Committee for the Abolition of Illegitimate Debt

CADTM: So you’re involved in “Occupy Wall Street” and “Strike The Debt”. Will you please tell us what’s happening today in the US about the actions related to the mortgage Mortgage A loan made against property collateral. There are two sorts of mortgages:
1) the most common form where the property that the loan is used to purchase is used as the collateral;
2) a broader use of property to guarantee any loan: it is sufficient that the borrower possesses and engages the property as collateral. debt, the student debt and also the debt municipalities in Detroit?

David Graeber : Well, we seem to be in this strange situation where we have a debt crisis on every level but nobody seems to know what to do about this. The “Strike Debt” was created during the height of the occupy movement and spent a lot of the first year or so casting around trying to think of how it would go about doing civil disobedience against financial capitalism. Me initially, I started out with speaking loan and debt to a lot of the people involved in those schemes. I must say it for myself, for my own part when I was first working on doing some of the initial organizing for occupy Wall Street. I’ve written a book on debt and, as I keep trying to keep the two separate, but “well… who’s mine? the other movement”. It wasn’t only difficult because wherever I would go, I gave a talk to any number of young people, then people come up to me afterwards, so start like: “is there somehow you can start a movement around the student loans?”. So, there is clearly a huge demand for it but despite the fact that so many people are interested and trying to do this, I’m not sure what exactly we could do. Part of the reason for that was that people were afraid. We…The first idea that come… quite a clever idea… is that: why don’t we just have people take a pledge that once we reach a certain number of signatures, that everyone has known before but once. So you can’t be accused of encouraging people to fault with the fault of the student loan with others’ consequences they’ve got to find ten to twenty - thirty thousand dollars, people have their loans, doubled, were incapable. So we put together this pledge, I was actually involved in the group of talk, and they found that… it was really hard to get people to sign it. We manage to get a few, I don’t know, five or six thousand signatures, but they weren’t really personal. So we consider this to be a failure we had to rethink that. One conclusion came to, is that a lot of people didn’t want to put their name on things that suggest that they might default on their student loans. Because they were already defaulting on their student loan. About one of every five student loans are currently in default and another fifth say that they considering that if you ask them anonymously.

So that was one thing and either they were already in default or likely to be in default, or considered the possibility of default, the last thing they wanted to do was to put their name on a document saying “yes it’s me and I’m doing it for political reasons and the debt collector will come after you”. And we thought maybe this phenomenon is more widespread than we think and when we started researching we discovered that the amount of default was actually enormous: one of every seven American is currently being pursued by debt collectors for something or another, add to this the mortgage default and the student loan default. Putting all together, probably a quarter of Americans who are in debt are already in default. It might well be higher than that.

So, you realize, alright, you have this spectrum, there are several million people, maybe 75-80-90 million people, who are actually practicing civil disobedience against finance capital but they don’t want us to know. Then, how do you organize people whose form of resistance is essentially secretive? We came up with the idea of an invisible army: “there is an invisible army of defaulters”. Astra Taylor a filmmaker and Laura Hanna got the idea to make a video where they would just film ordinary Americans talking about defaulting on loans. Making occasional and ordinary activities, mowing the lawn, walking the dog, that sort of thing, because they’ll all be working on failing profits. They should all be members of the invisible army of defaulters. But, more importantly, it came the idea of the “dead resistors operations manual” which is a manual of operations for the invisible army. The idea there was to gather as much information as possible about each type of loan, each type of debt that exists in America, give a little bit of historical and political explanations. But then give practical information: what it is they will tell you will happen if you default and what will actually happen, get people who were insiders in various industries to sort of give away their secrets. For example, had one guy who has actually worked for “Payday Loan” outfit for about a year, before he quit in disgust and he told us that the great secret of “Payday Loans” is they can charge like 800% interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. annually, on a monthly basis because its usual capitalism. Capitalism isn’t abolished in America. But the way they excused it to themselves is that, “if you don’t pay they don’t do anything”. They just leave you alone so it’s free money if you want it to be. Obviously, that’s the last thing they want you to know so we just put all that kind of information in there. That was sort of successful, we targeted a circulation on the internet of hundreds of thousands of copies have been given away in one form or another. Everything itself would roll into belief.

