Bailing out People not only Banks

Government using taxpayer money to bail-out the banks is postponing an inevitable problem, and further increasing the burden of debt on the public. Giving the banks liquidity to lend more money to the public and industry is not the solution to the current financial crisis.

The alternative? Government should use these funds to pay off a measure of mortgage debt, taking an equity stake in each property. As well as giving liquidity to the banks, this provides genuine help to consumers, lowering arrears and repossessions. This solution simultaneously keeps inflation in check, lowers the burden on employers, and keeps unemployment and benefits in check.

For lenders, risk levels are reduced, and equilibrium can return to the market. Maximum lending criteria is fixed, and irresponsible lending becomes a thing of the past. Placing a salary cap on senior executives in addition would further rebalance the market in favour of the consumer.