The real solution to the crisis of credit:

 

Strategies to increase savings and prevent the budget deficit

 

There was much debate on how the credit crisis started and that the bailout package seems to be the most effective way to develop a solution. We need to allocate resources for homeowners facing foreclosure? What about the banks that are on the verge of collapse? Many of us agree that we need both approaches to be taken into account for engineering curb the current financial disaster. But there are other strategies that would be well suited for the task. The first minimum wage should be increased so that families can have more disposable income and then rmed to purchase the assets and increase spending. Secondly, there must be a wider choice of savings deposit program for low-income families to enable them to tail and, in a house in their path. Third, the State authorities to be aware that the solution to their current financial dilemma is to increase the tax base through the ‘assistance programs down payment.

 

Trickle Up Economics

 

Many economists are delivered page indicates that cutting taxes to stimulate productivity and growth, increase employment and lead to increased skatteint & # xE4; associated gains. But what we have seen an increase in the deficit at the federal and state since the late 80s. [1] This is the result of wishful thinking that goes against all the teachings in the field of macroeconomics. Macroeconomics textbooks inform students on a balanced budget theory indicates that if there is an increase in public spending, there must be a tax increase. [2] The United States and many other governments have not implemented such a theory in quite a long time or not at all. But what I saw is a huge expense for the federal government, which has been fueled by loans from other countries. If the federal government to spend money and cut taxes at the same time, they do what any good manager would seek a return on their capital.

 

An effective strategy to achieve that return on equity is that the U.S. government to reduce corporate taxes on a carrot and stick a F & # xF6, r to increase the minimum wage. For example, companies that pay seven dollars. 15:01 hours and pay a rate of 35% corporate tax should see a 15% tax rate and the minimum wage for employees is $ 14 30 hour. It ‘s the same concept as the financial rescue package of Wall Street. But this time the dollars will be added directly into the hands of consumers and not “trickle down” for them to finish. Instead, U.S. dollars trickle up the economic ladder fills the coffers tax from federal, state and local.

 

Also, he said that higher wages allow workers to deposit more money into savings accounts. This will benefit the banks because their deposits will give much needed in a time when many have suffered terrible damage. Instead, a rush by banks to banks will help restore confidence in the banking system. Banks will still be flushed with cash and be ready to lend money to customers deserve.

 

What can you learn from countries HSBC Bank

 

I recently visited a local branch of HSBC in Staten Island, because I was interested in saving their first home. The program works like this: Potential homeowners are required to save a fixed sum of money every month for a maximum period of TV & # xE5; years. After that save time, homeowners who have established a good payment history with the bank first will see their contributions matched with a ration of 4-1, which is mourning nsad to $ 7,500 The catch you ask? Homeowners must borrow from HSBC. In this way, HSBC invests $ 7,500 in deposit operations of the bank to recover more than twenty times Ani interest expense for the duration of the loan.

 

Therefore, they can use the same strategy that has worked for HSBC and implement it in order to increase the tax base. For example, Frank is interested in buying a home but do not have enough for a down payment. New York steps up and says it will match dollar for dollar by the amount saved will be limited to say $ 10,000 Now Frank buys a $ 200,000 home. New York property taxes are about 12 139% since 2009. As a result of state funds invested in the form of down payment assistance will in fact increase the turnover of $ 24,278 / $ 1,000 = $ 24 x $ 50 = $ 12,000 (annual income tax declaration). [3] Over thirty years, the owner has paid an estimated $ 36,000. But usually increases in property prices at a rate of annual inflation is estimated to be 3% per year. This means that the state receives more than five times what they originally invested with the assistance payment. In addition, homeowners will increase their wealth and thus increase their spending. In this way, local businesses make more money and thus pay more taxes, which further enhances the state.

 

Damage control

 

The recent credit crisis has caused heavy damage to the city tax base because of all foreclosures. That is why we need such a plan is implemented as soon as possible. There is already talk of major cuts in social programs because of budget deficits. Governor Patterson recently made a trip to Washington to seek funds to close the budget gap $ 47000000000 U.S. dollars, VA Do not hide from me within the next four years. [4] For further erosion of housing prices just to throw salt on the open market already sari urban housing. Suggested, however, the strategy described above can enrich low-income families and help them move the ladder of upward mobility.

 

The minimum wage increase undoubtedly increase the levels of consumption. Since consumption accounts for seventy percent of gross domestic product, we will have a huge percentage increase of these levels. Along with this effort to increase income tax on sales of products purchased in the state. Therefore, States not only unexpected property tax revenue, but also from sales tax. Businesses will be able to hire additional workers because of increased activity and expansion will once again seems possible that SM & # xE5; companies. The cycle can continue to repeat until you restore the prosperity of the middle class.

 

Levels of expenditure increased by an increase in the minimum wage will increase both large enterprises and small and medium enterprises and # xE5; bottom line business’. As the stock market is a forward-looking mechanism, stock prices appreciate dramatically. investors will once again be able to count on them; retirement nest days for their golden years will be just that. Therefore, the increase in consumption and consumer confidence due to an increase in the minimum wage is exactly what doctors should prescribe that the eradication of Economic & pl # xE5; street markets ..



[1] Nouriel Roubini, supply-side economics: Do tax cuts interest rates to increase growth and revenue and reduce budget deficits? Or is it voodoo economics again? Stern School of Business at New York University, 1997.

 

[2] Robert J Gorden, macroeconomics 10th edition, Northwestern University, 2006.

 

[3] New York Department of Economics and Taxation, 2008.

 

[4] Rick Karlin, Governor Paterson described the boredom more financial instruments. Times Union. com, 2008.

 

Tags: budget, credit, Crisis, deficit, increase, prevent, real, savings, Solution, state, strategies