TED Conversations

Carsten Sprotte

Founder and President, ParisSharing

This conversation is closed.

Debt forgiveness, orchestrated across our modern economies, may be a plausible alternative to our current debt dilemma.

The looming Greek default threatens to undermine our entire economic system Financial markets are panic-stricken. Maybe we need to start thinking outside of the machine that operates us. Perhaps the entire debt structure of our modern civilization is just not sustainable. Perhaps, beyond a certain level of debt, the lender must share responsibility with the borrower for the consequences of excess. This is, in fact, a very very old idea. What do you think?

Share:

Showing single comment thread. View the full conversation.

  • thumb
    Nov 5 2011: Wow, only 2K chars. I'll try. I see that you have an educations in economics, that will probably help me ;) As you probably already know, Carsten, reality isn't entirely captured by accounting. Alas, accounting barely works at representing a company! Nonetheless, live by accounting, die by accounting it is, for your cash flow dictates not the success of your B&B/sharing initiative, but it surely has an influence on its short term and long term sustainability. Given your education ,you probably have at very least attempted to factor the possible costs in the prices of the houses, factored the offer of the competition, have evaluated the possible demand and target audience, and so on. Or maybe, you guys just agree on a price with the owners and "keep it simple", knowing that no matter how sophisticated, no model will be able to factor in all the possible costs and problems. Now let's hope that it never happens, but all of the sudden 10 clients default, let's imagine you are acting as the administrator of the various cash flows incoming from rents, and that you are short of money. You have a lot of explaining to do, to the banks that are not in mood for forgiveness, to the house owners that need the money to pay their bills, and so on. Hell of Black Swan isn't it? As you worked in HR, you know how irrational an human can become in a snap! Indeed the lender should also bear the responsability (risky leding = you got it wrong, pal, shame on you), but what if the lender, anticipating this panic event, has placed a bet to cover his ass (exactly because of his risky habits) and is now obliged to pay? Enter undergulated swap contracts and similar instruments, enter excessive leverage and contracts whose language is so archane very few have a complete understanding of their implications. Hence, debt forgiveness, a simple and potentially sensible idea, becomes unmanageable in the short term..it's easier to "blame the market" (invisible hand, remember?) and spread the cost.

Showing single comment thread. View the full conversation.