'To Bless All Mankind' August 10, 2015 Issue

How debt mercy helps drive US recovery

The Monitor’s Editorial Board

Originally printed in The Christian Science Monitor, January 6, 2015.

Many Americans may not feel it yet, but their economy is doing very well compared with the economies of other advanced countries. Growth is nearly 3 percent. About a quarter million jobs are being added each month. In a world searching for economic propulsion, the United States is now a “lonely locomotive,” as The Economist calls it.

Recovery from the 2007–09 Great Recession is still slow in the US. Yet relative to Europe, which is tipping back into recession, the US has many advantages, such as higher worker productivity, a boost from shale petroleum, and a flush of monetary stimulus from the Federal Reserve. To many economists, one advantage stands out: The US has been quicker to reduce the private debts of homeowners and companies.

As sloppy and as painful as debt “deleveraging” may be, the American method of bankruptcy, home foreclosure, and mortgage modification has put many consumers back on their feet faster. A culture of forgiveness and a belief in redemption account for this willingness to offer a fresh start. But backing it up are court judges and government programs that nurture quick and equitable justice for both debtors and lenders.

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