activism generosity social justice

Rolling Jubilee – the people’s bailout

Last night saw the launch of Rolling Jubilee, one of the most extraordinary responses to the financial crisis that I’ve seen so far.

As you may be aware, our debt problem in the Western world is not limited to government. Our companies are in debt too, and so are individuals. In the US, 1 in 7 people is being pursued by debt collection agencies. These agencies buy up debt cheaply from people who have failed to keep up with payments, and then chase it up themselves. And that begs a question or two. If you can sell debt cheap, why do ordinary people have to pay it back at full value? And what happens if someone else buys it and doesn’t claim it?

That’s how Rolling Jubilee plans to intervene. They’re raising money through donations and fundraisers, buying up tranches of cheap debt, and then writing it off: “We buy debt for pennies on the dollar, but instead of collecting it, we abolish it” they explain. “Think of it as a bailout of the 99% by the 99%.”

Because the secondary debt market sells big tranches of anonymized debt, the project won’t be able to help specific people. It will be abolishing debts at random. And you might be surprised how much debt you can get for your money. Yesterday the organisation had received just over $198,000, and that would buy $3.8 million in debts to annul.

Rolling Jubilee is a project from Strike Debt!, an offshoot from Occupy Wall Street. Some of their rhetoric on debt is a little overblown, and they will have to tread carefully in the debt market, where they will not be welcome. But the idea itself is innovative, radical and generous.

It’s a non-profit organisation, and all donations will go towards buying and abolishing debt. You can make a donation here.

7 comments

  1. Sounds a great idea, though I’m not sure why the purchased debt in anonymous. Surely if a debt collector buys the debt instead, they would need to know who to chase up for repayment? My guess is that the debts might only be anonymous prior to being purchased, but then after purchase, the list of debtors details should be provided.

  2. Not sure how you deal with the moral hazard involved. Some people in debt will be their because their circumstances changed through no fault of their own. Others will have spent it all on high living. Canceling debts at random will reward some feckless people.

    Also remember that many people will be defaulting on these debts anyway. The really cheap debt is that which is unlikely to be recovered. Bankruptcy or creditors arrangements are the Jubilee many of these people were going to be visiting in the fullness of time.

    1. A fair point, although the question of moral hazard in banking bailouts is much more serious. I have no problem with it because it’s random. You can’t get yourself into debt and then go crying to the Jubilee folks to sort you out.

      To me, one of the principles of Jubilee (as it was first conceived in the Old Testament) was that it was a recurring event. It came round every 50 years and any lending business would have to work within that. Lending with two years before the Jubilee came up would be on very different terms. It meant that you couldn’t hold someone’s debts against them forever. Borrowing was allowed, but could not become a trap that you would never escape. We don’t have that recurring reset, so any effort at a debt Jubilee will benefit some people and disadvantage others. That’s inevitable, but I don’t think it should mean it’s off the table.

      It’s worth mentioning the role of debt forgiveness in Iceland – a country that let debt get out of control, and has since written off vast sums of ordinary people’s debts. Actually I should write a separate post about that.
      http://www.bloomberg.com/news/2012-02-20/icelandic-anger-brings-record-debt-relief-in-best-crisis-recovery-story.html

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