We discovered that in a lot of forms of debt, the people, the corporations that hold the debt actually calculate-in certain amounts of default. They’re willing to write-off a huge amount of debt. They’re just not willing to write it off to the people who actually have the debt. This is very important because it shows that write-downs for people and debts cancellation happen all the time and probably will happen on mass scale but they don’t want you to know that. They want to preserve the morality of debt, the idea that, “ no, you have an absolute obligation to pay off your loans to be let off the hook”.

So, say you have $10 000 in credit card debt. After 6 months of non payment they turn it over to a debt collector but they don’t actually turn over the whole thing, they sell it at 5 cents on the dollar. So essentially, instead of $10 000 they take $500, they buy up the debt and they try to collect $10 000 from you. Suddenly they have about 50% of recovery on these debts so they are making enormous profits.

Thing we discovered is that you don’t have to be a debt collector to actually collect and to buy this stuff. Anybody can do so. Then tell you who’s debt it is, because otherwise you could buy up your own debt if you know beforehand. You can say, I want to buy medical debt from New Jersey, I want buy third part debt from Iowa or whatever it might be, you can buy it up and you can cancel it. Nobody will tell you “you can’t”. So we drive a fundraiser, we raised millions of dollars and we’ve been setting about systematically canceling people’s debts.

CADTM: What about Detroit ?

DG : Detroit is a perfect example of this debt morality, the way that certain types of debts are considered more sacred than others. Particularly debt between rich people and the debt between poor people have always been renegotiable but the debt between the rich and the poor is quite another thing. Even there, it’s only one way. The debt the rich hold to the poor can be renegotiated and are all the time. Hence, there are constant attempts to reform social security for example. Basically that is a benefit to the poor which we are constantly trying to figure out a way for it to renege.

Detroit’s pension funds Pension Fund
Pension Funds Pension funds: investment funds that manage capitalized retirement schemes, they are funded by the employees of one or several companies paying-into the scheme which, often, is also partially funded by the employers. The objective is to pay the pensions of the employees that take part in the scheme. They manage very big amounts of money that are usually invested on the stock markets or financial markets. ; the city owes large funds to large numbers of people and owing to various financial manipulations, at the moment their books have got to balance Balance End of year statement of a company’s assets (what the company possesses) and liabilities (what it owes). In other words, the assets provide information about how the funds collected by the company have been used; and the liabilities, about the origins of those funds. . In the past, when this happened, they always come in and fix it. In fact, neoliberals themselves; the basic tactics of neoliberal reforms, as they like to call it, was invented in a similar crisis in 1975 the New York fiscal crisis for various reasons didn’t balance. This has happened time and time again over American history, the Federal Government steps in and provides some sort of funding in the meantime, this allows the people to sort things out. This time it was refused. Instead of allowing New York to refinance they brought in a board of economic experts, basically creditors, and told them that they would have the power to reform the New York economy themselves so of course they privatized everything in sight. New York was a social democratic city, they had free university for example, had all sorts of free social services, they got rid of that, they just packed up the Reds, they put all sorts of new dues on the poor, and that model of repairing a fiscal crisis, imposing a board of so supposedly neutral technocrats, who are in fact ideological free market types, who then impose all sorts of essential, or so called, reforms that in fact let loose public resources for themselves without the agreement of the population, that was a formula that worked so well from their point of view that it was then applied to the rest of the Third World, the Baker plan in fact used Third World debt to do the same thing in country after country, first during the 80s and 90s. So it’s ironic that it’s come home, as it were. New York was the experimental ground and now it’s back in Detroit.