>I don't believe I've been obtuse on this point, but allow me to run through
>it with you. In the short run, homeowners unable to pay mortgages will
>default and the bank will foreclose, and they will live either in rented
>accomodation or with relatives or out of their cars or in a shelter.
That would be a dangerous social situation, given the millions of empty houses that must necessarily be a by-product of all those evictions. I think you'll find that the market price of residential rents would also be impacted. So that part of the capitalist class at least would be paying the price, the working class would only be affected nominally, by having to pay rent rather than a mortgage. But it would have to be an affordable rent, so they would be no worse off in reality.
> When
>the government starts trying to pay these trillions back,
Back to who? The lenders? I think it likely that inflation might make it relatively easy to repay. Inflation of course is a serious concern to those who have accumulated serious cash, but less of a problem to those who have less.
> this will be
>deferred until their is economic growth again (assuming that Stiglitz isn't
>right, and we aren't headed for L-shaped growth). They can then apply
>higher taxes to all income groups.
As I have already explained, only the employing class pays taxes. The market price of wages is denominated in take-home pay, not nominal pay. Employers pay the difference.
> Just as with public sector pay cuts in
>the UK, the working class may be expected to restrict its consumption in
>order to pay for the effects of the crisis. I say 'may' - I would
>anticipate that every effort will be made by the charmingly named 'donor
>community' to ensure that this is exactly what does happen.
What will restrict the consumption of the working class is the profit system itself. Dramaticalloy higher taxes could make it unprofitable for the owners of the means of production to produce things, which creates shortages.
Bill Bartlett Bracknell tas