Monday, January 19, 2009

Debt Repudiation

Repudiation of debts by a sovereign nation is sometimes regarded as a last ditch defense in the face of adverse circumstances, just as a 'phony war' (leading to a faux 'peace in our time') is sometimes regarded as the last ditch defense to the problem of a real war. Or as the acceptance of homosexuality into the Christian faith is regarded as a last ditch defence to the continuance of the existence of Christianity. The latter case immediately supplies us with a more suitable analogy - we might well ask 'Who was Jesus' most loved apostle ?' The clear answer seems to have been the 13th apostle - Mary. I will not go into details about this matter - for example I am unaware of the current situation around Miami beach or Jacksonville, Florida - but I know what it used to be like - crack houses, prostitution and muggings - and I cannot see any of these being popular with Jesus Christ. At the same time, whilst I hold the views of neoliberals like George Lakoff (or even, if you like, George Soros) in deep respect, and think Mary Magdalene (if she ever existed) must have been truly great, the idea of a victimless crime to me, on the face of it, seems absurd. Tolerance is a great and deeply respectable virtue, but like so many virtues, it can be played in to a 'reductio ad absurdum' style position.

So, bearing in mind the way the UK economy has been ransacked by criminals and frauds, as becomes apparent with the Royal Bank of Scotland debacle, where relative unknowns are said to have absconded with billions of pounds and the bank's alleged debts have become unreasonable, the correct answer may be that of, I think Harry S. Truman - 'Walk softly but carry a big stick' - for vigorous use if need be, in this case even a nuclear stick. In other words, when toxic debts are very large - repudiate them. The Chinese have recently applied the death sentence in extreme financial cases but it may be necessary to envisage going much further.

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