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Discussion Starter #1
There are many discussions on government spending on COVID, that involve everything from the size of the debt, to what the future may bring.

Some say the debt will be paid through inflation. Others say taxes will be raised. Many think it will be paid by future generations.

There are problems with each solution. Governments need to find the solution which will cause the least amount of damage.

Raising taxes.......coming out of an economy in deep recession, this is a very bad idea. It would address the symptoms by killing the patient.

Inflation.........this solution would depend on runaway inflation, which would also be a death knell for a recovering economy.

Default.........this is a likely scenario for many if the crisis lasts for an extended period of time. Already people who had to defer payments are in default.

Bankruptcy........is the end result of defaults.

Debt forgiveness.........the result is similar to defaults and bankruptcies.

The main difference between default/bankruptcy and debt forgiveness is the ability of the government to manage them.

Either method achieves the economic goal of washing away debt so the economy can begin the rebuilding process.

In my opinion, structured debt forgiveness is the best of the options available to governments. We shall see which path they take.

A few months ago a concept such as debt forgiveness was unthinkable, but so was the current situation in which we find ourselves.

Everything is on the table now.
 

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Discussion Starter #3
In dollars and cents, it should be considered that although the CERB is a large amount of government spending, it only covers until July.

Although the CERB benefit of $2,000 is large in comparison to any previous programs, it represents less than the wages from a minimum wage job.

Many couples receiving even double benefits are unable to pay all their bills, on what is effectively the income from two minimum wage jobs.

They are steadily edging closer to the brink of financial disaster.
 

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Discussion Starter #4
I do not agree with forgiving any debt anyone incurs. You owe it, you pay it.
So you think it is better to let the dust settle where it may ? That would mean you prefer the default/bankruptcy scenario ?
 

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So you think it is better to let the dust settle where it may ? That would mean you prefer the default/bankruptcy scenario ?
Bankruptcy IS debt forgiveness. It's the same darn thing.

What is the difference between
A. A borrower telling the lender they will not pay them back, and the Government preventing them from pursuing that debt.
and
B. A borrower telling the lender they will not pay them back, and the Government preventing them from pursuing that debt.

I've asked this before, what if your borrowers decided to default, bankrupt, or have their debts forgiven?
Are you really okay with them just saying "all those things you thought you had, you don't"
Your bank balances, contracts, "investments", gone, every single one of them.

I think your "plan" is to "structure" so that all debts, except those owed to sags are forgiven.
 

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Discussion Starter #6
Low income, part time and some gig workers may be okay financially with the CERB for as long as it lasts.

The wealthy don't need the CERB benefits at all. They are isolated from financial hardship.

It is the middle class, people with average or better wages, mortgages, kids.......who will suffer the most.

They are the same group that propels the economy forward. Remove the middle class and the economy will collapse affecting everyone.

It isn't as simple as saying you don't approve of debt forgiveness. What are the other options ?
 

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There is no default/bankruptcy if you pay your debts sags. I believe in being responsible for your own actions. Personally, rather than giving people $2000 each, I would LOAN them the money and expect them to PAY it back.

How a person or a business get themselves into trouble is their responsibility. I am paying all my monthly bills including a large income tax installment last month. I MANAGE my finances and do not live month to month.

I look at those who will be paid CERB and ask 'where are your savings for rainy days?' I am willing to bet that many of those defaulting on their rent will be using their CERB handout to pay for their smartphone, tv, internet, etc. Their priorities are all wrong.

In a time like this, there are only 2 things we NEED, shelter and food. So you pay rent FIRST and if that means you have to give up your phone service, so be it. You buy groceries and if that means you have to give up your internet and tv service, so be it.

People and businesses who cannot weather a storm are responsible for themselves. But if someone else bails them out, they learn nothing except that it is OK to live in debt because someone else will bail them out.
 

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Low income, part time and some gig workers may be okay financially with the CERB for as long as it lasts.

The wealthy don't need the CERB benefits at all. They are isolated from financial hardship.

It is the middle class, people with average or better wages, mortgages, kids.......who will suffer the most.

They are the same group that propels the economy forward. Remove the middle class and the economy will collapse affecting everyone.

It isn't as simple as saying you don't approve of debt forgiveness. What are the other options ?
The middle class have no reason to have ANY debts at all other than a mortgage sags. You seem to accept that it is OK for them to go into debt to buy something that they actually cannot AFFORD to buy.

The 'other option' you are asking for sags is to not go into debt.
 

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Discussion Starter #9
Too late for that option LTA. The cards have already been dealt. Lessons on morality are redundant at this point. I have no control over other people's spending.
 

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Too late for that option LTA. The cards have already been dealt. Lessons on morality are redundant at this point. I have no control over other people's spending.
Okay, so we can't control their decisions.
Can we at least let them face the consequences of the decisions so they make better ones next time?
At least some minor consequences.

