to remove their negative information, but a debt collector who wants to meet his quota may override this policy for you.
5 Ask that the remaining balance of the debt not be sold to another collection agency. A common practice among debt collectors is to negotiate a settlement with a consumer and sell the unpaid balance. The consumer is then faced with yet another collection agency attempting to collect for the same debt. This practice may be unethical, but unless a written agreement exists between both parties prohibiting the practice, it is perfectly legal.
6 Get your settlement agreement in writing before you make any payments on the account. Also make certain that the agreement contains a signature. Agreements with signatures are harder to contest in court. Have the settlement agreement faxed to you to adhere to any time constraints the debt collector is working under to meet his quota. If you fail to get your agreement in writing, you can be certain that your settlement will quickly be "forgotten".
Tips & Warnings
Be nice. A debt collector is more likely to adhere to your terms if those terms are laid out politely.
Always pay via money order. Never allow a collection agency to draft payments from your bank account. Giving a collection agency a check or permission to create a draft gives it access to your bank account -- and it can easily draft the entire amount owed rather than the settlement amount.

Posted by: urple | Link to this comment | 11-14-13 6:11 PM
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No, they don't. I mean, I haven't read every one, but I skimmed, and they basically say "here are some difficult things you can do, that aren't likely to work, that probably won't get a collections agency (which is likely basically not very interested in negotiating with you) to possibly negotiate with you." And you've said yourself that you basically have to figure out ways in which they've acted illegally in order to get them to the table. I'm not saying that such negotiation is impossible always and for everyone. What I am saying is that they're not going around happy to accept a firm $20 payment on the debt they bought for $5 and so if consumers only knew how cheaply their debt had been sold they could just negotiate away their consumer debt issues.


Posted by: Robert Halford | Link to this comment | 11-14-13 6:15 PM
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66 before seeing 65 (that was one I hadn't read) but I don't think the consensus is that such negotiations are very likely. Note that point 3 is basically Spike's point about quotas.


Posted by: Robert Halford | Link to this comment | 11-14-13 6:17 PM
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Okay, I blockquoted one entire article. I could blockquote a dozen others, but that seems like it would clog up the blog. Can you provide a link to one that say what you're saying in 66?


Posted by: urple | Link to this comment | 11-14-13 6:21 PM
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I already did.


Posted by: Robert Halford | Link to this comment | 11-14-13 6:23 PM
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Being able to negotiate with a debt collector like that seems like it would require a specific set of social skills that a lot of people do not possess. I get anxious when I have to call to order pizza.... I don't think I could handle talking down a debt.


Posted by: Spike | Link to this comment | 11-14-13 6:31 PM
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64: don't be miffed at me. I said I did believe you. And then you agreed with me that certain conditions need to be in place for the negotiations to have much chance of success. That seems like comity, no?


Posted by: Von Wafer | Link to this comment | 11-14-13 6:35 PM
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Halford, the article you (selectively) quoted, which incidentally doesn't say anything like 66, is an answer to the question: "A collection agency has my debt. Can I negotiate with the original creditor?" That's obviously a different question. However, in that very article is a link to the Nolo article: Negotiating With Collectors on Unsecured Debts. Do I need to blockquote that? Here are the first few helpful paragraphs:

Before you start negotiations, understand these key points:
The collection agency didn't lend you the money or extend you credit initially. It doesn't care if you owe $250 or $2,500. It just wants to maximize its return, which may be a percentage of what it collects or whatever it can collect over the pennies on the dollar it paid for the debt.
Time is money. Every time the collection agency writes or calls you, it spends money. The agency has a strong interest in getting you to pay as much as you can as fast as possible. It has less interest in collecting 100% over five years.

I can keep quoting.


Posted by: urple | Link to this comment | 11-14-13 6:36 PM
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72 to 69.


Posted by: urple | Link to this comment | 11-14-13 6:37 PM
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I had an unpaid bill that I refused to pay, basically out of pique

I'm about ten months into this move with my dentist bill (which I think I posted about back in the spring). Trouble is my wife is serving as Associate In Home Collections Unpaid Intern (and right now it is still with the dentist office, probably because we've been patients for 25+ years and my wife and son go and pay their bills with them on time like fucking sheep). My latest negotiation with the spouse is that I get to say, "Fine here's the money, but it's the last you'll ever see from the Stormcrows!" But then it would be all on me to find an acceptable replacement dentist my wife reminds me with surprisingly vehement skepticism.


Posted by: JP Stormcrow | Link to this comment | 11-14-13 6:39 PM
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71: sorry, but at this point you're guilty by association.


Posted by: urple | Link to this comment | 11-14-13 6:41 PM
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Fair enough. Between 75 and I can keep quoting, I'm pretty sure you're bob. Take that! (Since you're miffed, I want to be clear that I'm kidding and have no dog in this fight, horse in this race, turtle in this pond.)


