Rolling Jubilee: can a crowdsourced bailout of personal debt work?

A new spin-off of Occupy Wall Street wants to cancel debt. Can it?

This is an interesting thing. The Rolling Jubilee:

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.

So how does this work? 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

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).

That's how it works. But will it work? Maybe.

The legal mechanics of what they are doing are pretty clearly in their favour. Debt collectors really can cancel the debt if they want.

The problem is that if you try to actually do that, you may find very quickly that people stop selling you debt.

A similar idea was proposed a while back by an organisation called American Homeowner Preservation. It also deals with distressed debt, but focuses exclusively on mortgages, buying up pools of bad loans, and restructuring them to make it easier for the homeowners to pay them off.

But the original plan was simpler still. Felix Salmon explains:

Investors would buy a house in a short sale at the market price, and then lease the home back to the homeowner until the homeowner had the ability to get a mortgage and buy it back at a pre-set price.

The idea might have been elegant, but it didn’t work in practice, because the banks wouldn’t play ball: they (and Freddie Mac) simply hated the idea of a homeowner being able to stay in their house after a short sale, and often asked for an affidavit from the buyer saying that the former owner would certainly be kicked out.

There's not really any cold hard economics at play here. The banks have no reason to care what happens to a house after they've sold the mortgage for it, but they do. The best explanation for their stubbornness is that they fear that organisations like American Homeowner Preservation are creating a sort of moral hazard by reducing the penalties for defaulting on mortgages.

Will the debtholders be similarly reluctant when it comes to playing along with Rolling Jubilee? We'll see, but I don't have high hopes for a change in tactics any time soon.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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How Devon's humpback whale is dredging up the politics of the sea

The arrival of a humpback whale at Slapton Sands has caused a local splash. But the history of the village has a warning for those who think of the sea as spectacle alone.

The Devon coast road from Dartmouth to Torcross is as pretty as it is treacherous. After winding through a cliff-top village, the road ahead falls away to reveal a giant lake – the Slapton Ley - flanked by green hills on one side and ocean on the other. 

Tourists (or "grockles") gasp at the view and, in recent weeks, even locals have been staring out to sea - where a giant humpback whale has taken up residence in the bay.

Not seen at Slapton in living memory, the whale has swum into rural stardom. Hundreds have lined the beach with cameras and telescopes. The nearby pub and farm shop have seen levels of trade only usually enjoyed in the summer.

According to Keith Pugh, (the ice-cream-van-man who has been keeping the crowds supplied with tea) one lady from Plymouth caught the bus here every day for six weeks just to catch a single glimpse. That’s a four-hour round trip.

If this all sounds a bit fishy, that's because it is. Experts believe that the whale is feeding on the bumper numbers of small fish and mackerel that have been reported in the area. But even these are behaving in unexpected ways. “The mackerel are further north than usual for this time of year,” says Mark Darlaston, a photographer who first identified the whale as a humpback (and jokingly named it after storm “Doris”).

So what is the humpback up to, so far south of its northern feeding grounds? And should its presence be seen as a sign of recovery - for whales and UK waters in general? 

Not yet, say conservationists. And not if the history of Slapton is anything to go by.

Troubled waters

Villagers at Torcross, at the far end of Slapton sands, are familiar with secrets from the deep. In 1944, a military training in the bay went horribly wrong, when nearly 1,000 American servicemen were drowned. The tragedy was hushed up for decades.

But the greatest threat to the community comes from mismanagement of the sea itself. On 26 January 1917 the entire neighbouring village of Hallsands was swallowed by a storm. The tragedy was partially manmade. The underwater sandbanks, which had helped protect the shore from longshore drift, had been thoughtlessly dredged to supply building materials for the Plymouth docks. Some 660,000 tonnes of material were removed and never replaced.

The results of that plunder are still felt at Slapton today. In 2014, a gale-force storm swept away part of the road that runs between the sea and the ley. Just last year, the seawall at Torcross crumbled, as the protective beach beneath was carried away by waves.

Into the Brexit deeps

So much in our oceans is tightly connected to human activity. If whales are a rare sight on the UK coast, it is partly because of the human campaign against them for many years in the form of whaling. According to Sally Hamilton from the conservation charity Orca, the 1980s moratorium on whaling has helped some populations to recover. 

But others are still fighting to survive in the face of pollution, noise, and over-fishing. The UK’s last resident pod of killer whales looks likely to die out after high levels of PCB chemicals have stopped the females reproducing. In Norway, a stranded whale was found to have over 30 plastic bags blocking its digestive system.

There is also no certainty that the glut of fish that the whale is feeding on will come again next year. “There is still masses we don’t understand about the ocean,” says Will McCallum from Greenpeace, “Climate change and the threat of over-fishing mean that where fish are moving to is more unpredictable that it has ever been.”

And it's not just whales that could get caught out. Some UK politicians have demanded that a Brexit deal include blocking foreign vessels from fishing in British waters. With 58 per cent of UK-caught fish caught by non-British fleets, it is argued that a ban would benefit the UK industry.

Yet with migration patterns becoming more erratic, McCallum is sceptical. "Re-territorialising our waters would be an absolute potential disaster because we just don’t know where fish stocks are going to move," he says. 

Out of the Blues

At Torcross, the sea has long been a source of worry. Claire, the landlady at the Start Bay Inn, recalls the many storms that have pelted the seafront pub since she was a child. Just last year she was “running from one end to the other” trying to sweep the water out, while bottles rattled and the chip-fryer shook.

So it was perhaps unsurprising that news of the whale’s arrival first met with local concern. “I can’t bear to see it,” one woman tells me. She had read in the press that it had come so close in to shore to “beach” itself and die, and heard rumours it was in mourning for a lost calf.

But thanks to the investigations of Mark Darlaston and the divers at the British Divers Marine Life Rescue, such fake whale-news has been corrected - and its visits are fast becoming a source of wider hope. The owner of the Stokely farmshop has joked about replacing it with a decoy “nessie” when it leaves. Claire cannot wait to put its picture on the front of her menus (where the picture is currently of the recent storm).

It is not yet known what lies ahead for Brexit fishing policy, or for whales. But dip into the history of the village of Torcross, and it's clear that understanding and protecting the sea is inseparable from protecting ourselves.

India Bourke is an environment writer and editorial assistant at the New Statesman.