The economic solution remains the same, in and after
every global crisis. Politicians debate and approve bailouts through the
banks. For it is the banks, which have the best records of financial data and
activities on every individual, SMEs and large corporations, which would need
help to recover. The Treasury gives money to the banks to lend to those most
affected, at very low or no interest rates, to meet living and operating
expenses and boost future revenues, as if the crisis never happened. The
question is why does not the Treasury, Tax Collection Division have the same or
better data, with which to make such money distribution?
The so-called banking or mortgage crisis 2008, saw
the major banks receiving billions, meant to fuel the recovery, and did so,
repaying the said Government funds fully. Not by lending to those affected by
the crisis, the homeowners who could not pay their mortgages, but by selling
off the homes in bulk to rich scalpers. People who brought hundreds of these
homes, for cents on the dollar, and resold them to much more qualified
homeowners who could afford the mortgage. Earning these rich people large
profits and making them even more wealthy. But most importantly, these scalpers
were and are intimately associated with the said bailout banks.
The victims of that crisis, the unqualified
mortgagees, are renting accommodations, still carrying unpaid debt and bad
credit reports, on to the next crisis. Every individual, SMEs and large corporations
affected by this pandemic can learn from that situation. All except the
Politicians, who seem to want the gaming to continue. Economic recovery for
those who are in a convenient position to earn from others misfortune. The Rich
getting richer on the backs of the Poor. What can Politicians do? They all need
rich donors. Perhaps this crisis is different, and those who suffer layoffs,
closures, and a steep drop in sales revenues, can recover.
Forcing the banks to lend, may appear as a laudable
goal, but banks charge to lend, earning revenue for their shareholders, and
even with heavy restrictions applied, they will always treat their biggest
customers best. Restricting the banks via legislation, from calling in "before
crisis" indebtedness, foreclosing on or selling forced to close, partially
operating or going concerns, and from lending to new or existing fully working
entities, from said bail-out funds, may help. However, new and unseen methods
of gaming the system will be found and exploited, delaying or mis-aiming the recovery,
to where individuals, SMEs or even, large corporations should be.
Economic Measures, approved by the legislature to
manage and bring disaster relief should be managed through the Executive
Cabinet, its Ministry of Finance, Treasury Department by its Taxation Division.
Addressing large corporations and SMEs that have been forced to cease operations, via their last three years of Tax filings. The same for operations
that have to be partially closed. And offering them an equivalent revenue loss
bailout loan interest free for a calculated period. With the insistence that
they send staff on full pay leave and retain pre-crisis staffing levels. The
Tax Man should now bring a cheque.
Rationale
T.A.J &
Associates Company Limited uses this occasion
to comment on topics that have been covered, both academically and by the
mainstream media, to add its opinion and point out investment opportunities,
not to invoke any social action.
