Time for debt forgiveness?

[Sheilbh]

No wonder your country's real estate market went for shit.  No collateral.  Not even the property itself.  That is some messed up system you got there.

I've read about the mortgages that it's easy to get out of, my land law lecturer mentioned them (horrified) in passing too.  That has been described as a problem with the US real estate market, I think many states have now legislated against it.

[crazy canuck]

  Who said anything about them not seizing the property after a failure to pay?  The mortgage insurance is there to cover the lender in case of default.  The property is still going to be seized.

So the banks do take the property as collateral...

Yes, and then they cash in the insurance policy on the loss as well.

Yeah, that makes sense. 

[Admiral Yi]

Credit cards, student loans, personal lines of credit... there are plenty of unsecured loans.

Sovereign debt is all unsecured  Corporate bonds aren't collateralized; they just give you first dibs on the office furniture.

[crazy canuck]

Credit cards, student loans, personal lines of credit... there are plenty of unsecured loans.

Sovereign debt is all unsecured  Corporate bonds aren't collateralized; they just give you first dibs on the office furniture.

Credit cards are a different animal.  The user gets access to a credit facility and if they miss a payment they get charged large amounts of interest until the balance is paid.  The sad fact that many people treat them as loans does not make them loans.

Student loans are again another animal - I dont know how it works in the US but here much of it is guarranteed by the government so there is no need for the lender to obtain collateral.

Corporate bonds are, as you say, collateralized by the assets of the company. 

[Ideologue]

Sovereign debt is all unsecured

Is it?

[Admiral Yi]

Is it?

Of course.

There are exceptions like the Confederate bonds which were collateralized by an option to buy cotton at a fixed price after hostilities terminated.

[MadImmortalMan]

Well, unless the debt is owed to another sovereign with a more powerful army and a fleet of gunboats.