Basically they are using charitable donations to buy up bundles of 'distressed loans' (eg loans with bad payers) and then writing them off. The value that the debt can be bought for is far below the value of the money owed, so with $171,000 donations they have written off $5m of debt.
Imagine if the idea caught on in a big way - eg millions of people in the UK donating a pound, like a massive debt-writing off lottery. I thought it was an interesting political tactic in terms of showing up the difference between how the financiers and the debt-ridden view the debt itself.
The fact that so many people are in debt and there is no demand in the economy is one of the reasons we're seeing such a long recession. We won't have growth again until people have money to spend.
So on one hand I'm against this, as I think the economy needs to be fundamentally changed, and on the other hand, I certainly have sympathy with people who are in debt - especially for things like medical bills.
See I don't see how it saves capitalism. Surely it reveals the ridiculousness and unfairness in the system - and liberates people from being tied into perpetually servicing debt they can't manage. Do you think it is a sticking plaster measure of sorts?
I agree with you that a massive restructure is necessary.