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"mortgage debt is almost nonexistent. " This doesn't make a lot of sense, if there is low interest rates and no estate or real estate tax, then people should n

by jariel 5y ago

"mortgage debt is almost nonexistent. " This doesn't make a lot of sense, if there is low interest rates and no estate or real estate tax, then people should naturally have considerable leverage.

Annatar 5y ago
That's because in Croatia, banks have often been the focal points of financial crime deeply intertwined with political crime; as the justice system isn't functional, the banks constantly and literally swindled citizens, so the average Croat does not take out a mortgage and does not trust any institutions. For example, several years ago, lots of people were intentionally misled by the banks providing loans in kunas which were tied to the swiss franc. When the Swiss National Bank lifted the peg in 2012, the franc, being the safe harbor currency, skyrocketed in value. The banks immediately demanded higher interest, which the loan consumers were of course unable to financially bear. The whole debacle ended up going all the way to the supreme court where it was finally overturned. Up until that point, the banks did not care and kept bankrupting people without so much as batting an eyelash. This is just one example. In the '90's, bank of Ljubljana simply froze, then siphoned off all of their Croatian customers' assets in Croatia to their central office in Slovenia. Nobody ever saw any of their money up to this present day, and are unlikely to ever see it. Nobody went to jail, and it is unlikely anyone ever will. There are a sea of such examples in that country. This is why in Croatia, one borrows cash from family, relatives and friends at no interest, rather than get screwed over by the state and all kinds of private institutions, none of which can be trusted. Croats have zero confidence in their government or anyone else for that matter, sometimes they do not, or cannot even trust their own family or would-be friends.
- jariel 5y ago
  If that's the case, then none of the aforementioned issues matter one bit. It's pointless to talk about the efficiency of public systems, for even the effectiveness of wealth taxes etc. if corruption is endemic, particularly in the financial sector. If the banking sector is corrupt - there can be no real economy. And FYI this notion of 'no mortgage debt' as something healthy is completely wrong. 'Credit' is the lifeblood of an economy, if you want to get people into good housing, it's essential. Mortgages enable people to spread payments out over time and are a fundamental artifact of affordability. Mo mortgages = bad housing and fewer jobs in the construction sector. There can be risk of housing bubbles etc. but that can be effectively managed. Or should be, a lot of countries struggle with that.
  - Annatar 5y ago
    I didn't mention, nor did I refer to any issues, so whatever you are stating here is none of my concern, nor does it have anything whatsoever to do with anything I wrote about, nor does it have anything whatsoever to do with me. I also did not talk nor did I write about any efficiency of any public system, so that does not concern me or what I wrote about either. "If the banking sector is corrupt - there can be no real economy." There is no economy in Croatia; it has very little industry of any significance, with tourism being the only significant influx of funds into the country. "Mortgages enable people to spread payments out over time and are a fundamental artifact of affordability." SIGH Sir, how do I explain this? You are so deep into classical economy thinking, whereas the reality in Croatia is one of tribal mentality. People take on debts from friends and family, and nobody worries about making payments the way you understand them, because the money owed is paid back in cash, with physical bills, in person and in one lump sum. Cars, condominiums, houses... it has always been this way in Croatia, for hundreds of years, and will be that way for a very, very long time, possibly the next hundred years, if not longer. It's Croatia: that is the only way that people there were able to come up with which functions reliably. Ergo, nobody gives a flying fuck about a mortgage over there, that's just something one reads about on the InterNet. No Croat will trust themselves to apply for one after all that corruption, and even if one did, nowadays the banks are reluctant to lend money to consumers. So the chances of both parties coming together to consume a financial transaction are zero. It has effectively become a cash only economy, and even though kuna has been a stable currency for almost three decades now, every Croat will convert their excess cash (which they hide at home) into euros, cash again, the first chance they get. When a Croat goes to buy a car, he or she will literally walk around with a small sport bag full of physical currency. There was a period of people going deep into debt with consumer credit to buy cars, of course that has failed spectacularly with most being unable to service their debt, so things are back to the usual - cash. When a Croat goes to buy a house, he or she will literally walk around with a briefcase full of stacked bills.
    - jariel 5y ago
      "so whatever you are stating here is none of my concern, nor does it have anything whatsoever to do with anything I wrote about, nor does it have anything whatsoever to do with me." Why are you commenting on a thread about X and Y, and then saying 'X and Y are none of my concern and have nothing to do with me?' You original response was in a thread concerning public welfare systems. You commented extensively about financial systems in response to issues concerning mortgage debt and credit. "You are so deep into classical economy thinking," This has nothing to do with 'classical economics' it has to do with a working financial system. What you just did was more effectively explain why Croatia is poor. If banks are corrupt and/or don't offer credit, and if consumers have no interest in it, then of course, a credit system won't exist and it will keep Croatia poor. If, as you say, Croatia won't have anything but a 'cash economy for hundreds of years' then Croatia will be poor for hundreds of years. It's like not having electricity or water.
- visarga 5y ago
  > Croats have zero confidence in their government or anyone else for that matter The zero trust in state and banks syndrome, I have it too. I'm from a different Eastern European country though. Since I don't trust the pensions, I save up individually.

by jariel 5y ago

"mortgage debt is almost nonexistent. " This doesn't make a lot of sense, if there is low interest rates and no estate or real estate tax, then people should naturally have considerable leverage.

