"Still, the data highlight the fact that the supply of strategic defaulters isn’t endless. Reneging on debts can provide a boost, but it’s no way to build a lasting recovery."So should we look down on these people for reneging on their obligations to pay? Or should we look to these people to spend their way to our recovery?
Monday, July 5, 2010
Strategic Defaulters: Villians or Heros?
The WSJ Real Time Economics blog is one of my favorites because it highlights things like this. Credit firm Experian and consultancy Oliver Wyman note that 355,00 people defaulted on their mortgages in the first half of 2009 even through they could pay. This ties in nicely with one of my previous posts about credit card defaults. Defaulting lightened the financial burden of these defaulters which consequently allows them to spend more. But as the WSJ points out:
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Sometimes defaulting on purpose is the only solution.
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