Category Archives: Debt

Chart of the day: Indexed change in debt types

From Demos, a look at the relative changes in U.S. family debt burdens between 1989 and 2013, with all types indexed at 100 in 1989:


Headline of the day: Grecoausterity fight resumes

From eKathemerini:

Talks with creditors to resume but review up in the air as Athens rejects fresh austerity

With talks set to resume on Tuesday with Greece’s international creditors, Athens said on Monday it has no intention of implementing austerity measures beyond the commitments it signed on to in the third bailout last July and plans to seek “allies” among European countries.

They’re back: The Zombies from Wall Street

The Australian Broadcasting Corporation comes to Cleveland to look at the city’s growing bad mortgage crisis and finds a city almost as devastated as Detroit.

It’s a bad sign for other cities.

Via Journeyman Pictures:

The Zombies From Wall Street

FROM ABC’s program notes:

Next time the dinner party conversation turns to property values, consider this: in once-proud American neighbourhoods, two-storey houses are being dumped at auction for a few hundred dollars. Some are literally being given away.

In Cleveland, Ohio – once America’s economic powerhouse – it’s almost a daily event, a legacy of the banking villainy that gave us the GFC.

And now, believe it or not, the banks are playing havoc again.

Is this a family show? – Cleveland politician and activist, Jim Rokakis, when asked for a comment on the banks.

When reporter Paul Barry visited the Midwest city in 2007, “subprime” loans were pushing thousands of families into default. Many were evicted. Others just walked away, emptying out once thriving neighbourhoods.

Everybody’s gone. I’m the old lady on the street now. – East Cleveland resident Stephanie Benifield

Now Barry returns to Cleveland to find prices have plunged so far that many houses are worthless. Banks don’t even bother to foreclose on defaulters. And homeowners are now being stalked by “zombie mortgages”, which leave them liable for property taxes and maintenance costs they can’t afford, even if they’ve left their homes and declared bankruptcy.

Chart of the day: Whilst on the subject of money

From Gallup, a look at the generational divides in debt anxiety, with Gen X suffering from the highest levels of angst:


Apologies for the orientation of the graphic, but given that WordPress now longer allows use to pop up graphic elements to enlarge them, this was the only way to ensure legibility.

Quote of the day: Ruthless demands on Greece

From former Greek Finance Minister Yanis Varoufakis — ousted for his outspoken anti-austerity statements at the insistence of the Troika of the International Monetary Fund, European Commission, and European Central Bank — writing for Der Spiegel about the implications of the secret IMF transcript just released by Wikileaks:

What new light does the leaked dialogue between [IMF European chief Poul] Thomsen and Delia Velculescu (the IMF’s Greek mission chief) throw on this saga? It reveals the following state-of-play, as assessed by the IMF:

  • The EU Commission seeks another fudge to be agreed during the IMF’s mid-April Spring Meetings that will allow European leaders to celebrate (again!) the end of the Greek crisis
  • The IMF will block this, unwilling to go along with yet another fudge that violates its no-lending-to-insolvent-governments directive
  • The Greek government is ready to capitulate on new austerity measures demanded by the IMF and amounting to between 2.5 percent and 3 percent of GDP, involving: (a) pension cuts, (b) reduction in income tax credits for the poor, (c) a shift of basic foodstuffs from the 11% to the 23% VAT band, and (d) salary cuts for many public sector workers
  • The Greek government is still holding out on these concessions because the Commission is offering Athens false promises of a ‘softer’ austerity package
  • The IMF is furious with the Commission, not for being ‘kinder’ to Greece but because the Commission’s own “numbers” are pointing to even harsher future measures than the IMF’s
  • The IMF regrets not having negotiated a common position with the Commission first, before the Commission started misleading the Greeks
  • To concentrate the Europeans’ mind sufficiently to force them to come to a ‘decision point’, Greece ‘must’ come close to another catastrophic ‘Event’ (default to one of the troika lenders)
  • Because of the sensitive UK referendum, on 23rd June, the IMF predicts that its “hostilities” with the Commission will be suspended until July when, just like last July, the Greek “Event” will loom
  • At that point, in July, the IMF plans to corner Chancellor Merkel into choosing what costs her less politically: Continuing with the Greek program without the IMF? Or granting the Greek state substantial debt relief?
  • As long as Mrs Merkel chooses one of these two options, the IMF will be out of the woods: Either it will exit or the debt write-off will have rendered its Greek program consistent with its “primary directive”.

