A Public Dialogue on Sovereign Debt Forgiveness

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I sent the following letter to President Obama and Secretary Clinton on the 21st of May. I would like to ask all of you in the Alternative Banking group to offer your professional opinions on the potential long-term economic effects of implementing such a proposal.

And, if like me, you believe these long-term effects would be highly positive for all the World’s People, then I would like to ask you to support this idea by attempting to raise public support and awareness of this economic alternative, and please feel free to sign your own name at the bottom of the letter and forward it to either the

White House (http://www.whitehouse.gov/contact/submit-questions-and-comments)

and/or the Secretary of State (http://contact-us.state.gov/app/ask)

and the Secretary of the Treasury (http://www.treasury.gov/connect/Pages/Message-to-the-Secretary.aspx).

Thank you.

The original letter:

Mr. President and Madame Secretary of State, as a veteran and a student of foreign policy and economics, I offer you this advice on the ongoing global financial crisis, with special attention to the European Union Debt Crisis due to current events.

 

I would like to suggest a bold new program to augment current efforts to promote simultaneous Frugality and Growth. This program could be called Sovereign Debt Forgiveness.

 

Just as Bank of America was recently compelled to take responsibility for the hardship that their mismanagement of the American Economy has caused the American People, in the form of Debt Forgiveness through an estimated $3 Billion in Principal Reductions on Underwater Mortgages, the Global Financial Sector should be held accountable and responsible, and be compelled to set Right the Wrongs they have committed through their greed, parasitism, selfishness, and short-sightedness.

 

Let us not forget that the Lenders to the Sovereign States are also the very same Global Investors who are the leaders of our Global Economy, and thus are those who were responsible for the mismanagement of our Global Economy and the collapse that followed.

 

It must not be the People of the wealthier Nations who bail out the People of the Nations who were most harmed by the Financial Collapse, because it was not these People who are to blame for the problem. It must be the Institutions and the Individual Investors whose Recklessness and Greed led us into this catastrophe who bear the greatest penalty during the recovery.

 

Therefore, we should begin a Global program which will identify those Institutions and Individuals most responsible for the Harm inflicted on the World’s People and their Economy, as well as those Populations who have been most Harmed, such as those in Greece, Spain, Italy, Africa, the Middle-East, and Asia by dramatic rises in inflation and commodities prices, coupled with declines in per capita income and overall assets, and extreme rises in unemployment, which can all be directly attributed to the financial mismanagement that began in American and European Banks and Institutional Investment Firms.

 

The Reaper comes to collect what he is due. Judgment for those responsible is unavoidable. Some know their guilt, like Mr. Buffet, and have genuinely repented and sought to make amends.

 

For the rest, the financial leaders who will neither change, nor repent, nor relinquish their positions of leadership, either the People or their Representatives must demand that an example be made of these malevolent leaders to ensure that our future economic leaders will not make the same mistake of presuming themselves entitled to the Wealth of Nations without an implied responsibility to use that privilege to Serve Humanity. Justice must be done.

 

Mr. President, your role, and that of America, is to lead the World toward Justice, Accountability, Benevolent Leadership, Peace on Earth, and Goodwill toward Humanity.

 

In this case, that means calling for a global implementation of the same principle that the Justice Department exemplified by compelling Bank of America to offer principal reductions on under-water mortgages. This time though, we must call for those Financial Institutions which are most guilty of leading the world into crisis to bail out Greece, Spain, and Italy, while facilitating sustainable growth across Asia, the Middle-East, Africa, and South America, not with more opportunistic and usurious loans, but with Debt Forgiveness, followed by either their genuine dedication to benevolent financial leadership worldwide, or by their replacement with Individuals and Institutions of sounder Character.

 

I wish you the best of luck in guiding our Nation and our World toward a higher standard of leadership in Government, in Finance, and in all aspects and expressions of Humanity’s Conduct and Character.

 

If we can restore Justice and Accountability in the Financial World, and encourage Innovation, Determination, Cooperation, Healthy Competition, and sound Character and Values worldwide, while also protecting and rejuvenating the Earth and Ecosystem we depend on by making sustainability and a symbiotic relationship with the biosphere (which is our life-blood) our highest priority, then our Economic woes will soon vanish.

 

Sincerely,
Gabriel G. McMillan
Veteran, Writer, and Philosopher

5 Responses to “A Public Dialogue on Sovereign Debt Forgiveness”

  1. Mosheh Eesho Muhammad Al- faraj Thezion

    That’s nice… but the problem is… our debt, includes every dollar in circulation…. meaning the total is not 16 trillion… but is more like 300 trillion……. and so… to end the debt… we must revalue all Dollars in circulation… otherwise if we just switch to another currency… it will ruin the world economy… would start a world war… and would raise poverty for the world, and that would be bad.
    I offer a simple suggestion to deal with this, please consider it… –> http://mosheh.org/Currency.html

    The idea that the World Bank, and IMF could forgive our debt… is fine… and I would support that… but.. since We as the USA practically run both of those organizations it becomes problematic, unless we work to end all world wide debt… which… I also support and provide a plan for… –> http://mosheh.org/Message-for-Bankers.html

    The real issue.. is that most of the worlds wealth is held by 5 major international banks… and they are the ones who invest into the debts of the world… So… in order to change the world, WE MUST give them.. them.. a better way to invest and a better way to run the planet wide economy…. and as I have said… I offer a plan they would agree too if the people of earth demanded it.

