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Stimulating the Economy

what i'd do if i had hundreds of billions of dollars

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This has nothing to do with China, but I need a conversational outlet for current events in the US.

The economic crisis is a complex set of issues that no one will ever fully understand...and I'm not an economist by any means, but I sure do have some opinions.

So some big banks made a lot of really bad lending choices. Some mortgage customers borrowed too much and added to the collective debt crushing the country. Some people are deceitful, some are just ignorant, or as Shirley Q. Liquor says, "ignunt." Anyway, the housing market collapsed, one of many dominoes to fall in the financial system. Then the federal government decides to give a bunch of money to these failing banks because it is important to keep them from all from actually failing.

Here's my take on it. Giving money to the banks improves their balance sheets but doesn't change any of the bad loans. Banks lose money, people lose houses. Why not use the money to pay the mortgages? That way people keep their homes and the banks end up with the money anyway. Bad debts are reduced, people retain their homes, banks have better balance sheets, and consumer spending goes up because people aren't making mortgage payments any more. I know there must be problems with this solution. So what are those problems? I don't know.

Another use for hundreds of billions of dollars involves student loans. The federal government loans students tons and tons of money each year. Why not apply some stimulus dollars forgiving loans of students who have graduated? It rewards a demographic group of people who have worked hard to educate themselves instead of a few greedy corporations. Then all those loan free graduates would have more money to dump back into the consumer economy. What are the technical drawbacks of this idea?

Now the part about China, or Asia at least. The US economy touches everyone in the world and I have personally seen how it affects poor people in Southeast Asia. You may not realize it, but the economic woes in the US have drastically reduced the quality of life in places like Cambodia, Vietnam, and Thailand. These are countries where labor is cheap so they tend to export lots of manufactured goods for consumption in the West. They also depend heavily on tourism, where a dollar can go a LONG way to support thousands upon thousands of people who rely on foreign tourists.

Did you know that in Cambodia and Vietnam you don't even need to exchange your money? Almost all of the prices in tourist destinations are in US dollars. They us it as a dual currency because their own currency has been so devalued. When food prices in the US go up a little bit we all complain. When they go up a little bit in places like Cambodia people starve. Americans are not alone in this economic crisis, but they sure do have it easy despite all the doom and gloom.

Posted by grmoski 22:53 Archived in China Tagged living_abroad

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