Debt of The Future

Further Reading: Debt

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Loan Origination ... There are many different types of loans. For more information on loan types, see the loan and consumer lending articles...

European Sovereign-debt Crisis ... From late 2009, fears of a sovereign debt crisis developed among investors as a result of the rising government debt levels around the world together with a wave of downgrading of government debt in some European states... This included an agreement whereby banks would accept a 53.5% write-off of Greek debt owed to private creditors, increasing the EFSF to about €1 trillion, and requiring European banks to achieve 9% capitalisation... While sovereign debt has risen substantially in only a few eurozone countries, it has become a perceived problem for the area as a whole...

Debt Deflation ... Debt deflation was largely ignored in favor of the ideas of John Maynard Keynes in Keynesian economics, but has enjoyed a resurgence of interest since the 1980s, both in mainstream economics and in the heterodox school of Post-Keynesian economics, and has subsequently been developed by such Post-Keynesian economists as Hyman Minsky "The Financial Instability Hypothesis"(1992) ] and Steve Keen... Fisher's formulation In Fisher's formulation of debt deflation, when the debt bubble bursts the following sequence of events occurs: Assuming, accordingly, that, at some point of time, a state of over-indebtedness exists, this will tend to lead to liquidation, through the alarm either of debtors or creditors or both... Then we may deduce the following chain of consequences in nine links: Debt liquidation leads to distress selling and to Contraction of deposit currency, as bank loans are paid off, and to a slowing down of velocity of circulation...

Deficit Reduction In The United States ... Measured as a percentage of GDP, debt held by the public ranged between 23% and 50% during the 1971-2007 period, then rose significantly in the wake of the financial crisis and recession of 2008–present, ending 2010 at 62.1% GDP or $9.0 trillion... Causes of recent deficits and debt increases Economic growth and employment are key factors driving recent deficits...

Debt Consolidation ... Debt consolidation can simply be from a number of unsecured loans into another unsecured loan, but more often it involves a secured loan against an asset that serves as collateral, most commonly a house...

Islamic Economics In The World ... The only significant distinction between the Islamic waqf and English trust was "the express or implied reversion of the waqf to charitable purposes when its specific object has ceased to exist", though this difference only applied to the waqf ahli (Islamic family trust) rather than the waqf khairi (devoted to a charitable purpose from its inception). Another difference was the English vesting of "legal estate" over the trust property in the trustee, though the "trustee was still bound to administer that property for the benefit of the beneficiaries." In this sense, the "role of the English trustee therefore does not differ significantly from that of the mutawalli." The trust law developed in England at the time of the Crusades, during the 12th and 13th centuries, was introduced by Crusaders who may have been influenced by the waqf institutions they came across in the Middle East...

Administration (law) ... The administrator is an officer of the court and an agent of the company, and is not personally liable for any contracts she or he makes on behalf of the company. He has the power to do anything necessary or expedient for the management of the affairs, business and property of the company...

Debt Levels And Flows ... Within mainstream economics, levels and flows of public debt (government debt) are a cause of concern, while levels and flows of private debt (especially households and corporations) is not seen as being of central importance... In measuring debt, stocks and flows are both of interest: stocks are amounts, levels of debt (e.g., $100) and have units of currency (such as US Dollars), while flows are changes in levels – in calculus terms, the derivative – (e.g., $10/year), and have units of currency/time (such as US Dollars/Year)... In order to make these stock and flows comparable between countries and across time, one may normalize these by some measure of the size of the country's economy, most often GDP, that is, compute the debt to GDP ratio...

Securitization ... Critics have suggested that the complexity inherent in securitization can limit investors' ability to monitor risk, and that competitive securitization markets with multiple securitizers may be particularly prone to sharp declines in underwriting standards. Private, competitive mortgage securitization is believed to have played an important role in the U. S...

Debt Relief ... To qualify for irrevocable debt relief, countries must also maintain macroeconomic stability and implement a Poverty Reduction Strategy satisfactorily for at least one year... Arguments against debt relief Opponents of debt relief argue that it is a blank cheque to governments, and fear savings will not reach the poor in countries plagued by corruption... They further argue that it would be unfair to third-world countries that managed their credit successfully, or do not go into debt in the first place...

Bank ... Due to their critical status within the financial system and the economy generally, banks are highly regulated in most countries. Most banks operate under a system known as fractional reserve banking where they hold only a small reserve of the funds deposited and lend out the rest for profit...

Foreclosure ... If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt...

Risk-free Interest Rate ... Why risk-free? One explanation for the assumption that no default risk exists is due to the nature of government debt... In this case, true default is theoretically impossible: owners of government debt can always be paid, but with money that may have substantially lower value...

Criticism Of Debt ... There are many arguments against debt as an instrument and institution, on a personal, family, social, corporate and governmental level... Calls for debt relief to the developing countries have been more and more insistent since the 1980s Latin American debt crisis, and, more recently, the Argentine economic crisis... Developing countries' debt has often been qualified as an odious debt and a mean of neocolonialism, in particular by "third-worldism" (tiers-mondisme) and the more recent alter-globalization movement...

Fiscal Policy ... Contractionary fiscal policy occurs when government spending is lower than tax revenue, and is usually undertaken to pay down government debt... Consuming prior surpluses A fiscal surplus is often saved for future use, and may be invested in either local currency or any financial instrument that may be traded later once resources are needed; notice, additional debt is not needed...

Bankruptcy ... Many city-states in ancient Greece limited debt slavery to a period of five years and debt slaves had protection of life and limb, which regular slaves did not enjoy...

Financial Position Of The United States ... The net worth of the United States at the end of 2008 was $75 trillion or 5.2 times GDP. Net worth Net worth is the sum of assets (both financial and tangible) minus liabilities for a given sector...

Debt ... Debt is usually granted with expected repayment; in modern society, in most cases, this includes repayment of the original sum, plus interest... In finance, debt is a means of using anticipated future purchasing power in the present before it has actually been earned... The letter b in the word debt was reintroduced in the 17th century, possibly by Samuel Johnson in his Dictionary of 1755 – several other words that had existed without a b had them reinserted at around that time...

Mortgage Industry Of The United Kingdom ... Finally, bad debt provisions relative to advances were only 0.4% for the top 20 societies compared with 2.8% for the four banks...

Political Debates About The United States Federal Budget ... The extent to which the deficit and debt increases are a cause or effect of wider systemic problems is frequently debated...

Credit (finance) ... Credit does not necessarily require money. The credit concept can be applied in barter economies as well, based on the direct exchange of goods and services (Ingham 2004 p...

Nonrecourse Debt ... It is only used for residential mortgage loans in the United States, although most of Europe enforces mortgage debt forgiveness after eviction... Common uses Non-recourse debt is typically used to finance commercial real estate and similar projects with high capital expenditures, long loan periods, and uncertain revenue streams...

Income Inequality In The United States ... While post 1970s increase in inequality (sometimes called the Great Divergence) has not been caused by a widening gap between the poor and middle class, but between the middle class and top earners, with disparity becoming more extreme the further one goes up in the income distribution. A 2011 study by the CBO found that the top earning 1 percent of households gained about 275% after federal taxes and income transfers over a period between 1979 and 2007, (although this number has decreased somewhat since 2007 as a result of the Great Recession )...

History Of Bankruptcy Law ... In Islamic teaching, according to the Quran, an insolvent person was deemed to be allowed time to be able to pay out his debt...