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comment by ButterflyEffect
ButterflyEffect  ·  2069 days ago  ·  link  ·    ·  parent  ·  post: Croatia votes to scrap debt of its poorest citizens

    The government will not pay the debts; the creditors will simply absorb them.

What are the consequences of this? The people have their debt relieved, the creditors lose out on money, but how will this affect the government or future borrowing from it's citizens?





flagamuffin  ·  2068 days ago  ·  link  ·  

Almost certainly

    Some economists, among them Baker, are skeptical whether the scheme will succeed: "I am not sure that this is the best way to help low-income people. If lenders think this can happen again they will charge very high interest rates to low-income borrowers," Baker said.

https://hubski.com/pub?id=204580

katakowsj  ·  2069 days ago  ·  link  ·  

Good question. I wonder what data-based research supported this decision? Could Croatia have recognized that continuing the debts of its poorest citzens cost the rest of it's citizenry more than if those debts were erased. I'd be interested to see the math behind this decision. Maybe it's similar as Henry Ford recognizing that by paying his workers more, he created an additional market for Ford products. Get the yoke of debt off the most burdened Croatians and also relieve a burden on the Croatian economy.