Occupy Wall Street has launched a ‘Rolling Jubilee’ of debt cancellations, in a “people’s bailout” campaign to wipe out millions of dollars of debt.
Unlike bailouts by wealth countries and international institutions, which have handed trillions of public money to banks and financial institutions clobbered by a financial crisis their greed helped to engineer, the “people’s bailout” is about helping the 99 per cent.
It is based on generosity rather than austerity, and uses a multiplier effect to reverse the standard corporate idea that the poor should help the rich out of the economic crunch.
The simple idea is to use donations to buy bundles of toxic debt for pennies, and then cancel it.
Set in motion yesterday (15 November 2012) through a telethon which quickly 'sold out', the imaginative campaign has already raised enough cash to knock out more than US$5.2 million worth of debt, and contributions have started to roll in at a considerable rate.
Chicago's Grist journal has described Occupy’s ‘Rolling Jubilee’ as a "model for cooperative purchasing power", and it has already attracted praise, comment and analysis from the New Statesman magazine, from sections of the business press, and from financial advisers.
"With community bids for clean solar and wind energy gaining traction across the country, maybe a Green Jubilee is already beginning to roll," added Susie Cagle, comparing the people's bailout approach with other current crowdsourcing alternatives initiatives on Grist.
The Rolling Jubilee explains the process as "a bailout of the people by the people. We buy debt for pennies on the dollar, but instead of collecting it, we abolish it. We cannot buy specific individuals' debt - instead, we help liberate debtors at random through a campaign of mutual support, good will, and collective refusal.
Alex Hern of the New Statesman explains how it works: "Distressed debt – debt which is in default – is frequently more trouble than it is worth for banks. Those institutions specialise in making money from money they hold, not recovering money they are owed. So if they have too much trouble getting that debt repaid, they sell it on. Someone pays less than the full value of the debt, and hopes to profit by recovering it and pocketing the difference."
He adds: "For really troublesome debt, sometimes that value can shrink to pennies in the pound – hence the Rolling Jubilee's plan, to buy $16,000 of debt for every $500 they raise (that is, $32 for $1)."
The difficulty, as American Homeowner Preservation found out when they used a similar technique focused on mortgages, is that once you start abolishing debt, those who hold it may stop selling it to you, not least because in America there is a deep-rooted fear of 'moral hazard' - encouraging people to behave irresponsibly. The Rolling Jubilee seeks to address this by its random process for taking on and cancelling debts, which ought to stop people speculating on it.
Rolling Jubilee explains: "There is no way to seek out a specific person and buy that person’s defaulted debt. With 15 per cent of Americans currently being pursued by a debt collector, looking for one person’s debt would be like looking for a needle in a haystack. Anonymous accounts are bundled together and sold as a whole. Before purchasing debt, there is only limited information as to whose debt we are buying. These peculiarities are part of the scandal that we are trying to highlight."
The campaign adds: "We believe people should not go into debt for basic necessities like education, healthcare and housing. Initiatives like the Debt Resistors’ Operations Manual offer advice to all kinds of debtors about how to escape debt and how to join a growing collective resistance to the debt system.
"Our network has the goal of building a broad movement, with more effective ways of resisting debt, and with the ultimate goal of creating an alternative economy that benefits us all and not just the 1%."
The idea of Jubilee comes from many faith traditions including Judaism, Christianity and Islam. A jubilee is an event in which debts are cancelled and those in bondage are set free.
Yesterday evening the campaign tweeted: "Rolling Jubilee has officially erased $100,000 of people's medical debts. Millions more will be erased, soon."
* More on Rolling Jubilee: http://rollingjubilee.org/
* Follow the campaign on Twitter #rollingjubilee #strikedebt and #peoplesbailout
* Donate online: https://www.wepay.com/donations/526105166
* Edinburgh conference seeks inspiration from Occupy movement - http://www.ekklesia.co.uk/node/17371