Momentum Grows for Debt Repudiation

[Joanne98]

As I noted in November:

Debtors are revolting against exorbitant interest rates and fees and other aggressive tactics by the too big to fail banks. See this, this, and this.



Congresswoman Kaptur advises her constituents facing foreclosure to demand that the original mortgage papers be produced. She says that - if the bank can't produce the mortgage papers - then the homeowner can stay in the house.



Portfolio manager and investment advisor Marshall Auerback argues that a debtor's revolt would be a good thing.



And even popular personal finance advisor Suze Orman is highlighting the debtors revolt phenomenon on her national tv show.

Walking away from home mortgages has actually become mainstream, being trumpeted by:

•CBS
•CNBC
•The New York Times (and New York Times Magazine)
•The Wall Street Journal
•MSN
•NPR
•The Arizona Republic
•Many others
In addition, as I pointed out in February:

There is an established legal principle that people should not have to repay their government's debt to the extent that it is incurred to launch aggressive wars or to oppress the people.
Matt Taibbi wrote Monday:

As powerful as these Wall Street banks may seem, they are also exquisitely vulnerable. Right now virtually all of them are dependent upon the government keeping accounting standards lax enough for all of them to claim to be functional businesses. It is generally accepted that if the major banks on Wall Street were forced to mark all of their assets to market tomorrow, they would all be either insolvent or close to it.



Thus their “healthy” financial status is already illusory. So imagine what would happen if large numbers of those dubious loans on their balance sheets that they have marked down as “performing” were suddenly pushed ahead of time into the default column. What if Greece, and the Pennsylvania school system, and Jefferson County, Alabama, and the countless other municipalities and states that are wrapped up in these corrupt deals just decided to declare their debts illegitimate and back out?

I think it’s an interesting question and would like to hear what knowledgeable people in the field have to say about it. But the big picture, to me, is that these companies are almost totally dependent not only upon the continued good faith of aggrieved debtors, but upon the government recognizing the (sometimes fraudulent) loans made to those debtors as fully performing.
Similarly, Gregor MacDonald argued in February 2009:

Continued>>>>
http://www.zerohedge.com/article/momentum-growing-debt-repudiation

[bemildred]

1. If you don't have the money, you cannot pay.

Call it poverty, not "debt repudiation". The other situation is you have the money, but you realize you made a bad investment, and then you are just a good, prudent businessperson who does not throw good money after bad, and it still is not "debt repudiation". "Debt repudiation" is a bank-sponsored meme that implies you are doing something wrong.