The snowball of debt

Submitted by AWL on 13 April, 2020 - 9:10 Author: Colin Foster

Trade unionists and other have called for the government to write off all households’ council-tax and benefit-overpayment debt, and to freeze rent, utility, council tax, and loan-repayment loans during the pandemic.

They also call for the suspension of all debt-collection activity. They estimate the plan would cost the government about $10 billion (see here).

Another group, 200 NGOs and similar, have called for the cancellation of all external debt payments to be made by poorer countries in 2020, and emergency finance to help them through (see here).

Even the Institute of International Finance, a grouping of over 450 banks, hedge funds and other global financial firms, has called for a suspension of debt payments by the poorest countries to private creditors “for six months or to the end of 2020” (see here). And Tidjane Thiam, former boss of the Swiss bank Credit Suisse, and other plutocrats, have called for a two-year moratorium on the $115 debt of African countries.

The pandemic has already pushed the British government to wipe out £13.4 billion debt owed by NHS hospitals, and the official Financial Conduct Authority has said that credit cards should not be cancelled during the pandemic.

All this is only reducing a snowball of debt which will roll down on life as and when the lockdowns ease - household debt, government debt, company debt. Governments across the world borrowed $2.1 trillion in March, the highest monthly figure ever.

Germany’s post-1945 economic recovery started in June 1948 with the effective abolition of all debts (and most savings). Economic life was put on “restart” with firms and individuals allocated a more-or-less flat-rate quantity of the new currency (60 DM per individual or employee).

We need to start thinking about something comparably radical.

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