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Friday, December 19, 2008

Forgive my debt!?!?

The more and more I read about the problems in the financial sector and the deepening of the credit crisis world wide, it is becoming more and more apparent that we would have to forgive folks of their debt--home equity and credit card debt, primarily.

We have to find a way to scroll back the huge debt inflicted upon ordinary citizens who got teaser rates for home mortgages and also, adjustable rates and high interest payments on their credit cards.

It is the only way to fully recover from this global slump. In fact, they (government regulators) have to do it--or else, consumers may decrease consumption and adjust to new living conditions, and leave stocks and bonds at a low yield rate for many, many, years to come. That damages Wall St. and they don't really want that and leave them at the hands of private equity firms, for an extended period of time.

The obvious, should be stated and that is that we can't forget the mass amount of actual consumers and main drivers of the economy--the average and middle class. They are the huge spenders in numbers, not the hot shot Wall Street power broker and not the guy's in government. But, the actual you's and me's of this economy.

Because average folks like you and I, are suffering with 1. lack of credit and 2. high debt ratios--from predatory lending practices, for the most part, we can't go to the malls and go buy that stock or bond, and, quite possibly, are selling our lot in this bear market and having that patio sale, to buy food and gasoline. Thank God oil went down and is going down, food prices should follow--if we don't have a massive disruption in oil that is not derivative and financial related.

The US CPI is down. Japan has just cut it's interest rates. Exports are down in China and Japan--two of the major global exporters-- and US and EU inflation, is down due to lack of demand and not because of high interest rates, as they have been cut. Oil is deflating.

Despite all that has been done in regards to monetary policy, it still is not enough as companies, worldwide, on top of all of the bad news reported, are losing stocks and we are in the mid-way point of a deflationary period in goods and stocks.

I can now appreciate the position of forgiving folks of their debt. Even if politicians, took it as pandering and demagoguery to the masses, if you are going to give fat cats on Wall St. a bail out, and, give the auto-makers a bail out and leave out the auto-worker's, you have to give the average man, who have the numbers, a bail out as well.

The free check in the mail by the US Treasury was a good attempt. But, more was needed. In fact, folks need to be welcomed into their lending institutions, with new faith that their bills will be met and their credit, will not be harmed in the near or distant future. We need a direct debt solution between the bank's and the average tax payer. We need to think on that. Seriously!

In fact, a bail out on Main street, is needed to complete this cycle of economic doldrums and for the world, to come out of this economic funk stronger and faster.

Youri
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