Posted by: Von Wafer | Link to this comment | 11-14-13 6:43 PM
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Still don't really believe this works very often in individual negotiations.


Posted by: Robert Halford | Link to this comment | 11-14-13 6:43 PM
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How often is it attempted?


Posted by: Sifu Tweety | Link to this comment | 11-14-13 6:45 PM
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Yeah, 65 does not seem encouraging at all. "Collection agencies do not like to remove their negative information, but a debt collector who wants to meet his quota may override this policy for you."?

I'm just imagining my inept attempt to negotiate with people like this:

me: I'll pay you $X, if you remove the negative information from my credit history.
them: How about you pay me $10X and I don't do that?
me: Um... no?
them: Yes.
me: Well, shit. Okay. I guess...?


Posted by: essear | Link to this comment | 11-14-13 6:46 PM
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A couple years ago I got a notice from some collection agency for around $300. It listed the source of the debt as another collection agency, and it listed a date that was many years back. Then I started getting robocalls from a number that seemed to be the same agency. I honestly couldn't think of what it might be for, and there was nothing on my credit report that helped. So I sent them a verification letter under the Fair Debt Collection Practices Act and threatened them under federal and state law if they put anything on my credit report. The calls stopped and I haven't heard anything about it again. Then $5, of course.


Posted by: Bave | Link to this comment | 11-14-13 6:48 PM
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See, Bave is much more effective than the hypothetical negotiator in my head.


Posted by: essear | Link to this comment | 11-14-13 6:49 PM
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Maybe I should practice on all the goddamn conferences that have started charging like $600 fees to every participant so they can serve lukewarm coffee three times a day.


Posted by: essear | Link to this comment | 11-14-13 6:51 PM
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Look, these kinds of negotiations really depend on how much leverage people have. Someone who doesn't care about their credit rating and doesn't owe enough that it's worth taking them to court has quite a bit of leverage. Sometimes the last line in essear's dialogue is

me: (hangs up) (cancels phone number) (gets prepaid phone) (moves)


Posted by: Bave | Link to this comment | 11-14-13 6:51 PM
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My strategy has always been to ignore debt collectors and/or refuse to take their calls. Oddly, my credit is fine.


Posted by: Sifu Tweety | Link to this comment | 11-14-13 6:52 PM
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Clearly there's a market need for a debt-collection-negotiation practice service. I pretend I'm a debt collector and call you incessantly; you tell me you'll give me $0.15 on the dollar and not a penny more. Eventually, I'll give in, and you'll feel empowered.

Obviously, since you've got lousy credit, I'll need my payment up front.


Posted by: urple | Link to this comment | 11-14-13 7:00 PM
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Wait a minute... is that what those "credit counselors" do?


Posted by: urple | Link to this comment | 11-14-13 7:01 PM
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Ideally, one could just refer one's debt collector to ones debt negotiation service.


Posted by: Spike | Link to this comment | 11-14-13 7:02 PM
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86: I always assumed they helped you figure out how to make cat food palatable so you can make some asshole who bought your debt whole.


Posted by: Sifu Tweety | Link to this comment | 11-14-13 7:03 PM
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87: if you give a man a fish...


Posted by: urple | Link to this comment | 11-14-13 7:03 PM
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I'm really enjoying this.


Posted by: Robert Halford | Link to this comment | 11-14-13 7:03 PM
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Like, if they can pay someone ten cents-on-the-dollar to assume my debt, why can I pay someone twenty cents-on-the-dollar to assume my liability, and let those two sort it out?


Posted by: Spike | Link to this comment | 11-14-13 7:05 PM
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I love the idea in 91.


Posted by: urple | Link to this comment | 11-14-13 7:08 PM
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Really, there should be debtor's unions that can negotiate collectively. Haha that sounds super politically possible.


Posted by: Sifu Tweety | Link to this comment | 11-14-13 7:08 PM
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93: You could cause a lot of trouble with industrial actions though. Everybody could pay one day late. Everyone could pay on the same day. Everyone could sign up for electronic payments one month, then discontinue them the next. Everyone could pay one penny over or under, or pay with a regular check and a money order. Everyone could transfer balances away from one issuer, wait a couple of months and do it again. Wouldn't even need to be everyone for most of these -- imagine how much havoc you could cause the banking system just by reducing one issuer's assets by 10 or 25% in a week. Markets would freak the fuck out. Shit, just bumping up the number of applications by 20% one month would snarl things up pretty bad. A paper DDOS attack, basically. None of it illegal, either.


Posted by: Natilo Paennim | Link to this comment | 11-14-13 7:30 PM
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70: Here is some inspiration for you.

http://www.youtube.com/watch?v=64cj7Q9c_YA


Posted by: Natilo Paennim | Link to this comment | 11-14-13 7:35 PM
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I will never be as cool as Giovanni Ribisi.


