A really simple idea for a global economic revival
Eurozone is crumbling, Italy and Greece in sovereign debt crisis, France no better, high unemployment, low consumer confidence, flat incomes, increasing costs, etc. all of these no doubt is the perfect recipe for a pessimistic outlook of the world. IMF chief Christine Lagarde warned today about a lost decade for not just the developed world but for the whole world if wealthier nations don't intervene referring to the Germanys and USs of the world. These are sobering days of the times we live in.
Here is atleast one simple solution, that is certain to increase housing demand and thereby can most certainly increase the confidence in the economy. We are at 9% unemployment in the US, which means more than 90% are still with jobs. These people need to be encouraged to spend more. Since the biggest investment for any family is their home, why not start from there. Almost all houses have lost their values by atleast 15% to 50% for no fault of the ordinary people. We should remember this crisis was not caused by the ordinary folks but by the extraordinary and unchecked risks banks took. So banks have to absorb some genuine losses and pay the price.
Many people who have stable jobs are paying their mortgages faithfully inspite of the loss of value to their homes in the hope it will bounce back some day. People feel they have less worth. To increase their feeling of worth, it will greatly help to reward these steadfast, promise keeping everyday folks, by banks writing off the lost value in their homes whether its 15% or 50%. If the sincere and hard working regular families are rewarded this way, there will be a psychological increase in their worth (economic confidence) as well as an economic benefit (aka spending) to that increase in worth. The write-off may be a big sum, but it will be something every society (government experts) should know how to absorb it! Loan write-offs are not new in the world, these have been practiced during the Old Testament times, Roman times and several periods in history wherein loans of people are completely forgiven every seven or so years to renew the economic system. Won't a similar forgiveness not put us back in a prosperity track? After all the common man did not ruin this economy, why should he pay the price, which the banks should have paid in the first place anyway.
Here is atleast one simple solution, that is certain to increase housing demand and thereby can most certainly increase the confidence in the economy. We are at 9% unemployment in the US, which means more than 90% are still with jobs. These people need to be encouraged to spend more. Since the biggest investment for any family is their home, why not start from there. Almost all houses have lost their values by atleast 15% to 50% for no fault of the ordinary people. We should remember this crisis was not caused by the ordinary folks but by the extraordinary and unchecked risks banks took. So banks have to absorb some genuine losses and pay the price.
Many people who have stable jobs are paying their mortgages faithfully inspite of the loss of value to their homes in the hope it will bounce back some day. People feel they have less worth. To increase their feeling of worth, it will greatly help to reward these steadfast, promise keeping everyday folks, by banks writing off the lost value in their homes whether its 15% or 50%. If the sincere and hard working regular families are rewarded this way, there will be a psychological increase in their worth (economic confidence) as well as an economic benefit (aka spending) to that increase in worth. The write-off may be a big sum, but it will be something every society (government experts) should know how to absorb it! Loan write-offs are not new in the world, these have been practiced during the Old Testament times, Roman times and several periods in history wherein loans of people are completely forgiven every seven or so years to renew the economic system. Won't a similar forgiveness not put us back in a prosperity track? After all the common man did not ruin this economy, why should he pay the price, which the banks should have paid in the first place anyway.
Comments
Post a Comment