"Debt Forgiveness" - the monster that should not be named - now appears!

This blog has asserted long, loud and oh so often, that it is the house price crash, underwater home owners, walkaways and re-possessions that lay at the heart of the ongoing economic crisis in the English speaking countries of the West. I have in the past suggested means of solving this crisis, expensive but with costs as nothing compared to this proposal from the Irish Independent, this morning, read here. A quote:

"It [debt forgiveness] will have to be done simply because the Irish economy will not be able to function properly at all levels if we keep the levels of debt as they are. So far, we have spent four years of this crisis loading more debt on to the shoulders of already heavily indebted households and families. It is unsustainable," the Trinity College economist told the Sunday Independent.

Pointing to the direct impact the servicing of this massive debt was having on the middle class, whom he described as the "main productive part of the economy", he added: "We will have to simply allow these people to write down their mortgages to closer to the level of the prices of the homes that these mortgages have been written against. It has to be done very robustly at the level of the middle class. The reason why, is that the middle class is being the hardest squeezed by tax increases at current levels and future ones. They also bear the most burden in terms of debt, but also they are the main productive part of the economy."