Debt vs. Austerity

Debt in the US and abroad has been the source of international hand-wringing for years, and a debate rages about how to deal with it. Should we cut back dramatically or take another approach?

The Chicago-Sun Times's Terry Savage believes that loan forgiveness in the US as a dangerous game:

"But to actually 'write off' the loans, to forgive them, would threaten the very solvency of Fannie and Freddie — the owners or guarantors of more than 60 percent of outstanding mortgages! And would that really help the housing market — or just force mortgage rates higher as lenders take that risk into account?"

Other commentators, like this one, are deeply skeptical of austerity measures:

"You can see how deadly austerity is, when you compare it to healthy economics. Prosperity generates capital in gigantic amounts. Austerity does the exact opposite. In a capital driven economy which relies on money to move, it just doesn’t, and can’t, work. Making the poor poorer is a [misguided] goal, because even under the basic tenets of capitalism, that’s where the drive to create capital comes from."

Read more here.