Sunday, 18 November 2012

The Rolling Jubilee.

The Rolling Jubilee is yet another innovative project from the Occupy Wall Street movement and it aims to buy up 'toxic debt' (or debt that hasn't a hope of being repaid) and cancelling the same. Most toxic debt can be bought for pennies in the pound as the Rolling Jubilee project found:
Individuals or companies can buy distressed debt from lenders at knock-down prices if it the borrower is in default or behind with payments and are then free to do with it as they see fit, including cancelling it free of charge.

As a test run the group spent $500 on distressed debt, buying $14,000 worth of outstanding loans and pardoning the debtors. They are now looking to expand their experiment nationwide and are asking people to donate money to the cause.
This shows that  £1 can buy 28 times that amount of toxic debt.

When we are looking at improving economic activity and prosperity in Wales shouldn't the reduction of debt be one of the economic levers that we should be using to that end?

The Daily Post reported in September of this year on the crippling level of debt in North Wales and the success of advice agencies in cancelling out nearly a £100 million of debt through Debt Relief Orders and Bankruptcy. Looking at this another way, a £4 million investment across North Wales would have served the same purpose in cancelling out this level of debt.

Also not all debt are suitably resolved by Debt Relief Order or Bankruptcy but are rather smaller debts like a £1000 on a credit card is a big burden for an out of work family whilst it would be manageable for other families.

Another problem that debtors across the country will find in future is that welfare advice agencies will no longer have funding to represent debtors in court as the Community Legal Services budget is decimated by government cuts.

Cancelling of toxic debt for our most impoverished residents must be a priority and brings with it immeasurable benefits such as better health and wellbeing (particularly mental health), less stress within families and of course more disposable income for spending in the local economy.

This suggestion is not without its problems and controls will be necessary to ensure that families that benefit to do not return to a spiral of debt.

Imagine if 22 Local Authorities invested half a million pounds in a one off fund to buy up toxic debt then there is a potential of £300 million worth of debt that could be written off, that would make a huge difference to the most impoverished and debt ridden families in Wales and is one answer to the impact of welfare reform.

Whether Local Authorities can use their finances for such a project is another question?

5 comments:

Anonymous said...

DAMN!

why did I bother to scrimp and save and pay off my student loan?

I should have spent the money on holidays and stella then my debt could be written off to make some champagne socialist feel self righteous.

Plaid Gwersyllt said...

I wonder how many student loans are written off every year because the person has never reached the income level whereby you start paying off the loan?

Anonymous said...

anonymous - typical self centred capialist rabid response. Label hard working families who through no fault of their own end up in financial crisis. Victims of savage cuts while a tory government props up their billionaire banker cronies with our taxes. Help a local family, put more money in the local economy, instead of some corrupt greedy city scumbag. Or maybe you like buying yachts for privaleged.

Anonymous said...

Had the Welsh Government spent the £250 million they wasted on Communities First on buying up toxic debt they would have helped more poor people in Wales than CF ever did or will in the future.

Anonymous said...

@Plaid Gwersyllt

I assume you mean the low interest, state backed loans that you don't have to repay until you reach a certain income. Do you realise that not everyone gets those? They are mainly for university degrees, usually for middle class students.

Like many other working class students I had to take out a private loan to get my diploma, and had to start paying off on a very low income.

@anon 11:20 the tory/lib dem coalition (not a tory govt) wasn't elected until 2010, by which time the Labour government had already given our taxes to the billionaire bankers in one of the biggest bailouts in history.

Now please excuse me while I decide which of my yaghts I'm going to take out tonight.