Lets be clear, this was all obvious, with pretty much every financial expert, at every level, saying that having large amounts of debt was a problem.
We're now facing that problem. This wasn't a surprise, people have been predicting this since the last crisis.

There are only a small number of ding-dongs that were saying high debt levels weren't a problem.
 

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Too late for that option LTA. The cards have already been dealt. Lessons on morality are redundant at this point. I have no control over other people's spending.
I realize we have to deal with 'what is' rather than what we wish was sags but people being people, most do not learn their lesson unless they suffer the consequences as MrMatt suggests. IF they get any kind of 'forgiveness' all they learn as I said is that someone else will take care of them.

I'm thinking of the poster here Just A Guy who has told of how he ended up broke and out of work and vowed never again to have to rely on anyone else for food on his table. He learned what was no doubt a very painful lesson. You only need to learn a lesson like that ONCE to never let yourself get into such a situation again.

So take your middle class average person who can't pay their debts, foreclose on their condo, repossess their car bought on credit, take away their credit cards and then MAYBE just maybe I would agree to saying, 'OK, we'll clear the slate and let you start over with no debt. Here's your job back, go find a place to live, buy groceries, walk to work or take public transit and start over.'
 

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Discussion Starter #12
It will be interesting to return to this thread in July and see what the future brings.
 

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I realize we have to deal with 'what is' rather than what we wish was sags but people being people, most do not learn their lesson unless they suffer the consequences as MrMatt suggests. IF they get any kind of 'forgiveness' all they learn as I said is that someone else will take care of them.

I'm thinking of the poster here Just A Guy who has told of how he ended up broke and out of work and vowed never again to have to rely on anyone else for food on his table. He learned what was no doubt a very painful lesson. You only need to learn a lesson like that ONCE to never let yourself get into such a situation again.

So take your middle class average person who can't pay their debts, foreclose on their condo, repossess their car bought on credit, take away their credit cards and then MAYBE just maybe I would agree to saying, 'OK, we'll clear the slate and let you start over with no debt. Here's your job back, go find a place to live, buy groceries, walk to work or take public transit and start over.'
I think that is a bit harsh since the government has literally deployed armed officers to keep people from going to many jobs.

I think that the government should do the minimum possible to PAUSE, during this crisis.
Also any pause shouldn't disproportionately benefit one group. I'm for widespread measures, because the WHOLE country is going to have to pay for this disaster.
 

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Before I opened this thread, just going by the title, I had the feeling sags would be in favor of welshing on all debts except debts owed to sags.
 

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I think that the government should do the minimum possible to PAUSE, during this crisis.
Also any pause shouldn't disproportionately benefit one group. I'm for widespread measures, because the WHOLE country is going to have to pay for this disaster.
Yes, that is a problem. Teachers (and probably other government employees) get full pay to stay at home. Many private sector employees will get nice pay to stay at home thanks to the payroll subvention (why is this so much more money than the CERB?). Some get the CERB. All the above get paid to basically watch netflix all day long.

Then there are people who have to work from home and juggle work and the kids 24/7. Others are still working in essential services for little more than the CERB, some in horrible conditions right now. And we have the doctors in Quebec who just made a deal to go help in nursing homes... for over 200$ an hour. No, this is NOT a typo. There's a whole lot of unfair going around before we even start paying for all this.

I'll believe debt forgiveness when sags hands over his bank account.
 

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Before I opened this thread, just going by the title, I had the feeling sags would be in favor of welshing on all debts except debts owed to sags.
He also wants his CPP benefits increased, too! Nevermind that CPPIB would be hit hard by such debt defaults.
 

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Discussion Starter #18
Whining and complaining isn't going to provide a solution.

Perhaps some don't know that default and bankruptcy IS a form of debt forgiveness. It just happens to be a really messy approach to the problem.
 

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Lots of complaining but no solutions ?
I've posted a few times.
1. Develop a plan to reduce the lockdown and economic impact ASAP.
- Relaxing measures without a plan is bad, waiting years for a vaccine that might not come is also bad.
2. Discourage lenders from formal default procedures. Encourage deferral options under similar terms to the original loan agreement.
3. Increase EI & keep the 75% staff retention program.
4. Be fair in any handouts given. If you're going to give $2k a month out to 6 million+ Canadians, give it to everyone.
5. Review programs to ensure they're not poverty traps.
6. Review EI & CERB to ensure that the labour shortage isn't exacerbated by overly generous compensation programs.

What is your program? Other than spend a trillion dollars and give lots to sags?
 

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Whining and complaining isn't going to provide a solution.

Perhaps some don't know that default and bankruptcy IS a form of debt forgiveness. It just happens to be a really messy approach to the problem.
Your'e the one saying that they're different.
"The main difference between default/bankruptcy and debt forgiveness is the ability of the government to manage them. "
That's doublespeak for political interference.
 
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