COULD SUBPRIME DEBT BEEN REPLACED WITH FINANCIAL GROWTH? ~ Η ΕΛΕΥΘΕΡΗ ΦΩΝΗ
Η ΕΛΕΥΘΕΡΗ ΦΩΝΗ: COULD SUBPRIME DEBT BEEN REPLACED WITH FINANCIAL GROWTH?

7 Μαρτίου 2008

COULD SUBPRIME DEBT BEEN REPLACED WITH FINANCIAL GROWTH?

    The growing housing debt in American and European economy has great resemblances with the Great Deppression of 1929.At that era,the policy of cheap loans just biggened the debt of Americans householdings making them uncapable to meet the loans.The state decided measures to strengthen the consumption and economy,following a low fiscal policy and increasing government spending,measures that gave money to individuals.This policy anticipated that individuals would start again to consume products and so give a relief to the economy.Instead they just started to pay back the big debt of their householdings and the depression didnt stop.
   At terms of global economy of 2008,the federal bank confronted with a financial decline and a great debt that stops consumption, started to give cheap money through cheap loans.It is also estimated that American government will also cut the taxes in order to seduce capital individuals to invest to the economy.At first the cheap loans wont motivate the householdings to start spending because they already have a big debt.At second  the rising price of oil is a key factor that deters capital for investment.
     So,without spenditure and investment the Depression in America’s economy is ahead.
The classical Keynes theory suggests that public works and socializement of investments could possibly get out the economy of the Depression.The theory claims that with social or state investments we could keep people fully employed (something that will grow consumption) because private factor is scared to invest in the economy.Well this policy showed that people instead of spending they just saved more money in order to pay back the loans or to buy some basic goods.So,is Keynsian theory nowadays enough to get economy back in growth?
    This decade also is characterized through martial policy,hoping to mobilze the demobilized manpower,policy that is inspired of the great productivity of World War II.The effects of this policy though were not so encouraging.Instead we saw a very big state expenditure and a close-term productivity that was replaced with demobilization and decline of economy.
   Could a meta-keynsian policy promise a financial model of growth for the next decades?A policy of the state that is generally characterized with state investments or tax-free policy through replacement of the big debts.More specialized measures could be for the state to exchange the subprime loans of banks with participatement to social investments.This could relieve the householdings of the debts that they cant pay back.With this way also state mobilizes private factor to invest in the economy.It also raizes the employment,making private householdings capable to start consuming again,because they will relieve  themselves of the big debt.Another more special measure could be also to exchange the big credits of private factors with reduction to investment taxes.With this way private investments that are stuck to unpaid loans could be motivated to invest in the economy,in order to expand their capital and give a relief to the economy.The state could also invest in new commercial technology that gave last 2 decades big economical growth.The private factor could participate to these investments only with the exchange of their big loans.
     The general idea of the proposed policy is to socialize the big debt of householdings that could be compined with financial growth.If a new Big Depression is coming to 2008, the only hopes stay to brave policies.

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