Wednesday, March 16, 2005

Are the Congressional Republicans Bankrupt?

William Sjostrom has some interesting thoughts on the bankruptcy bill.

I have tended more to the Glenn Reynolds view, though of course Sjostrom points out this smacks of "daily Kos" style argument, than which nothing is more superficial.

Making discharge of credit card debt harder makes it more attractive to lend. Moreover, borrowers who know themselves to be high risk (call them dishonest) are driven away by customers who know themselves to be lower risk (call them honest). It is Daily Kos level analysis to try to reduce this problem to us poor little helpless consumers against the big mean corporate interests.

WS also notes:

Easy discharge of debts drives up interest rates. The gainers are the dishonest borrowers who plan to retreat into bankruptcy (why worry about the interest rate if you do not plan to pay off?). The losers are the more honest borrowers who face higher rates.