I understand you. It's easier to blame others than to find the real reason or solution.
I'm not sure if you do, at least on this issue. I was just stating a fact.
bitSILVER, bitGOLD and bitBTC always had 10% MSSR and never applied BSIP42 but GSed long ago. This fact doesn't support the assumption that a higher MSSR will prevent undercollateralization from happening.
It takes more than MSSR. At least a combo of MSSR and MCR. But The weaker the bitAsset the higher they need to be; as en example bitCNY can have lower settings and still function properly. If you don't have liquid market on butAssets GS will happen no matter the MSSR and MCR if the right conditions are met.
If we can find a proper way to incentivize the involved parties, we'll solve the problem.
No matter the incentive, there will be always someone (maybe someone that no longer pays attention to his debt) that will let it ride. If we don't come up with a way to automatically close the debt the GS will always be there.
I will give everyone another option to think about on the GS issue:
When collateral reaches 1:1 simply force settle that debt based on percentages. If there are 1000 smart coins issued, 10 is being force settled; each holder would see 1% of their smart coin force settled by the blockchain. This avoids GS alltogether and good debt stays in the system.
This is also an option if our only goal is to avoid undercollateralization (btw technically 1% is not guaranteed that all undercollateralized positions will be settled, also technically we can increase the percentage when it's the case).
IMHO this option does more harm than good, because we have other goals which IMHO are more important, one of them is to give debt asset holders as much freedom as possible to decide by themselves, because we assume they're risk haters. On the other hand, debt position holders are risk lovers, so it's fine to have more aggressive rules on them, e.g. margin calls and force settlements. Please see discussions in https://github.com/bitshares/bsips/issues/179.
Also it would be a crisis for businesses built on top of BitAssets because they have no easy way to convert the collateral back to BitAsset when collateral price bounced back up. Imagine that if someone deposit bitUSD to an exchange but later can only withdraw some BTS and some BitUSD. In short, don't remove coins from users' balance, otherwise users will leave.
Alternatively, perhaps we should give asset holders an option on whether *automatically* settle a part of their holdings when feed price is closed to GS price, which may slightly improve the situation, but is not that hard.
bitAsset is not a currency or not even a coin, it's a contract between 2 parties that agree that particular asset will have a value equivalent to that asset in real life and will be backed by BTS. If anyone (exchanges) are running their business on that asset they should be able to adjust their holding (and users) to bitAsset+BTS. They already do it for some forks, air drops etc. This would not be any different and would always avoid GS. And I think that's the goal to have liquid market where the bitAsset is equal to it's RL counterpart ie: 1 bitUSD = 1 USD
Auto settling bad debt on a bit asset holder would be somewhat like force settlement on the debt holder. A risk on both sides.