How would you fix this credit-crisis?

[korrupt_1]

It seems that key people in power are at a loss at what to do to fix this credit problem. Headlines are saying "they all agree that it's bad, and need to act as a group"... but geeze, we want action... not confirmation that the world is in a deep pile of cow dung... lets see something get done and less talk about it...

So how would you fix this problem?

I say, enforce the banks to lend, then let the government insure against defaults. It's a win-win for banks and businesses. I'm sure there are issues with that idea, but perhaps as a collective bunch of thinkers, we can come up with a solution that would work?

Over to you...

 

[Sean K]

Allow stupid decisions to be punished.

 

[nunthewiser]

Has the perfect plan !!. why not sting the taxpayers for 700bill, call it a bailout , inject cash into mine and the other "good ole boys" falling over companies , pay ourselves a nice lil nest egg and then hit em up for more ....

oops ang on i think this may have already been thought of

please disregard idea until i come up with one with more 0000,s attached

 

[xyzedarteerf]

I would appoint these two clown's as head of the banks.

"you go that way, I go this way and together we can fix this"

 

[Nyden]

Let it all fall apart

... no help whatsoever for the greedy and ignorant.

If people and companies are bailed out, and do not suffer the consequence of poor decisions; then the lessons here will not sink in - and we'll be here in another 10 years.

 

[Green08]

"you go that way, I go this way and together we can fix this"

Every now and then there is a classic - xyz you made my day!

 

[MARKETWAVES]

Re: How would you fix this credit-crisis?
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Raise the Minimum Wage to reflect real inflation !

( only then will people have real savings, and be able to afford Healthcare )

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and clean up Wall Street by putting more young minds in key positions ......

 

[Awesomandy]

I would raise the interest rate to protect the currency and to attempt to lower inflation. Sure, the economy will probably go backwards, and there is a likely increase in unemployment, but you need to have a strong currency and lower inflation to build the foundation for any future growth. Also, having a higher interest rate will promote more savings for the high-income individuals. If having a 8, 9, or even 10% risk-free return doesn't promote savings, I'm not sure what else would.

 

[Jikx]

Unfortunately, there's nothing else that can be done at the moment besides what they are doing already. The gears of lending much be oiled now lest they seize completely. The only real "punishment" they can give out is to nationalise everything they bail out.

Now, how to stop a credit crisis from happening again? Many thing I suppose. Instead of the reserve bank focusing on inflation, they really should have a look at money supply.

In the decade preceding the current crash, inflation was intensely benign. Yet, hiding under the surface was intense amounts of cash - the amount of money flooding the system was growing at 20% / year!! Where did all this cash come from? Where did all this cash go? Who knows! All we know is that now all the cash is drying up, and taking money away from productive parts of the economy.

Another thing is more scrutiny over what a company can constitute a "profit". One thing driving the use of CDO's and other (I can say it now!) bogus derivatives is they added to the bottom line in massive amounts. Companies that only last year was making billions and billions are now bankrupt! How on earth does that make sense? Tightening accounting rules is a definite must. On the same train of thought, there should be greater alignment of accounting and taxable profit. If companies had to pay more tax on their mega-profits then at least you know some of it is "real".

I think we can all learn something from this - financial innovation is not as benign as it sounds. While the likes of Alan Greenspan was harping on about how CDO's and other derivatives spreading the risk was a "good" thing, we can now see the consequences. All it does is hide the risk, and allows it to build to extra-ordinary levels. Had we had our recession 3-4 years ago, sure it would have been painful, but not absolutely catastrophic thanks to "financial innovation".

Never again!

 

[Smurf1976]

Let it die. The longer we keep trying to prop this mess up, the worse the end result will be. All it will do is continue the stupidity that got us into this mess in the first place.

And get rid of the idiots who created this mess in the first place. 25 years of accountants running the world and we end up broke.

It's time to put the scientists, engineers and so on back in charge and put the economists and accountants well away from anything concerning management or decision making - they've messed up on a monumental scale almost beyond belief. It's a case of believing their own lies that has lead to this - science and engineering is real whereas credit and financial manipulation are created out of thin air with zero real substance.

There don't seem to be too many economists and so on running around in the booming economies of China etc. Nope, it's engineers, scientists and so on making things happen there not people messing with numbers.

 

[Smurf1976]

In the decade preceding the current crash, inflation was intensely benign. Yet, hiding under the surface was intense amounts of cash - the amount of money flooding the system was growing at 20% / year!! Where did all this cash come from? Where did all this cash go? Who knows! All we know is that now all the cash is drying up, and taking money away from productive parts of the economy.

Get an old dictionary and you'll find that an increase in the money supply is inflation by definition.

It's only in recent years that someone decided that inflation could be better measured (ie hidden) by wandering around the supermarket with a calculator and concluding that second rate mince was exactly the same as top quality steak.

 

[Ageo]

Hmm according to the documentary "money as debt" which i found very educational, they believe removing interest altogether along with some other things. Towards the end is when they explain it.

http://video.google.com/videoplay?d...262&start=0&num=10&so=0&type=search&plindex=0

 

[deadset]

Guarantee'ing bank deposits and guarantee'ing interbank lending, and guarantee'ing troubled debt assets. That's what just happened didn't it.

 

[Greg71]

Become like in Star Trek. No personal wealth, no money. Don't ask me how that works, but it's all I have.