What do you think about the potential global fix for the economic problems? The article is with an Australian focus.
With all this talk of toxic assets, I think the banks need to go on a detox diet :p Maybe they could eat nothing but liquidised celery for a month, then they could try and liquidise their assets too. I can't really help but find it a little amusing when articles say things like reopen the arteries of credit
In all seriousness though, there are three entities responsible for the current financial problems: 1. Individual People - Some people were foolish/misguided/didn't understand and therefore consistently on a monthly basis borrowed far beyond their means. 2. Banks - The banks wanted to make money, they best way is through lending money to people because you then charge them huge rates of interest. The banks however were stupid and took it way too far and lent to people who could never have paid the money back. 2. Government - Governments e.g. the UK government have for years used lowering interest rates to stimulate economic growth. Gordon Brown has been doing this for years. The only way this strategy works is by the first two points above being true. The government knew this and took advantage of it. Another thing is bankruptcy, where you have someone who has massive debts, can't pay it back and declares bankruptcy, which then wipes out these debts. The banks may lose money, of cause because of the high interest rates they charge the person may have actually paid off the initial borrowing. Bankruptcy should be changed, people shouldn't be able to wipe out a debt, instead that debt should remain, but the interest charged is only at the rate of inflation. One main reason people can't pay back debts is because of interest, and reducing it to the rate of inflation would help this situation. Also they should be given advice, and given a strategy whereby they are able to live within their means and can pay back the money in a fixed amount of time. Also if they've paid back e.g. twice the amount they borrowed (because of interest) then the debt could be wiped out, as the entire remaining amount would be interest payments. This method would prevent the banks losing money, although they wouldn't gain as much, and it would mean that people would pay back their debts. While this wouldn’t fix the current problems, it would to some extent help. It would help both the individuals and the banks.