This proposal is in many ways a sort of “soft Jubilee” — which I endorse.
As for “hard currency economics” of the sort propagated by various groups of (unfortunately highly influential) loons, it stems from a fundamental misunderstanding of the nature, origins and operations of sovereign currencies. The only thing ANY currency is ultimately “backed” by is the sovereign’s capacity to successfully levy and collect taxes.
Banks have to meet reserve requirements and demands of regulators. While defaults pay a fraction on the dollar it is still a significant amount on the balance sheet. You need to address the stability of the banking system that can no longer declare loans in default. I missed that.
You reference "people stay in their homes", meaning you expect individuals to restructure their mortgage debt, which means that bank assets would have to be written down, which has some problems in-itself (Canadian equity markets) but those assets also securitize other assets and liabilities, and the downstream web would extend like a web into every aspect of life. It is an interesting idea, but the complexity of the banking system likely makes it unworkable. Better to just control the border more effectively.
You've described the entire problem with Canada's economy.
Personal homes are non-productive assets, and they are assets that have been described as one of the world's largest real estate bubbles. That in itself is a massive liability. It means the assets are wildly over-valued, but the expectation that they continue to "deliver" when the vast majority of Canadians are completely tapped out.
That is the cause of Canada's economic problems, not its solution, and it is making our entire economy more fragile. These mortgage debts keep causing crises - 2008 & the Global Financial Crisis, and 2020 in the pandemic, where the Bank of Canada & CMHC intervened with over a quarter of a billion dollars in freshly created money to keep those assets prices up and to keep Canadian banks lending.
"Debt compromise" could avoid the destruction of the assets and equity of millions of Canadians, farmers and businesses, and avoid uncontrolled defaults by having structured write-downs.
That fuelled the crisis we are in today - and it is a crisis - which has made our economy more fragile and susceptible to shocks, because we have invested to drive up and speculate on the price of existing non-productive assets, instead of productive ones. Which, naturally, has led to a slump in productivity.
It makes no sense for the U.S. to address border issues with self-punishing 25% tariffs, and it has to be said that there are lots of guns and drugs flowing into Canada *from* the U.S.
This proposal is in many ways a sort of “soft Jubilee” — which I endorse.
As for “hard currency economics” of the sort propagated by various groups of (unfortunately highly influential) loons, it stems from a fundamental misunderstanding of the nature, origins and operations of sovereign currencies. The only thing ANY currency is ultimately “backed” by is the sovereign’s capacity to successfully levy and collect taxes.
Yes. That’s the goal.
The Line is a fairly well-read online news source I believe, with some thoughtful followers and commentators. I'll share a link to this.
Thank you!
Banks have to meet reserve requirements and demands of regulators. While defaults pay a fraction on the dollar it is still a significant amount on the balance sheet. You need to address the stability of the banking system that can no longer declare loans in default. I missed that.
When a customer defaults the bank’s asset (the mortgage) turns into a liability. Having customers NOT default protects the financial system.
You reference "people stay in their homes", meaning you expect individuals to restructure their mortgage debt, which means that bank assets would have to be written down, which has some problems in-itself (Canadian equity markets) but those assets also securitize other assets and liabilities, and the downstream web would extend like a web into every aspect of life. It is an interesting idea, but the complexity of the banking system likely makes it unworkable. Better to just control the border more effectively.
You've described the entire problem with Canada's economy.
Personal homes are non-productive assets, and they are assets that have been described as one of the world's largest real estate bubbles. That in itself is a massive liability. It means the assets are wildly over-valued, but the expectation that they continue to "deliver" when the vast majority of Canadians are completely tapped out.
That is the cause of Canada's economic problems, not its solution, and it is making our entire economy more fragile. These mortgage debts keep causing crises - 2008 & the Global Financial Crisis, and 2020 in the pandemic, where the Bank of Canada & CMHC intervened with over a quarter of a billion dollars in freshly created money to keep those assets prices up and to keep Canadian banks lending.
"Debt compromise" could avoid the destruction of the assets and equity of millions of Canadians, farmers and businesses, and avoid uncontrolled defaults by having structured write-downs.
That fuelled the crisis we are in today - and it is a crisis - which has made our economy more fragile and susceptible to shocks, because we have invested to drive up and speculate on the price of existing non-productive assets, instead of productive ones. Which, naturally, has led to a slump in productivity.
It makes no sense for the U.S. to address border issues with self-punishing 25% tariffs, and it has to be said that there are lots of guns and drugs flowing into Canada *from* the U.S.