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Bankruptcy; A Survival Mechanism for Capitalism?

on 1/12/20, 6:19 AM 159 views

The Economist magazine has long been seen as a mouthpiece for the Rothschild family who are large minority shareholders. The Magazine’s advice in handling macro-economic policy is probably accorded more deference than that from any other source, including that from Central Banking figures. It carries a long history at the centre of financial affairs in its train.

The 26th of October, 2013 edition carried comment on European banking policy. Some excerpts from their article “Europe’s other debt crisis” follow:

“Europe is always thought of as having a sovereign-debt crisis, and it has. But the origins of the euro disaster lay less with government profligacy that with excessive private borrowing.”

“Unfortunately, the euro zone has made less headway than other places in reducing this private-debt burden. Thanks to mortgage write-downs and faster growth, America’s households have unwound about two-thirds of the excess debt built up during the boom years.”

“If the euro zone’s recovery is to strengthen, this burden of private debt must be lightened. According to the IMF, private debt is a bigger drag on Europe’s growth than government debt.”

“Another necessity is for banks to recognise, and write-down, non-performing loans.”

Lastly, a more honest assessment of bank’s balance-sheets must translate into a willingness by the banks to sell or reconstruct mortgages and corporate loans.”

“It falls to Mr Draghi (the President of the European Central Bank) to start clearing up.”

Clearly quantitative easing, though unmentioned in the article, is not to be seen as the cure-all.

To maintain the system which insists that all money be created as debt and dispersed only as debt owing to these banks, the advice is that some of this impost be written down, or written off, to maintain the health of the host upon which the parasite feeds. The idea is to forego some of the milk being extracted from the cow, in order to maintain the general workability of the dairy.

Writing off debt does not write off the deposits which resulted from this debt being spent into the community, so these deposits remain available to pay down further debt outstanding. The only source of debt free credit available under conventional banking practice comes from debts, the collection of which is abandoned.

Banks extract some considerable benefits from write-offs. A full tax write–off of these amounts is one such. Another is in the ability to recreate a like amount of loans which are more likely to be collectable with interest. Only the increased blatancy of the advocacy of write-offs, is new.

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Asked: 1/12/20, 6:19 AM
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Last updated: 1/12/20, 6:19 AM