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Politics : Mainstream Politics and Economics
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To: Broken_Clock who wrote (50575)8/10/2013 9:36:08 PM
From: TimF3 Recommendations

Recommended By
FJB
i-node
Thehammer

  Read Replies (2) of 85487
 
Its not rich vs poor, its following agreed contract terms. If the less rich creditor was senior, then they should get the money first not the richer creditor. If (as in this case) the senior debtors are wealthier, then we shouldn't tare down all respect for contracts just to stick it to the rich.

Senior debt has a lower interest rate, because its less risky, because it gets paid first. To the extent this seniority is ignored the borrower, and maybe similar borrowers, or if the idea is pushed far enough all borrowers, will no longer be able to get a lower interest rate in the future. Having to pay higher interest rates makes it more likely that cities, companies etc. will fail. Having them fail makes it more likely they will not be able to pay out pensions and benefits.

isn't that another form of regulation?

Contracts are voluntary agreements. Regulation is command and control imposed on people. Totally different things.
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