Tuesday 20 February 2018

Debt forgiveness is more than godly -- it makes fiscal sense

Of all the actors in the crisis, the least guilty -- homeowners -- are only ones not let off the hook, writes Marc Coleman

Are you Old Testament or a New Testament person? This isn't a census-type inquiry into your religious status. In fact, you don't need to be religious at all to answer. What I'm basically asking is this: Are you a forgiving sort of person or not?

With 80,000 mortgage holders in arrears or worse and another 18,000 on Mortgage Income Supplement, it's an important question. OK, so some warnings about these numbers spiralling out of control have a book of revelations ring to them. But grow they will and by enough to make the issue of mortgage debt forgiveness unavoidable. Some people have already decided that the issue is a non-starter. Old testament types, they also tend to be public servants on high salaries who bought their properties in the 1980s. And although I'm a new Testament person myself, one of my favourite quotes from the New Testament has an old Testament logic to it: In Matthew 18:25 a servant begs a king to forgive a debt owed. The king duly forgives the debt only to learn that the same servant nearly choked an underling to death for owing him a smaller sum. Horrified by the hypocrisy, the king has the servant tortured. Those advocating no help for the younger generation are guilty of similar hypocrisy.

They want younger generations to bailout their pensions and were happy to benefit from the sale of their overvalued houses but now want to pull the ladder up after themselves. This double standard also applies at a policy level: Banks and bondholders have gone to their king -- the European Central Bank -- who has forgiven their recklessness and forced taxpayers to bail them out. Now indebted taxpayers seek help, the public servants who advise government are -- from the security of positive equity and secure jobs -- telling government to ignore us.

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