Annatar 5y ago

That's because in Croatia, banks have often been the focal points of financial crime deeply intertwined with political crime; as the justice system isn't functional, the banks constantly and literally swindled citizens, so the average Croat does not take out a mortgage and does not trust any institutions. For example, several years ago, lots of people were intentionally misled by the banks providing loans in kunas which were tied to the swiss franc. When the Swiss National Bank lifted the peg in 2012, the franc, being the safe harbor currency, skyrocketed in value. The banks immediately demanded higher interest, which the loan consumers were of course unable to financially bear. The whole debacle ended up going all the way to the supreme court where it was finally overturned. Up until that point, the banks did not care and kept bankrupting people without so much as batting an eyelash. This is just one example. In the '90's, bank of Ljubljana simply froze, then siphoned off all of their Croatian customers' assets in Croatia to their central office in Slovenia. Nobody ever saw any of their money up to this present day, and are unlikely to ever see it. Nobody went to jail, and it is unlikely anyone ever will. There are a sea of such examples in that country. This is why in Croatia, one borrows cash from family, relatives and friends at no interest, rather than get screwed over by the state and all kinds of private institutions, none of which can be trusted. Croats have zero confidence in their government or anyone else for that matter, sometimes they do not, or cannot even trust their own family or would-be friends.

jariel 5y ago
If that's the case, then none of the aforementioned issues matter one bit. It's pointless to talk about the efficiency of public systems, for even the effectiveness of wealth taxes etc. if corruption is endemic, particularly in the financial sector. If the banking sector is corrupt - there can be no real economy. And FYI this notion of 'no mortgage debt' as something healthy is completely wrong. 'Credit' is the lifeblood of an economy, if you want to get people into good housing, it's essential. Mortgages enable people to spread payments out over time and are a fundamental artifact of affordability. Mo mortgages = bad housing and fewer jobs in the construction sector. There can be risk of housing bubbles etc. but that can be effectively managed. Or should be, a lot of countries struggle with that.
- Annatar 5y ago
  I didn't mention, nor did I refer to any issues, so whatever you are stating here is none of my concern, nor does it have anything whatsoever to do with anything I wrote about, nor does it have anything whatsoever to do with me. I also did not talk nor did I write about any efficiency of any public system, so that does not concern me or what I wrote about either. "If the banking sector is corrupt - there can be no real economy." There is no economy in Croatia; it has very little industry of any significance, with tourism being the only significant influx of funds into the country. "Mortgages enable people to spread payments out over time and are a fundamental artifact of affordability." SIGH Sir, how do I explain this? You are so deep into classical economy thinking, whereas the reality in Croatia is one of tribal mentality. People take on debts from friends and family, and nobody worries about making payments the way you understand them, because the money owed is paid back in cash, with physical bills, in person and in one lump sum. Cars, condominiums, houses... it has always been this way in Croatia, for hundreds of years, and will be that way for a very, very long time, possibly the next hundred years, if not longer. It's Croatia: that is the only way that people there were able to come up with which functions reliably. Ergo, nobody gives a flying fuck about a mortgage over there, that's just something one reads about on the InterNet. No Croat will trust themselves to apply for one after all that corruption, and even if one did, nowadays the banks are reluctant to lend money to consumers. So the chances of both parties coming together to consume a financial transaction are zero. It has effectively become a cash only economy, and even though kuna has been a stable currency for almost three decades now, every Croat will convert their excess cash (which they hide at home) into euros, cash again, the first chance they get. When a Croat goes to buy a car, he or she will literally walk around with a small sport bag full of physical currency. There was a period of people going deep into debt with consumer credit to buy cars, of course that has failed spectacularly with most being unable to service their debt, so things are back to the usual - cash. When a Croat goes to buy a house, he or she will literally walk around with a briefcase full of stacked bills.
  - jariel 5y ago
    "so whatever you are stating here is none of my concern, nor does it have anything whatsoever to do with anything I wrote about, nor does it have anything whatsoever to do with me." Why are you commenting on a thread about X and Y, and then saying 'X and Y are none of my concern and have nothing to do with me?' You original response was in a thread concerning public welfare systems. You commented extensively about financial systems in response to issues concerning mortgage debt and credit. "You are so deep into classical economy thinking," This has nothing to do with 'classical economics' it has to do with a working financial system. What you just did was more effectively explain why Croatia is poor. If banks are corrupt and/or don't offer credit, and if consumers have no interest in it, then of course, a credit system won't exist and it will keep Croatia poor. If, as you say, Croatia won't have anything but a 'cash economy for hundreds of years' then Croatia will be poor for hundreds of years. It's like not having electricity or water.
visarga 5y ago
> Croats have zero confidence in their government or anyone else for that matter The zero trust in state and banks syndrome, I have it too. I'm from a different Eastern European country though. Since I don't trust the pensions, I save up individually.