The Financial Crisis

Now I’ll put my hand up here right now and say that I am not a socialist but I’ve come up with a socialistic solution to the current financial crisis.  Kevin Rudd has pledged $4b to be given to non-4 big bank home loan lenders to make it easier for them to get funding and hopefully increase some competition into the market.

Now $4b is $4,000,000,000,000 if my high school memories serve me right.  So if we divide that by our 20 million population you get a figure of $200k per person.   If we give every man woman and child $200k most of them will be able to pay off their mortgages and there would be a flood of money into the banks that could be released for other purposes.

It would mean that all those people who currently rent could afford to enter the housing market and think about the construction boom that would ensue.    I guess maybe we would have to put a freeze on house prices to stop inflation caused by people bidding too much money for whatever was on the market, but that wouldn’t be a bad thing.  Those who already own houses would be able to upgrade with the extra money anyway, thus freeing up the lower end of the market for poeple who currently can’t afford a home.

And for those who don’t want to own a home they would have $200k each to plough into other investments – new businesses, superannuation, or even just household goods which would help the economy even more.

Maybe there would need to be some caveats on when it was spent and in what manner, maybe half would need to be put into some sort of savings account or government bonds.  But it seems to me that rather than give the lenders the chance to make more money for their shareholders, that all of us who are contributing to the payout should get some direct benefit.

I guess those sort of ideas are why I’m not an economist.  Sounds like a good solution to me.

The Financial Crisis

Now I’ll put my hand up here right now and say that I am not a socialist but I’ve come up with a socialistic solution to the current financial crisis.  Kevin Rudd has pledged $4b to be given to non-4 big bank home loan lenders to make it easier for them to get funding and hopefully increase some competition into the market.

Now $4b is $4,000,000,000,000 if my high school memories serve me right.  So if we divide that by our 20 million population you get a figure of $200k per person.   If we give every man woman and child $200k most of them will be able to pay off their mortgages and there would be a flood of money into the banks that could be released for other purposes.

It would mean that all those people who currently rent could afford to enter the housing market and think about the construction boom that would ensue.    I guess maybe we would have to put a freeze on house prices to stop inflation caused by people bidding too much money for whatever was on the market, but that wouldn’t be a bad thing.  Those who already own houses would be able to upgrade with the extra money anyway, thus freeing up the lower end of the market for poeple who currently can’t afford a home.

And for those who don’t want to own a home they would have $200k each to plough into other investments – new businesses, superannuation, or even just household goods which would help the economy even more.

Maybe there would need to be some caveats on when it was spent and in what manner, maybe half would need to be put into some sort of savings account or government bonds.  But it seems to me that rather than give the lenders the chance to make more money for their shareholders, that all of us who are contributing to the payout should get some direct benefit.

I guess those sort of ideas are why I’m not an economist.  Sounds like a good solution to me.