So ever since this whole Housing/Credit/Economy crisis began to show it's ugly face, several people on JU and other blogs and media outlets have tried to propose solutions to this terror, destroyer of the American lifestyle. Some of these ideas seemed too complicated for me to understand and others just didn't seem like a real solution to the problem. An example would be the few articles I saw where the write said that the Gov't should just either give a huge amount of money to every American ($1 million or something within that range) or to just pay off the houses for these people. Well, that may sound all nice and dandy, people will simply pay off their house (we would assume), the houses will no longer be in foreclosure, the banks get their loans paid, people pay their bad credit off, and they can even buy a car and all would be solved, right? Well, with the exception that the Gov't would now be in a deficit so big it we may as well become slaves to another nation. Not to mention that the root problem of the crisis remains unresolved, the irresponsibility of both the lenders and the buyers.
Here is what I think should be done. I am a firm believer that of you do the crime, you do the time. You took risk and you lost. I am not too sure why should anyone be rewarded for failing. But we have to take into consideration the damage these mistakes will do, this will not only affect the buyers and the lenders, but the entire nation as a whole, so a compromise must be reached. Someone will have to lose here and while I think buyers are just as guilty as lenders, I think the lenders should take loss. The buyers, while at fault as well, are the ones who maintain these companies, to let them take the fall (lose their houses) would only put a bunch of people out in the street and a bunch of worthless houses in the hands of the lenders.
My solution is to start slashing prices all across the board. Not just houses (which have already had their values lowered) but the existing loans, cars and store items. banks should just take the existing loans and slash them 25 to 50%, this will allow the home owners to keep the house, to afford the morgage payments (considering the job and economy issues we are currectly having) and the banks don't have a house on foreclosure, will still get something out of the house and may be able to start lending again. For the car industry, it's either cut the prices no less that 35% or face bankruptcy. At this point, hardly anyone can afford a new car, especially one that still uses too much gas and not enough miles. Stores should also consider lowering prices, half price on flat screens and game consoles.
Someones gotta take the fall and realistically it can't be the consumer. They are, after all, the ones who provide the money for businesses to grow.
What do you guys/gals think? Does this sound like a more sound solution? I know ti won't be easy for businesses to accept loses and jobs may still be lost. But at leats the businesses have the opportunities to stay alive so that later on they can grow again and hire people again; better than going under all the way and everyone being out of a job with no chance to get it back later. What say you?