Lenders should forgive debt

Author Margaret Atwood suggests debt forgiveness could be one way to restart the world economy.

"I'm a screaming optimist," says Man Booker Prize-winning author Margaret Atwood. These two words not only describe the author, but highlight her view on the way out of the current economic crisis.

According to Atwood, the economic crisis will not end until banks and financial institutions agree to forgive the massive amount of debt on their books. To back up her position, she references the ancient Greek politician Solon who, at a time of stagnation in the Greek economy, abolished all debts as a solution.

"What had happened was a few rich people had got all the money into their own hands and it wasn't moving," says Atwood. "Money is worth nothing when it doesn't move, that's why it's called currency. It's the same as the human body; [if] the blood stops going around and around, we're dead. Why the credit crunch is bad is because it stops things from circulating."

"What Solon did was he abolished all the debt. It made him unpopular with a few people but the result was an enormous stimulation of the economy," says Atwood.

Undoubtedly, cancelling all debts in our credit infused world would make more than just a few people unhappy, but the idea certainly has merit.

Speaking last Friday at the Man Hong Kong International Literary Festival about her latest book Payback: Debt and the Shadow Side of Wealth, Atwood extolled the implications of debt on the current economic crisis. In Payback, Atwood looks at debt as a normal part of human society, calling borrowing and lending a "part of the glue that sticks social [human] beings together". Broken up into five parts, the book explores debt in ancient times, its "sinful" qualities for both borrowers and creditors, its use in literature, its "shadow" or criminal side and closes with two scenarios for the future payback of society's debt.

"We finally found the weapons of mass destruction... they were buried in our own backyard," says Atwood, citing Thomas Friedman. It was these weapons of mass destruction that caused the subprime issues in the US to spiral into a global economic crisis. She explains that subprime did not come out of nowhere but is linked to a legacy of increasing credit availability in the US and around the world since the 1970s.

The root of the current crisis may be the introduction of credit cards in the 1970s but debt is a cyclical issue. Looking back, Atwood sees similarities between the 1920s and the 2000s in their free-wheeling carelessness with debt. While her screaming optimism keeps her from believing the current crisis will become a second Great Depression, she pins her hopes on re-instilling confidence in the system.

Atwood describes money as "a creature of the [human] imagination" that, because the user trusts he will receive the amount printed on a bill, is instilled with value. It is a distrust that today's high levels of debt will not be paid back that underlie the current economic crisis.

Despite her bleak outlook, Atwood sees a silver lining in the current turmoil. "When we reach the floor, people will start building again and you'll probably see a lot of business activity, but guess what, they're going to be somewhat different [than yesterday's] businesses," she says. "Necessity is the mother of invention. [Today] we are faced with a lot of necessities and there is a lot of invention going on."

"Where would I put my money," asks Atwood. "I would look seriously at people inventing cheap desalination plants and solar fabrics... green technologies."

Throughout her talk, a tired Atwood screamed with optimism. Be it about the success of her next book, green technologies or a satisfactory end to the economic crisis, she sees a positive end-scenario playing out.

"It will either be great or it will be terrible, but who cares," says Atwood. "You have to take a chance on things." It is only by taking a chance that society will succeed and pay back its debts, and we can move on.

¬ Haymarket Media Limited. All rights reserved.
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