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What do you think the fix is?
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The Worldwide DEBT is the problem.
The best solution for the present economic crisis would be a REBOOT or restart of the entire debt system for the ENTIRE WORLD.
1. A data base listing ALL DEBT, government, business and personal needs to be created. The list would need to list the debt and debt holder with a bank that could make an accounting of the debt. Included would be all national debt of all nations, all mortgages car notes and credit cards for individuals. All outstanding bond and other debt for corporations, The idea is to list ALL DEBT of any kind owed.
2. Every government on the planet would need to call a special session of its legislature. Using the same authority that governments have to use or create FIAT CURRENCY the legislatures and Central Banks need to authorize the creation of ACCOUNT CREDIT in an amount equal to all the listed debts in the world.
3. The Various governments and Central Banking Systems then need to make an accounting change equal to the debt in the form of an ACCOUNT CREDIT or CREDIT zeroing out ALL THE DEBT in the entire world, and crediting all debt-holders in the world.
The following day the economy of the entire world would restart and the Stock Markets of the world would react to the new renewed capital in the banking systems, the Capital now available to restart all business and the disposable income to the individual people would restart and grow the retail sectors and the manufacturing sectors of the entire world.
Some have commented that if this was done in a very short time the exact problem would be repeated. My answer to this idea is history does recycle and repeat itself but some do learn and avoid making the same mistake. If your wife was to back her new car into a ditch, you would immediately call a wrecker to pull it out. you would not say if I pull her out she will just do it again and leave her car in the ditch. The economy is now in a ditch.
The other objection has been the possible inflation that would result would weaken the dollar. My answer to the weakened dollar is it may be a GOOD thing to help our ability to export manufactured products and also make our manufactured products more competitive in our own country. Jobs are needed for our own citizens especially the bottom forty percent.
Allen Charles Report
http://allencharlesreport.blogspot.com/
Someone said this below and I agree it would be something that would certainly help. Makes sense to me, but what do I know, I'm just a regular American...
If banks need billions or trillions and Americans are struggling financially, especially to pay debts, then is it not possible to kill two birds with one stone? Give the banks $ through Americans by paying on their debt, at least the credit card debt. I saw it reported that "Americans have more than $900 billion collectively in credit card debt." Only 900b? Heck, pay it all off. The govt is spending trillions on things the average American won't even experience, or perceive to. Instead of giving money directly to banks put that towards American's credit card debt. Less debt = more money on hand; money that people will spend! And we know that the American's with credit debt will spend, that should be obvious :)
Hal McKinney's idea below -- an interest free (or minimal) government loan to home-sellers whose home-sale revenue is insufficient to pay off their mortgage debt -- is a good one. I hope it gets some traction. On a related note, I have also decided to agree with my own opinion put forth below -- harnessing 401K contributions for the purpose of debt-payoff.
BANKS are not the source of wealth in this country. We don't need to recapitalize the banks so we can borrow more money. That's silly. Good jobs and good wages are the source of wealth. Workers with good steady jobs don't need to borrow anybody's money.
And who says the "supply-side" is the capital -- boy was that ever a Reaganomics brainwash. The supply-side is the LABOR that produces the goods and services, the supply-side is the worker at the bottom who actually makes something productive and earns money he can put in the bank!!!
This whole country has been bleeding jobs for years. Jobs and wages are the red blood cells of the economy, and the patient has lost so much blood he's nearly dead. It reminds me of George Washington's deathbed medical treatment.
So called globalization and deregulation (whatever that means) is a synonym for bleeding of jobs and income.
The words labor and worker (thanks to an unfortunate association with Karl Marx) had almost become dirty words, and the words credit and consumer rushed in to fill the void, and yet this has become the strange habit of our culture.
Our over-bloated, over-loaded military is causing the dollar to be too high against other currencies, that's why all the out-sourcing has been happening. We dump so many trillions of dollars into unproductive military expenditures at the same time we have lost too many civilian manufacturing and service jobs here at home -- this is the deadly combination that has made for America's financial ruin.
To be competitive, organizations need a long-lasting governance system that leads to the 3 Rs of business: i.e., everyone doing the Right things, and doing them Right, at the Right time. Early implementers are using an Integrated Enterprise Excellence (IEE) business management framework to achieve these objectives, along with significant financial benefits.
Highlights of the IEE system are:
- The creation of business value-chain predictive metrics where there is no game playing with variance-to-goal targets; e.g., the organization suffers, while some individuals takeaway huge financial gains.
