Mortgages cancelled in Ecuador?
May 14, 2012
This may not be the best way to handle the situation, but it shows that the banks' popularity is at an all-time low.
Ecuador's legislature has passed legislation that would require banks to forgive any outstanding debt on mortgages for first-time home buyers of properties worth up to $146,000 if they default and forfeit a home.
The measure, aimed at discouraging a real estate bubble of the type that has caused so much pain in the United States and Europe, won praise from many Ecuadoreans on Wednesday. The country's banking industry did not immediately comment.
Approved Tuesday evening by a 68-21 vote, the bill also covers loans by banks to first-time purchasers of automobiles that cost up to $29,200.
The most obvious problem with this legislation is that it is a virtual call for everyone to default on their mortgages, whether they can afford to pay or not. I mean, why pay on a mortgage if one does not have to do so?
I realize, of course, that those mortgages created money out of nothing, so they should be paid back in kind--with nothing. But the real underlying problem is in the private bankers' right to create money. That is what ought to be nationalized immediately, so that money is owned by government, rather than by private interests. Only then can money be created and spent into circulation without it being a debt.