Greek government responds to IMF [Wiki]leak

That Wikileaks-posted transcript revealing dissent within the International Monetary Fund over the draconian bailout conditions imposed by the IMF/European Commission/European Central Bank Troika has drawn a quick response from the Greek government.

From Reuters:

Greece demanded an explanation from the International Monetary Fund on Saturday after an apparent leaked transcript suggested the IMF may threaten to pull out of the country’s bailout as a tactic to force European lenders to more offer debt relief.


“The Greek Government asks the IMF for explanations whether pursuing the creation of bankruptcy conditions in Greece, just before the British referendum, is the Fund’s official position,” government spokeswoman Olga Gerovasili told state television.

An IMF spokesman in Washington said the Fund did not comment on “leaks or supposed reports of internal discussions” but added that the IMF had made its position known in public.


Commenting on the leak, Greek Prime Minister Alexis Tsipras told weekly newspaper Ethnos: “It seems that some people are playing games with an aim to destabilize us. We will not allow (IMF’s) Thomsen to destroy Europe.”

Another Wikileaks scoop: IMF dissent over Greece

From Wikileaks:

IMF Internal Meeting Predicts Greek ‘Disaster’, Threatens to Leave Troika

by Julian Assange

Today, 2nd April 2016, WikiLeaks publishes the records of a 19 March 2016 teleconference between the top two IMF officials in charge of managing the Greek debt crisis — Poul Thomsen, the head of the IMF’s European Department, and Delia Velkouleskou, the IMF Mission Chief for Greece. The IMF anticipates a possible Greek default co-inciding with the United Kingdom’s referendum on whether it should leave the European Union (‘Brexit’).

“This is going to be a disaster” remarks Velkouleskou in the meeting.

According to the internal discussion, the IMF is planning to tell Germany that it will abandon the Troika (composed of the IMF, European Commission and the European Central Bank) if the IMF and the Commission fail to reach an agreement on Greek debt relief.

Thomsen: “Look you, Mrs. Merkel, you face a question: you have to think about what is more costly, to go ahead without the IMF — would the Bundestag say ‘The IMF is not on board?’, or [to] pick the debt relief that we think that Greece needs in order to keep us on board?”

Remaining in the Troika seems an increasingly hard sell internally for the IMF, because non-European IMF creditor countries view the IMF’s position on Greece as a violation of its policies elsewhere of not making loans to countries with unsustainable debts.

In August the IMF announced it would not participate in last year’s €86 billion Greek bailout, which was covered by EU member states. IMF Chief Christine Lagarde stated at the time that the IMF’s future participation was contingent on Greece receiving “significant debt relief” from creditors. Lagarde announced that a team would be sent to Greece, headed by Velkouleskou.

Thomsen said internally that the threat of an imminent financial catstrophe is needed to force the other players into a “decision point”. For Germany, on debt relief, and In the case of Greece, to accept the IMF’s austerity “measures,” — including raising taxes and cutting Greek pensions and working conditions. However the UK “Brexit” referendum in late June will paralyse European decision making at the critical moment.

“I am not going accept a package of small measures. I am not…” said Thomsen. “What is going to bring it all to a decision point? In the past there has been only one time when the decision has been made and then that was when [the Greeks] were about to run out of money seriously and to default. […] And possibly this is what is going to happen again. In that case, it drags on until July, and clearly the Europeans are not going to have any discussions for a month before the Brexits…”

Last year Greek Finance Minister Tsakalotos accused the IMF of imposing “draconian measures,” including on pension reform. While Velkouleskou concedes in the meeting that “What is interesting though is that [Greece] did give in… they did give a little bit on both the income tax reform and on the…. both on the tax credit and the supplementary pensions.”

But Thomsen’s view is that the Greeks “are not even getting close [to coming] around to accept[ing] our views.” Velkouleskou argues that “if [the Greek government] get pressured enough, they would… But they don’t have any incentive and they know that the Commission is willing to compromise, so that is the problem.”

Much more, and links to the full transcript, after the jump. . . Continue reading