The announcement last night by U S President Obama of a package that is aimed at keeping people in their homes is, to me at least, a refreshing change of thinking that has some real significance. At last.
The suggestion that the US housing and mortgage market was probably the most fundamental issue which needed resolution - not at the lender, but the borrower/occupier level - came from friend and influential international economist, Ken Courtis. He said it many months ago. For myself, never being one to shy away from passing on perceived wisdom that I agree with, I subscribed to his views, and have been making the same point ever since. It has been reported in the Hong Kong media and most recently appeared last month in HK Trader.
"Ah ha!", I can imagine you saying, "he's only put this is in because he got something right for a change!" Well, I won't deny that one does take some pleasure in doing so. Epecially when you have been told that your views overall have been vocally decried by an expatriate senior member of the financial community, who is about to leave his position in Hong Kong, as coming from someone who is "obviously retired and out of touch". Maybe not as out of touch as you might think, when I've got good advice!!
But personal little digs aside, what's the point of having a blog if you can't enjoy it?
I seriously do think that the measures announced last night (and I haven't spoken to Ken yet!), whilst small, are in the right direction. If stability is to be created in the USA, which will then pave the way for more sensible and broader actions to be taken, we need some certainty in the mind of the general public, and this seems to mean the housing market at this point in time.
So far, you see, no-one has really identified the bottom of this crisis. It's like swimming in the sea, and you're a long way offshore. When you don't know what's beneath you, or how deep the ocean is, you tend to panic. As you get closer to the shore the panic eases, and you start to get a sense that you might just make it. I think these measures are one stroke closer to the shore.
But let's not delude ourselves, please. This in no way suggests that the world's problems have an early solution. I have already written off 2009 as being a year for any real sign of recovery (and this is the optimist in me!). There are just too many global problems to be resolved in the short term. Too many solutions required.
If it's not the auto manufacturers in the USA, (a problem that will probably result in a socio-political compromise with a temporary economic band aid), then it will be the depth of China's recession and their ability to deal with it successfully. Then there is the necessary deleveraging of the financial markets versus the aspirations of the lenders (read "Governments") to the banks who want to see more activity by those banks leading to stimulation of their economies - ahead of the inevitable inflation that will follow. It will be Prime Minster Brown's ability to persuade a sceptical and increasingly vocal audience that his administration can bring Britain through the crisis (hard to do, seeing as many thought he partly created the problem) - and the situation within Continental Europe, with the rather worrying realisation by some (a little late perhaps) that Eastern Europe is in really serious trouble.
The list, sadly, goes on.
Despite the brave words being spoken about "no protectionism", the first shoots are already coming through. "Buy American" sounds rather close to a protectionist war cry to me - one that may well be taken up elsewhere. It should not be a surprise to anyone.
But the work to find solutions must continue. Economic real solutions, whilst not taking our eye off potential political shenanigans in South America, Asia and elsewhere, or trying to find a way of dealing with the continuing troubles in the Middle East. All these need attention. It was hard enough to manage them before the Global Financial Crisis (GFC) came along.
Consequently I do not know how we are going to build the necessary bridges. What I do know is that there is a role for everyone to contribute to the rebuilding, and perhaps President Obama has just laid the first plank in that bridge.
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