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World News See other World News Articles Title: The biggest debt write-offs in the history of the world The biggest debt write-offs in the history of the world From ancient Babylon to 1930s Europe, debt jubilees have been far more common than discussions over Greece would suggest Greece's EU creditors are playing hard-ball over granting Athens debt relief Photo: Reuters By Mehreen Khan 5:00PM GMT 02 Feb 2015 A small southern eastern European country has announced a widescale programme of debt cancellation. No, it's not Greece, but Croatia. The Croatian government will be wiping off the liabilities of around 60,000 of its poorest citizens in a move to provide a "fresh start" for its indebted low-earners and get the economy moving again. Although much of the current debate among Europe's policymakers seems to regard debt relief as the ultimate taboo, the move for a government to cancel their citizens' liabilities, or for a sovereign to be forgiven by its creditors, is not nearly as unprecedented as we might think. In their seminal work, 'This Time is Different: Eight Centuries of Financial Folly' economists Carmen Reinhart and Ken Rogoff chart the long and varied history of sovereign debt defaults, noting that restructurings and write-offs have been key part of every major period of financial crisis. With that in mind, here's a potted history of how creditors and debtors have dealt with debt repudiation since the dawn of time. A Judeo-Christian tradition The practice of debt forgiveness can be traced all the way back to the Old Testament. In Jewish Mosaic Law, every seventh Sabbath year saw the wiping away of all debts, where creditors cancelled all the obligations of their fellow Israelites. Every 49th year (seven Sabbath years) was the 'Year of the Jubilee' when freedom from all debt and servitude was proclaimed throughout the land. Unlike modern notions of debtor distress, where default is seen as the result of profligacy or misfortune on the part of the borrower, Judeo-Christian traditions rested on the principle that both creditors and debtors had a duty towards God. In the New Testament, the Lord’s Prayer calls upon the disciples to ask God to “forgive us our debts, as we also have forgiven our debtors." Loans were less a way to make money than they were a means to help one's fellow man. Given that all worldly wealth and property belonged ultimately to God, a creditors' rights over it were temporary rather than absolute. Smashing tablets in Babylon One of the most famous proclamations of the virtue of debt repudiation comes from ancient Babylon (modern-day Iraq). In 1792BC, the self-proclaimed King Hammurabi of Babylon forgave all citizens’ debts owed to the government, high-ranking officials, and dignitaries. The Code of Hammurabi, which currently sits in the Louvre in Paris, declared: "If any one owe a debt for a loan, and a storm prostrates the grain, or the harvest fail, or the grain does not growth for lack of water, in that year he need not give his creditor any grain, he washes his debt-tablet in water and pays no rent for this year." Hammourabi’s jubilees were part of a long line of debt cancellations that can be traced back to Mesopotamia as long ago as 2400BC. Historians have counted around thirty episodes of general debt cancellations from 2400 to 1400 BC, noting they were occasions of great festivity which often involved the physical destruction of the tablets on which liabilities were recorded. Rescuing Europe from the Great Depression Europe emerged from the conflict of the First World War debt-addled and in a depression. By the mid-1930s, many countries had begun abandoning the Gold Standard in a bid to reflate their economies without the burden an anachronistic exchange-rate system. As part of this process, most of Europe's governments had a significant portion of their liabilities written-off for good. During 1932-39, average debt relief amounted to 19pc of national output in advanced economies, according to eonomists Carmen Reinhart and Christoph Tresbech. For the likes of France and Greece, the jubilees were closer to 50pc and 40pc of GDP respectively. Full repayment was so rare, that Finland was the sole European sovereign who managed to honour all its post-war obligations. Germany's post-war economic miracle Only 16pc of polled Germans currently think Greece should be the recipient of some form of debt cancellation from the eurozone. The irony of Berlin's obstinancy on debt relief may well be lost on some. Following the end of WWII, the London Debt Agreement of 1953 saw the abolition of all of Germany's external debt. The total forgiveness amounted to around 280pc of GDP from 1947-53, according to historian Albrecht Ritschl. The cancellation, along with an extension of its repayment schedule, allowed Germany to return to the financial markets, and become part of the IMF and World Bank. The London agreement also helped set in motion the country's incredible export performance as Germany was required to service its debt through money earned from foreign trade. In the words of historian Ursula Rombeck-Jaschinski, Germany's "economic miracle would have been impossible without the debt agreement." Whither Greece's debt mountain? Greece's new government is pushing for a debt conference on the lines of that which saved Germany from its post-war abyss. At more than €300bn, the Syriza-led coalition wants a nearly half of its debt pile to be permanently wiped off. So far, the country's Troika of creditors are not playing ball. Whatever happens in this latest game of brinkmanship between creditors and debtors, history shows that mass debt write-offs are neither as rare nor as taboo as we might think. Poster Comment: Bankers do not have the God-given right to be repaid. But from the way they act you would think differently. Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest
#1. To: BTP Holdings (#0)
This is a great post. Smaller is better when it comes to countries, except for how big countries use them for target practice. We desperately need a jubilee cycle. It may seem absurd and impossible, but the idea of today's Fed insanomics would have to 19th- century people, too. The EU is jew cutthroats. Don't look for any mercy or even humanity from it, ever. _____________________________________________________________ USA! USA! USA! Bringing you democracy, or else! there were strains of VD that were incurable, and they were first found in the Philippines and then transmitted to the Korean working girls via US military. The 'incurables' we were told were first taken back to a military hospital in the Philippines to quietly die. – 4um
The EU is jew cutthroats. Yes and when the Debt Jubilee and Cancellation happens you can bet all of the major banksters will be looking for cover since they will be on the receiving end of all retributions. We might need lots of short ropes and tall trees to hang them all. ;) "When bad men combine, the good must associate; else they will fall, one by one." Edmund Burke
Can't wait. They are the devourers of huge masses of people and the destroyers of every free country. THEY DESERVE TO DIE -- HORRIBLY AND SLOWLY! The Christian faithful will all shun the idea of executions, but I srsly volunteer to pull the lever, push the perps over the edge, inject them with antifreeze or whatever method is decided upon. It would be my holy joy and Christian service! God, if you read this, please put Lloyd Blankfein up first :-) I'LLLLL FIRE AWAY O LORDY, I'LLLLL FIRE AWAY..... _____________________________________________________________ USA! USA! USA! Bringing you democracy, or else! there were strains of VD that were incurable, and they were first found in the Philippines and then transmitted to the Korean working girls via US military. The 'incurables' we were told were first taken back to a military hospital in the Philippines to quietly die. – 4um
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