The other day I posted about using a monetary stimulus, printing £'s that is as a possoble solution. This had a mixed reception but I was glad to see the idea being discussed on Newsnight on Friday; so maybe not as barking as some would have you believe.
There are of course many problems with that idea (see comments to the article) but it is going to do more than cutting VAT by 15% for a year or so which is the Government plan plus a few small tax breaks for their client estate Labour voters.
The next proposal I have is more radical and is inspired a little by Anti-Citizen One's comment on my blog months ago.
Our banks are bust, they have far more toxic assets than they can cope with and are slowly going to die or be nationalised. All banks have the toxic virus as they all bought into the real estate bubble and structured finance con.
Yet businesses are crying out for loans, people need mortgages and car loans, the economy is stuck with a terrible monetary collapse - fiscal tax increases are not the answer (at least David Cameron get this as he said on Marr this morning in a very impressive interview).
What we need is a new bank or banks, one unemcumbered by the debt. Then the old ones can be wound down over time and the new ones take their place. So what is stopping this? Well a new bank needs a lot of capitalisation (hard cash), a branch network and lots of staff. Fortunately all these are avaiable for a song right now. The UK Government already owns the Norther Wreck and Bungle and Binglie networks and staff and could make better use of its assets.
Instead of a further investment into the likes of HBOS, we need new national champions - let the shareholders and bondholders in failed companies take the strain and not taxpayers.
Set up a new bank or two and then sell them to the private sector (most likley private equity coompany at first). They will have such a huge competitive advantage they will soon be able to clean up the monetary mess we have in the UK. Much of this work is already done, it just needs courage and some imaginantion to get it going.