The Mogambo Guru, as always, is about as subtle as a train wreck ...

(snip)"Japan has taken an interesting approach to preventing people from accumulating so much debt that they default; The Wall Street Journal reports that Japan has a new law "restricting total loans from all lenders to one-third of a borrower's income." Hmmm! Criminal penalties for accumulating too much debt? Wow!

In effect, the Japanese are not allowing creditors to sustain a loss by not allowing debtors to amass so much debt that they default so that the government gets less tax revenue, the deadbeat's credit is ruined, he loses everything, his girlfriend leaves him, he can't borrow any more money, and he lays around the house all day watching TV and whining about how life is unfair until his own parents throw him out of their house, screaming, "Get a job and get a life, you Lazy Mogambo Moron (LMM)!"

And the ripple effects of default are worse, mostly about how the government gets less tax revenue when the creditor nets this loss against (all things being equal) lower gains at tax-time, which does not even start to get into that whole inflation thing, where the money that was borrowed had the effect of increasing the money supply when it was borrowed, and now the default has the opposite effect, namely, shrinking the money supply when the money disappears when the debt disappears. Yikes! A falling money supply!

So there are lots and lots of reasons why nobody wants debtors to get into financial trouble because of excessive debt, and I have heard them all when creditors turn me down.

And they have more reasons besides those, like that time the bank loan officer said, "No! And get out of my bank, you freaking lunatic!" when he thought I wanted to borrow enough money to buy up all the houses around me for a quarter of a mile in any direction.

The reason that I wanted to buy everybody's house is so that I would create a "free-fire" zone around the Fabulous Fearful Mogambo Bunker (FFMB), taking a stupid residential area full of stupid people who are not smart enough to buy gold, silver and oil when their government is deficit-spending so much money, which is not to mention the despicable Federal Reserve creating the money that the government borrows, and turning this hotspot of dimwitted, residential lowlife troglodytes into a flat, deserted wasteland, completely barren and free of trees, shrubs, or cover of any kind, depriving my enemies, both real and imagined, of concealment of, again, any kind if they dared approach the aforesaid FFMB.

What the stupid loan officer misunderstood is that I don't want to borrow the money to buy the houses, but to borrow the money to buy gold, which will rise so much in value when compared to the houses, and to the original loan used to buy the gold, that I can use the gold at its much higher price to both buy the houses and pay off the debt used to buy the gold in the first place, with more gold left over! Whew! What a plan! What an amazing plan! What an Amazing Mogambo Plan (AMP)!

I devised this plan modeled on the heights of the Weimar Hyperinflation in Germany, where one ounce of gold - one ounce! - was supposedly enough to buy up 4 square blocks of prime, downtown-Berlin commercial property!"(snip)

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While the Mogambo is not meant to be taken seriously, his points about Japan's new law limiting total outstanding loans to 1/3rd of citizens' official reported incomes, and about one ounce of gold being able purchase huge amounts of physical assets / property during the Weimar deutschemark inflation, are completely accurate. And of more urgent import, his observation that loan defaults wind up 'costing' the gov't / taxpayers additional money because the banks / lenders being saddled with those losses are able to write off those losses against taxes due on other income, is also correct. In fact, the future tax deduction value of such rolled forward losses was a major justifying reason for big Wall St. banks buying up bankrupt lenders like poster child CountryWide in the first place.