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Debt defaults as moral fault

What do Greece, Washington, and potential mortgage-skippers have in common? They're on the verge of debt default. Why the ethical disregard about the effects of default on others?

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Back in the day of Charles Dickens, anyone not paying a debt could be arrested as a moral menace to society. While debtors’ prisons aren’t coming back, it is worth recalling such Victorian virtue in light of three debt crises:

1. Come Aug. 2 – the deadline for raising the United States debt ceiling – Congress may simply allow the US Treasury to default if lawmakers don’t reach a budget deal.

2. Greece appears headed for a debt default (or “restructuring”), which could trigger Portugal, Ireland, and other European countries to follow. Last year, Greece’s debt woes dragged down the world economy.

3. More than a quarter of Americans holding mortgages worth more than the value of their home – and who can afford to pay – say they would consider walking away from that payment promise. And the percentage of these potential deadbeats who may commit such a “strategic default” has doubled over the past year, according to Fannie Mae.

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