Posted by: Spike | Link to this comment | 11-14-13 7:39 PM
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None of it illegal, either

THIS IS THE CENTRAL SCRUTINIZER. IT IS MY RESPONSIBILITY TO ENFORCE ALL THE LAWS THAT HAVEN'T BEEN PASSED YET.


Posted by: Opinionated Frank Zappa | Link to this comment | 11-14-13 7:39 PM
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12: You know what the world needs? A national I Was Wrong day. It could start on blogs. Everybody looks back at the posts they've written over the previous year, and does a public accounting of a few cases where they screwed up.

This is a terrific idea, and one I could get behind. No need to limit it to posts written over the past year, and no need to limit it to blogs.

I'll be interested to see whether Erik Loomis or Yves Smith have anything to say regarding Rolling Thunder now.


Posted by: parsimon | Link to this comment | 11-14-13 7:45 PM
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Oh sorry. Rolling Jubilee, that is.


Posted by: parsimon | Link to this comment | 11-14-13 7:46 PM
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Rolling Thunder, Rolling Jubilee, it's only a couple thousand kilotons difference.


Posted by: Natilo Paennim | Link to this comment | 11-14-13 7:59 PM
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I will never be as cool as Giovanni Ribisi.

He's a Scientologist. I bet you're already cooler.


Posted by: beamish | Link to this comment | 11-14-13 8:00 PM
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100: Hey, I have no idea why there was any Rolling in it at all. Shoulda been called Occupy Jubilee, so people would know what it was.


Posted by: parsimon | Link to this comment | 11-14-13 8:11 PM
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94: I don't even get how those are supposed to work if everybody in the world did them. "Our computers are breaking because they are storing -.01 instead of 0. Surrender. We must surrender."

I see how everybody transferring balances away from one guy could work, but it would be really hard to get everybody to play along because some people don't have other credit sources to switch to and other people don't want to lose their miles on Delta or 2% introductory rate or whatever..


Posted by: Moby Hick | Link to this comment | 11-14-13 8:32 PM
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Do federal judges still have the ability to enjoin random things under the Sherman Act as "in restraint of trade"?


Posted by: Minivet | Link to this comment | 11-14-13 10:28 PM
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. Most of the rest, it's one try and then give up (usually selling the debt on to another form so the cycle of irritation can renew)

Irritation is right; I keep getting bills and threatening lettres for somebody who hasn't lived at my address for at least a decade or so. Informing the debt collectors is pointless, every couple of months a new one tries it on.


Posted by: Martin Wisse | Link to this comment | 11-15-13 2:00 AM
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12. It could be the anniversary of yesterday, when the POTUS publicly admitted that he had fucked up the roll out of Obamacare. Mrs y turned to me and asked what was the last time I'd heard a senior politician eat shit in public like that, and after some thought, the answer was never.


Posted by: chris y | Link to this comment | 11-15-13 2:40 AM
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103: The penny one might not be the best choice, although it would still screw up their projections. Balance transfers, simultaneous payments and increased applications would certainly mess things up though. At the other end of each of those processes is a fairly small group of people monitoring reports, addressing technical problems, etc. Just idling them for a month by making the simultaneous payments early would be somewhat disruptive -- after 9/11 the management at my financial industry employer were at their wits end with figuring out how to keep people busy during the time the market was shut down. All of this would be in the context of actually having a functional debtors' union, so there would be any number of ways to use media coverage to amplify the impact.

This was my day yesterday: http://blogs.mprnews.org/state-of-the-arts/2013/11/give-to-the-max-day-raises-17m-despite-major-technical-flaws/

And the high volumes were something that everyone involved *expected* for the whole year preceding. Huge amount of planning and excess staffing went into this and it still fell apart due to benign DDOS. (Also, the outage was more in the range of 6-7 hours from what I saw, with post-outage response times at the site hardly better than staring at a blank screen.)


Posted by: Natilo Paennim | Link to this comment | 11-15-13 3:18 AM
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re: 106

Blair's 'masochism strategy', maybe? Although that wasn't sincere.


Posted by: nattarGcM ttaM | Link to this comment | 11-15-13 5:41 AM
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I Was Wrong Day is a great, great idea.

Regarding collectors, here's a post of mine about a related issue: http://www.harrowell.org.uk/blog/2013/04/07/reading-gambetta-and-clausewitz-in-an-emerging-low-trust-society/

and the follow-up:

http://www.harrowell.org.uk/blog/2013/09/24/a-slight-return-to-gambetta-vs-npower/


Posted by: Alex | Link to this comment | 11-15-13 5:57 AM
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"The war situation has developed not necessarily to Japan's advantage" is up there, maybe.

