June 25, 2013
2 ways out of crushing debt
From Chris's FinancialServicesClub,
(I’m a bank teller at a large national bank. A customer in her mid-twenties comes up to my till.)Me: “Welcome to [bank name]! How can I help you today?”
Customer: “Yeah, can I find the total amount I owe for my student loans?”
Me: “Sure, what is your full name?”
(She gives me her name, and I give her the amount owed. It is a fairly large amount.)
Customer: “Perfect!”
(With a large smile, she hands me a cashier check from another bank, for the exact amount, totally paying off all loans she has with this bank. I enter the info, and print her receipt. I quickly run to the back to see my manager.)
Me: “Can I give this customer a couple of the promotional items that we usually give to people that open checking accounts?”
(My manager see the amount that she is paying, and that this means the customer has totally paid off the loans.)
Manager: “You can give her whatever you want!”
(I grab some items, and bring them back up to the till.)
Me: “Congratulations on paying off all your loans. Here’s your receipt, and a few gifts for paying off such a large loan amount.”
Customer: “Thank you very much! What I’m about to say has nothing to do with you; you are a great person, and thank you very much for the free gift. So, just go with everything I’m about to do.”
Me: “…Okay?”
(She holds up the receipt above her head, and speaks in a loud voice.)
Customer: “Ha! Six years ago I sold my soul to this bank! But after going through the nine circles of hell, I have finally gotten free of it! I now owe you nothing, zip, zero, nada! I am free; no more bills, payments, fees, nothing. I’M FREEEEEEE!”
(Even as she walks out the doors, she’s yelling and dancing. The dozen or so other customers and workers watch her the whole time. Another customer speaks loud enough so just about everyone can hear him.)
Customer #2: “Raise your hand if you wish you could do that.”
(Just about everyone else in the bank raises their hand.)
Strange and contradictory notions, indeed. In contrast, the impatient bears over at ZeroHedge point to Iceland:
Iceland Debt Forgiveness Reaches $2 Billion Since Crisis By Omar R. Valdimarsson - 2013-06-24T15:26:26ZIceland’s lenders have forgiven household debt equal to about 12.4 percent of gross domestic product since the island’s 2008 financial collapse.
Lenders had written off 212.2 billion kronur ($1.7 billion) in household debt through the end of 2012, the Icelandic Financial Services Association said in a letter to parliament. The group estimated a further 35.3 billion kronur will be forgiven this year after they recalculate loan agreements to meet a Supreme Court ruling.
About 141.2 billion kronur of that follows a ruling from the island’s top court stating that mortgage loans indexed to foreign exchange rates were illegal, it said.
The island’s biggest banks failed in October 2008, after defaulting on about $85 billion in debt. The collapse plunged the island’s economy into a crisis that sent unemployment surging nine-fold and triggered a recession.
The association said that of the total, 45.8 billion kronur in private debt was forgiven as part of an agreement that stipulated that debts exceeding 110 percent of a property’s value must be written off.
This is germane because, as ZeroHedge do not hesitate to remind us, "Iceland is so far the only success story in the continent of Europe, which continues sliding into an ever deeper depressionary black hole, as a result of the complete destruction of its financial sector and its subsequent rise from the ashes..."
If you're still interested, here's Chris's generational perspective and his gentle reminders that Britain has a "a £27.1 billion capital shortfall in the UK banking system" and a few random other troubled bank reports. Probably unimportant in the scheme of things.
Wait, one of those is a third way to get out of crushing debt:
Taped telephone recordings (from the bank's own systems) from inside doomed Anglo Irish Bank reveal for the first time how the bank's top executives lied to the Government about the true extent of losses at the institution. ...Anglo itself was within days of complete meltdown – and in the years ahead would eat up €30bn of taxpayer money. Mr Bowe speaks about how the State had been asked for €7bn to bail out Anglo – but Anglo's negotiators knew all along this was not enough to save the bank.
...The plan was that once the State began the flow of money, it would be unable to stop. Mr Bowe is asked by Mr Fitzgerald how they had come up with the figure of €7bn. He laughs as he is taped saying: "Just, as Drummer (then-CEO David Drumm) would say, 'picked it out of my arse'."
And a picture makes 4. I should change the title, but who cares about numerical accuracy these days?