A short while ago, I heard about Rolling Jubilee, the Occupy Movement’s newly launched plan to collectively buy distressed debt, much like speculative traders have been in recent years, but to pay it off and set the debtor(s) free. You can read more at Rolling Jubilee.
The idea is getting excellent response from the economic community. See this article in the Business Insider for a great example: http://www.businessinsider.com/why-occupys-plan-to-cancel-consumer-debts-is-brilliant-2012-11
A new initiative is re-energising the Occupy movement. Called the Rolling Jubilee, it is a plan to use money from donations to buy distressed consumer debt from lenders at a marked down price, just as debt collection agencies normally would. But instead of hounding debtors for payments, it will simply cancel the debts. The hope is that the liberated debtors will themselves contribute to the fund, “rolling” the jubilee forward.
The Rolling Jubilee is a genius move for several reasons. First, debt relief is a transpartisan message that eludes conventional political categorisation. As such, it returns Occupy to its origins as an advocate for the wellbeing of ordinary people, neither leftwing nor rightwing. The Rolling Jubilee says, non-threateningly, “We just want to help people in this unfair system.”
But despite its non-threatening appearance, the Rolling Jubilee has significant transformative potential. Two pillars uphold the present debt regime: the moral legitimacy of debt in society’s eyes, ie, the idea that a person “should” pay back what he owes; and the coercive mechanisms that enforce repayment, such as harassment, seizure of assets, garnishment of wages, denial of employment or housing, and even imprisonment. The Rolling Jubilee erodes both. It destigmatises debt by saying, “we’re all in this together, we believe your situation is unfair, not shameful, so we’re going to help you out”. And it lessens the severity of the consequences of default. If defaulting means you might get bailed out, why keep paying?
Slate gets into the discussion with some “who deserves this?” thinking at http://www.slate.com/blogs/moneybox/2012/11/09/rolling_jubilee_occupy_wall_street_s_bailout_of_the_people_by_the_people.html:
Now here’s an interesting idea coming out of the Occupy Wall Street community—a Rolling Jubilee executed by buying up distressed debt and then writing it off.
How does that work? Well, all kinds of debt gets “securitized” these days. Instead of a bank just lending money and collecting interest, it sells the rights to that income stream as an Asset Backed Security. By buying up a diverse array of ABS you can end up with less exposure to idiosyncratic risk than if you’re just lending. But what happens when securitized loans go bad? Well they become “distressed debt” that can be purchased for pennies on the dollar. So in theory you can find a loan with a face value of $100 and buy it for just $15. That’s supposed to be a kind of risky investment—a bet that the loan will actually pay off in the end. But the Rolling Jubilee concept is to turn it into a random act of kindness. Just write off the loan!
Any problems with this? Well, it’s a pretty great idea but I’ll quibble a little anyway
[…]
Given two struggling families, one of which is indebted and one of which isn’t, it’s not clear why you’d think that the family that’s borrowed heavily in the past is more worthy of assistance. And similarly, for any particular indebted family it’s not obvious that on a dollar-per-dollar basis debt forgiveness is more helpful than just handing over some cash.
That seems to be the question on the mind of many of those who are pushing back on the idea. But here’s the problem with that challenge as I see it: Is anybody just handing over some cash? And who decides who that cash should go to? Who is worthy of forgiveness, of grace? And if a family has borrowed heavily in the past, does that mean they are disqualified from forgiveness and grace?
What would it look like if, instead of Occupy Wall Street, the Christian church did a project like this? Would we make similar requirements?
Until we actually DO that, I’m adding Rolling Jubilee to my donors list (along with One Day’s Wages and Kiva). I love their implementation of grace, even if it is imperfect grace.
pat loughery 
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