- Creation of analytical/innovatively determined business strategies with built in risk assessments that lead to targeted improvements and/or design projects, which benefit the organization as a whole; e.g., the avoidance of strategies that have high associated company risk with minimal downsize exposure for golden-parachuted executives.
- Creation of improvement projects that benefit the organization as a whole, avoiding silo improvements that might sound good but have little enterprise financial impact; e.g., we saved 100 million dollars but nobody can find the money.
For books, articles, videos, and blogs about the IEE 21st century governance system see http://www.smartersolutions.com/blog/forrestbreyfogle/?p=455 .
Offer home owners this option:
IF they want to sell their home AND they are underwater on their existing mortgage AND they can’t currently sell their home for what they owe
THEN:
• Let the home owner sell the home for the best price they can get.
• Let Uncle Sam pay off remaining mortgage amount the seller can’t cover to the lender (less some penalty against lender for approving loan to begin with)
• Seller pays back Uncle Sam (interest free) by a (5?) percent increase in the seller’s federal income tax rate coupled with any gains made on future home sale(s) until slate is clean.
This idea gives some relief to sellers and lenders without shifting the entire burden of responsibility to the taxpayers in the form of a bailout.
Everybody possible is ultimately made whole and the system gets moving again now.
Note that I use the word “home†and not “house†so as to distinguish between primary residence homeowners and speculators.
As a small business owner of 26+ yrs I think the strength of our country is in the hands of the small & mid sized companies. Rather than rewarding large companies who have proved by their losses that they are fat spoiled and expecting to be royaly paid no matter what pitiful performance they deliver why not make some of this "bail out" money available to people who can demonstrate a qualified background in a field and an eagerness to start up a small business. The government would no doubt see an almost immediate return on their investment in tax monies generated, job growth... . I'm sick to death of my family being (for lack of a better expression) punished by means of taxation for hard work and diligence while I see others rewarded for what in reality is nothing more than pure old fashoned laziness. Throwing free money at people who have already shown their ability to lose their own money is NOT a smart investment, but then, our government has never been known to make smart investment moves. I truly wish we could get some businessmen in politics instead of politicians. Anyway, that is my opinion. Like they say that and 50 cents will get a cup of coffee.
This is an arm chair review and idea given the limited facts available to me.
My fix for the credit markets and the economy is this. Commercial banking provided much needed financial support for the economy. Money was cheap. They were not constrained by the traditional 10 to 1 banking standard ($10 lent for every $1 of deposits). In fact Bear Stearns as I recall was up to 33 to 1. Removing commercial banking created a huge credit whole in the market that we are still calapsing into today. Even government is not big enough to fill that whole. The issue that started the tumble from what I understand was not that of outstretched lending. It was started by the poor quality of the underlieing loans. When the quality of those loans deteriorated because they were risky to begin with the resulting turmoil in the real estate market caused even the good loans to deteriorate by falling market values and thus the equity positions of those loans. Now financial institutions are giving up high quality assetts at fire sale prices (which is horible to the long term health of the US financial sector) in order to meet the 10 to 1 lending standards.
To immediately raise capital without any government funds I suggest that the regulatory standard for traditional banks be raised to 15 to 1. I also suggest imposing highly regulated standards requiring a high percentage of all their loans to be high quality that is 20% or more equity in home loans, high assett to liability as well as high liquity ratios for business etc. In spite of the current market I still think that a small percentage should still be availabe for more risky start up loans as well. The idea is that all the good loans that are needed to drive the economy and provide banking security go through and all the rediculous loans that don’t make any sense do not. By raising the standard the banks themselves can fund their own loan programs, we the tax payors aren’t bailing anyone out, and the quality assetts within these institutions are still intact to grow the future economy. Raising the regulatory standard does not have to be given to all banks but could be something applied for to the government with certain criteria required of the banks to qualify for this new regulatory lending limit. This could be based on lending history, ability of the bank to regularly meet other regulatory standards, etc.
Thanks for considering my ideas.
In looking for a fix, we need to be clear that financial failure is only the tip of the iceberg. Our economic system has also failed environmentally and socially. It is collapsing Earth’s environmental systems and driving an ever more unconscionable concentration of wealth. Spending trillions of dollars in an effort to restore this system to its original condition is a reckless waste of time and resources. The more intelligent course is to acknowledge the failure and set about to redesign our economic system from the bottom-up to align with the realities and opportunities of the 21st century.
It requires a new policy framework favoring Main Street businesses and workers engaged in the socially and environmentally responsible production of goods and services that improve the lives of all. My articles in the forthcoming issues of YES! and Tikkun magazines set forth the needed framework. See http://davidkorten.org/content/neweconomy
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