As is -- taking a very different tactic -- "Yes, I have smoked crack cocaine -- probably in one of my drunken stupors."


Posted by: tierce de lollardie | Link to this comment | 11-15-13 6:03 AM
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Does this make any sense, regarding how Rolling Jubilee could scale? Concluding paragraphs:

But what Strike Debt did accomplish is two-fold: Raising awareness of the potential benefits of debt relief, and showing how it can be done in a sustainable way. While campaigns like the Rolling Jubilee may only have limited power to relieve debt, central banks have firepower limited only by the level of inflation, which is currently very low.
The Federal Reserve's quantitative easing program is currently buying $85 billion of debt a month in the form of Treasury bonds and mortgage-backed securities, with the intention of selling them later. If Janet Yellen, who is widely expected to win Senate confirmation to lead the Federal Reserve, really wants to start significantly reducing the rate of unemployment and improving market sentiment she might want to consider buying up distressed debts and forgiving them outright.

I assume it'll never happen. But can someone explain why not?


Posted by: parsimon | Link to this comment | 11-15-13 7:24 PM
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Is it just because, yo, we (Americans) don't believe in letting people off the hook?


Posted by: parsimon | Link to this comment | 11-15-13 7:28 PM
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Or is it just because it's politically completely unviable -- that is, people would be calling for Janet Yellen's head.


Posted by: parsimon | Link to this comment | 11-15-13 7:33 PM
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That was explicitly lead to the founding speech (such as it was) of the Tea Party, those deadbeats who get their mortgages paid off for free (which didn't even actually happen, so imagine if it did...)


Posted by: SP | Link to this comment | 11-15-13 7:36 PM
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111: Short answer: Rolling Jubilee is really only viable as long as it doesn't become a significant presence in the market. If it got to the point where it could buy up, say, all debt selling for 5 cents on the dollar or less, then debt collectors would adjust their business practices accordingly, and most of the benefits would go to the original creditors or the debt collectors, rather than the people who owe the money. (If you're a debt collector who currently finds it profitable to buy distressed debt at 5 cents on the dollar today, then in this hypothetical world you could afford to bid up to 10 cents on the dollar instead, undertake your normal collection practices, and sell what's left over to RJ at 5 cents).

RJ works great as a publicity stunt, and provides some good to a limited number of individuals today, but it really can't scale up to a major fraction of the debt market without distorting that market.


Posted by: Dave W. | Link to this comment | 11-15-13 7:50 PM
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111: Short answer: Rolling Jubilee is really only viable as long as it doesn't become a significant presence in the market. If it got to the point where it could buy up, say, all debt selling for 5 cents on the dollar or less, then debt collectors would adjust their business practices accordingly, and most of the benefits would go to the original creditors or the debt collectors, rather than the people who owe the money. (If you're a debt collector who currently finds it profitable to buy distressed debt at 5 cents on the dollar today, then in this hypothetical world you could afford to bid up to 10 cents on the dollar instead, undertake your normal collection practices, and sell what's left over to RJ at 5 cents).

RJ works great as a publicity stunt, and provides some good to a limited number of individuals today, but it really can't scale up to a major fraction of the debt market without distorting that market.


Posted by: Dave W. | Link to this comment | 11-15-13 7:54 PM
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Sorry about the double post.


Posted by: Dave W. | Link to this comment | 11-15-13 7:55 PM
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RJ works great as a publicity stunt, and provides some good to a limited number of individuals today, but it really can't scale up to a major fraction of the debt market without distorting that market

Okay. It strikes me, though, that it's not an all or nothing proposition: some scaling up could do, without tipping things over the edge. Realize that I really don't understand all of this -- yet it does seem to me that declaring that an RJ-style debt forgiveness program is an utter non-starter is a little too black and white.


Posted by: parsimon | Link to this comment | 11-15-13 8:08 PM
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118: Oh, sure. I didn't mean to suggest that you couldn't scale RJ up at all. RJ is small enough right now that I think you could easily make it several times bigger without distorting the market too much. I'm just saying that having the Federal Reserve Board get into replicating RJ on a massive scale might not be the best use of resources to help debtors.

If you're getting the federal government involved, I think it would be a lot more helpful to use their ability to set the rules of the game to create structural solutions. If you could just repeal the last round of "bankruptcy reform" - make student debt dischargeable again, give more people a clean start - I think that would do a lot more for insolvent debtors across the nation than any amount of RJ is likely to do. If you could also give bankruptcy judges the power to modify underwater mortgages to keep people in their homes, that would also do a world of good. Of course, the chances of getting either of those past the current Congress are probably minimal at best, but there may well be some similar administrative rule changes that could help.


Posted by: Dave W. | Link to this comment | 11-16-13 4:06 PM
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