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Obama is set to inject $500 Billion into the usa economy some time next year? do you feel this is enough to turn things around..? this is a very serious amount of money BUT is it enough..?
TWO questions for you:
Do you feel a Injection like this will work..?
If this doesnt work what will happen..?
The crisis was borne of a set of conditions which evolved over 15 years and that will not be solved by pumping money into them, nor will a short term solution be effective. People's attitudes towards credit, investment and spending has changed because they have finally realised what an unsafe house of cards the world economy was based on.
Will the injection work. It might if people are more prudent, and this includes the experts who perhaps never foresaw the present events taking place over the past years.
If it doesn't work. Perhaps doom and gloom, until the sun shines again. Whatever happens, there will still be some people either very rich or very poor, as in previous 'disasters'.
The only thing that will work is for people, and I include banks and governments, to stop spending money they don't have.
For the record, I have both a mortgage and a personal loan, and would be unlikely not to take out more if required unless there was some sort of legal compulsion.
Remember when hire purchase agreements had a minimum deposit, which varied according to the type of goods, normally set by the Chancellor in the Budget?
i dont think spending money 'artificially' is gonna solve this, just like the pathetic vat cut, 500billion isnt gonna solve these endemic problems, its taken a long time to get this bad, and it will take a long time to recover
if people carry on sensibly it will recover and there will be less of a nasty surprise
these spending sprees have to be paid for, just like the DFS style adverts, buy now pay later,
hold on, isnt this using the cause as a cure? that doesnt seem to work very often in nature!
The problem is we'll never know - what is done is done, and what happens happens. How would we know if it would have turned out better of worse with different actions.
One thing is for sure, the people who take the actions will say it was good and turned out better than otherwise. The people who thought different things should be done will say it's turned out worse than if their plans had been put into action.
And it'll be hard to really argue with either of them!
Notwithstanding that - the idea that more borrowing and spending will cure problems caused by too much borrowing and spending seems faintly ludicrous to me.
"Remember when hire purchase agreements had a minimum deposit"
Yes, that system made sure, that you were sure you really wanted to take the goods by putting some effort in beforehand to prove your intention. Todays have now pay nothing 'til next year easy credit means people resent the first payment as they perceive the goods as second hand by then.
Also with the save up and buy philosophy, there is a feeling of the goods worth, as you know how many extra shifts or days labour you did to buy the item.
I can also remember getting a lecture from the bank manager for spending a small loan I took out for a car an a holiday! We had to account for our decisions then...
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