An arrogant view of insolvency?

  • Thread starter Thread starter morganist
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Quote from rallydog:

I'm unsure of the UK, but in the US the typical BK runs around $2k. The US has been running about 120,000 bankruptcy's per month for well over a year and is sadly a growth industry.

Although these represent personal failures, I don't see this as a case of ruined lives, but an opportunity for a fresh start. The typical consumer will emerge from bankruptcy debt free and with a positive balance sheet. They will be credit "impaired" for a while, but will eventually return to the credit markets, hopefully wiser and better prepared to deal with the risks associated with credit.

In many cases, the consumer would be better off to "clean the slate" then attempt workouts that leave them with their debts and bad credit. At least with a BK the debts are gone and they have an opportunity to begin again.
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What about all of the debt that gets written off. Do you appreciate how much money that is and how much would have to be written off for it to return to anything like functioning. My suspicion is that the next step of this will be pension fund collapses in addition to the bank collapses. I predict this in six months to eighteen months especially in the UK.
 
Quote from shortie:

why is the market going up like crazy? the market says that the possibility of massive bankruptcies is nil.
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Actually the reason the market is going up is because people believe equity investments are safer than debt investments. You just justified my argument. People are investing in equity over debt because of the risk and low return.
 
My suspicion is that the next step of this will be pension fund collapses

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I was talking to this fellow about pensions in ny, I did not have enough time to complete this conversation but the short end of it was the state is tryiing to get the state workers pensions. I'd like to know if the state is going to hand over an iou for the money or what.

meanwhile, if a pension collapses and the entire pension is nothing more than an IOU from the state, maybe jack hershey will change his mind about this country heading for a depression.
 
Quote from nutmeg:

My suspicion is that the next step of this will be pension fund collapses

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I was talking to this fellow about pensions in ny, I did not have enough time to complete this conversation but the short end of it was the state is tryiing to get the state workers pensions. I'd like to know if the state is going to hand over an iou for the money or what.

meanwhile, if a pension collapses and the entire pension is nothing more than an IOU from the state, maybe jack hershey will change his mind about this country heading for a depression.
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I am discussing private pensions. State pensions generally work as a government IOU paid by the current tax revenue. Thus as soon as the tax revenue falls the pension payments cannot be made. This is the concern of the boomers pensions they have big pensions and there is a smaller workforce paying them. Something will have to give. My opinion is that most boomers will end in poverty even seemingly wealthy ones.
 
Given the scale of underfunding in municipal pension plans and the systematic way that this has happened, it seems likely the intention is to walk-away from these obligations and hope that the federal government steps in for cents on the dollar.

But in the two years, since the "great recession" wrecked their economies and shriveled their income, the states have collectively spent nearly a half a trillion dollars more than they collected in taxes. There is also a trillion dollar hole in their public pension funds.
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http://www.cbsnews.com/stories/2010/12/19/60minutes/main7166220.shtml
 
Quote from Steven.Davis:

Given the scale of underfunding in municipal pension plans and the systematic way that this has happened, it seems likely the intention is to walk-away from these obligations and hope that the federal government steps in for cents on the dollar.


http://www.cbsnews.com/stories/2010/12/19/60minutes/main7166220.shtml
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I heard San Diego has a real problem with this and California in general. The problem with this is the government will not be in a position to step in and people will be too old to do anything about it. It looks like they will not be in a position to remedy the situation. I really don't know what will happen.
 
It is understood and well predicted that as the boomers retire the percentage of provider to consumer will shift. This, on the face of it, should be inflationary, but globalization could more than offset this since global populations are lopsided the other way.

The thing that I am talking about is specific populations having their retirement savings disproportionately voided. Here is a site with a breakdown per pension plan per state. Their total in 4/2010 was $3T in unfunded obligations.
 
Quote from rallydog:



In many cases, the consumer would be better off to "clean the slate" then attempt workouts that leave them with their debts and bad credit. At least with a BK the debts are gone and they have an opportunity to begin again.
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The best route is to just stop paying, avoid the collections guys for awhile and it all falls off the record [for practical purposes] at some point..
 
Quote from morganist:

What about all of the debt that gets written off. Do you appreciate how much money that is and how much would have to be written off for it to return to anything like functioning. My suspicion is that the next step of this will be pension fund collapses in addition to the bank collapses. I predict this in six months to eighteen months especially in the UK.
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What if what is done is what the Fed/US gov. did with GM and AIG. They loan the money, print from thin air, shore it up until it bounces back and then take repayment. I have changed my opinion, I think it was a good idea, but as Mark Fisher MBF said US taxpayer should have demanded a 30% equity stake. Instead we lent it for free, basically, and just kept them from going under.
 
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