    Please think consider it.

    -Mosheh Eesho Muhammad Al-faraj Thezion
    http://mosheh.org/Home.html
    1-818-397-1352
    campaign@mosheh.org

  2. Steve Letsfixit

    My friend, this is not like writing down the debt of and underdeveloped nation like Bangledesh. Italy and Greece knew what they were doing, just as the bar tenders in Las Vegas who bought 5 condos, using each as collateral for the next.

    This seems to me to be a very naive solution. Every dollar of debt the US forgave would simply add to the US deficit and the US is already the largest debtor in the world.

    Furthermore, you seem to be confusing bank debt and sovereign debt. Banks can forgive or write down loans to Greece or Greek companies. The US government can only forgive or write down loans to Greece.

    As nations inflate their way our of the high deft loads they carry (US and EU included), the effective value of bonds everyone holds will be written down.

    Several nations, including us, are in for a tough decade or two because of irresponsible fiscal policy. In the end that bill will be passed to the people in the form of inflation.

  3. Gabriel McMillan

    I’ll try to reply to each of your comments one at a time.

    Mosheh,

    Please notice that I did not suggest only forgiving U.S. debt. Nor did I suggest only forgiving foreign debt. I suggested forgiving the debt owed by those most harmed by the financial crisis, I suggested that forgiveness be granted by those most responsible for the financial crisis.

    This would have many, many effects, and among them would be those 5 largest investment banks paying down a significant portion of the debt of every Nation that was harmed by their mismanagement of the global economy, which is exactly the legal and moral precedent that was set by the judgement against BoA requiring them to forgive a portion of the debt held by homeowners on under-water mortgages that BoA held.

    This, in turn, would have the effect of bolstering National budgets without cutting social programs or raising taxes, and the financial burden would rest squarely on those most responsible for creating it. It would finally hold the Financial Sector accountable for their crimes against humanity, worldwide.

  4. Gabriel McMillan

    Steve, I am not asking the U.S. to forgive debt. Rather, I am asking for a portion of the U.S. debt to be forgiven by those parties in the Financial Sector whose negligence led to the housing crisis, which caused the recession, which caused inflation, high unemployment, a dramatic fall in reveneue, GDP, and the overall assets of the MIddle Class, not just here in America, but wordlwide.

    The European and American Banks and Institutional and Individual Investors who hold significant portion of Sovereign Debt, in the form of Treasury Bonds, Municipal Bonds, etc should be legally and democratically held accountable and financially liable by being compelled to forgive that debt as a penalty for their negligence and greed at the expense of humanity.

    This would have the effect of improving the balance sheets of Nations, which would improve their credit ratings, reduce their annual interest expense, increase GDP, improve consumer confidence, reduce the need for higher taxes and/or austerity measures, stimulate growth in a responsible and sustainable way (without quantitative easing or more sovereign debt), and, I beleive, thereby improve everyone’s quality of life and the overall economy.

    The Financial Sector will recover from the shock, and I believe it would also have the effect of forcing the sector to behave far more responsibly. For the first time in decades they would be forced to consider the public’s welfare in how they do business.

    There is a potential hazard in paying down the debts of Nation’s which already had a debt dependency crisis before the financial crisis.

    There are two ways this hazard can be mitigated. The first, is through the Occupy Movement, which will raise public awareness of our fiscal crisis and ensure that our elected leaders are held accountable and are expected to maintain a balanced budget in the future so that this catastrophe does not recur.

    The other way is to implement a policy similar to what I suggested in the other part of my letter to the President. Simply forgiving debt is nowhere near enough to solve our financial problems and prevent future crisis. We, the People, not only here in America, but worldwide, are ultimately responsible for overseeing our own economy. We must do so, by demanding that the Global Economy and Financial sector, in the future, invests the World’s resources in a way that fosters sustainable growth around the World which Justly rewards every Person for the Fruits of their Labor, while extending Opportunity to all and Respecting and Fulfilling the Rights, Needs and Desires of of Humanity.

    These are not abstract words of pomp. This should be the Constitution that we write for World Economy, and which we demand be upheld as prerequisite to doing business.

    Clearly though, we are a long way from this goal. A first step is returning the wealth that was stolen from the Middle Cass (due to the greed, or negligence, or both of the leaders of our Global economy) to the People of the World, so that our economy can begin, not only to heal, but give way to a new era of global prosperity. Sovereign Debt Forgiveness will form a firm foundation on which we can build the future that we all hope for, for ourselves, and for our children’s children.

    • Gabriel McMillan

      I apologize for the bad grammar. I was thinking I could edit the comments afterward I posted them, as I could with the document. I’ll be more careful next time.