Why are the "brains" of this world constantly redefining the problem? We know what the problem is, why don't we come up with concrete proposals.The problem is the banks, which were given in excess of $100 billion in Taxpayers money but are still not willing or able to help. $100 billion in Cash assets theoretically creates $1 trillion in credit, assuming a 10 to 1 leverage ratio; they were leveraged at 30 to 1! Why are they not lending? Are their assets worth less than we thought and the money given them not sufficient to balance their books? Are they using that money to de-leverage? Or are they spending it on the wrong things? They are still paying out dividends and handing out bonuses! On the other hand they are collecting up to 22% interest on credit card debt and over 7% on mortgages when the cost of money is less than 1%! Whatever the problem, these traditional and apparently "failed" banks are not functioning and perhaps require a little encouragement by providing them with some competition.
The government should form 10 or more state banks with $100 billion of taxpayer's money and make the Taxpayer stockholders of these banks, not the government, by issuing stock certificates in these new banks to each taxpayer. The $100 billion would create credit facilities of roughly $1 trillion at a leverage ratio of 10 to 1 and would immediately unfreeze the credit markets. These banks could lend to the auto industry amongst other things and take that monkey of the government's back.
The government should form 10 or more state banks with $100 billion of taxpayer's money and make the Taxpayer stockholders of these banks, not the government, by issuing stock certificates in these new banks to each taxpayer. The $100 billion would create credit facilities of roughly $1 trillion at a leverage ratio of 10 to 1 and would immediately unfreeze the credit markets. These banks could lend to the auto industry amongst other things and take that monkey of the government's back.
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