What's the fix?
Fix the crunch by spending our way out
In the latest installment of our series "What's the Fix?" Scott Jagow talks to Howard Wheeldon, a strategist at brokerage house BGC Partners in London. Wheeldon outlines what government priorities should be.
Howard Wheeldon (BCG Partners)
More on America's Financial Crisis
TEXT OF INTERVIEW
Scott Jagow: We're doing a series called "What's the fix?" The question, obviously, is what are some of the best solutions for getting out of the financial crisis and improving the economy? This weekend, leaders from 20 countries will gather in Washington to discuss possible answers.
I'm joined now by Howard Wheeldon, a strategist for BGC partners in London. It's a brokerage house. Howard, what's on the agenda for this G20 meeting?
Howard Wheeldon: Well, the top priorities are to get the countries that have been the global leaders intent on spending their way out, increasing domestic consumption, and of course having sorted the banking and financial market crisis as such in their own views as to where we go from here.
Jagow: Well in terms of spending our way out of it, it seems that here, the focus for individuals is on saving right now -- and there doesn't seem to be any increase in consumer spending on the horizon in the United States. So it seems like it's all on the government to make it happen.
Wheeldon: Uh, that's a problem. I'm afraid the savings culture, much that I would welcome it -- and not just from consumers, but also from governments, because all this money that we will be borrowing, that you will be borrowing, that we will be borrowing, has to at some point in the future be paid for by higher taxation.
Jagow: And in terms of regulation, you know, world policing doesn't usually work very well. So how is that going to happen?
Wheeldon: Well we've never had it. And so there is the old adage, what you never had, you never miss. We're talking about global regulation, I think we are 10 years away from global regulation. And again, if I was a skeptic, I would have to turn round and say, well let them talk about it and have their pound of flesh, but quite frankly I don't see that anything is going to emerge. I think regulation has to be left centric to the individual nations. I think it's impossible to conceive that we will have a set of global rules that we all work to in under 10 years.
Jagow: Howard Wheeldon from BGC Partners in London. Thanks so much.
Wheeldon: My pleasure.
Comments
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From waukesha, WI, 11/11/2008
I think we need to teach the children about consumerism.
Buy things because they need to, not because they want to.
There's no "have to's" or "gotta haves" because her school mate has one. Use things until they breaks. By doing this, they will reduce trash. Teach them to recycle and to save for the future. When they are in the 60's, it's their time to spend with their grandchildren and not standing by walmart door and greet people just because they don't have the money to retire.
And if you don't have the money for those items you need, save! Credit is OK mortgage, but not personal goods. How would you feel if you are still paying fillet mignon you ate last Chrismas while the fillet mignon itself has turned to a p**p...?
From St. Louis, MO, 11/11/2008
MY solution for this whole problem is this. Force these banks to use this bailout money to reset loans at current home values. Reduce interest rates to managable levels. Regulate credit card companies from jacking interest rates up to outrageous levels by reinstating usuary laws. And finally, reset every Americans credit to 600. I'll tell you what if my credit hadn't been destroyed by credit cards jacking my payments up by up to six times what the last payment was because I made a late payment, I would definately be buying a house right now.I would probably never get a credit card ever again, but with prices this low I would be able to live in a safe neighborhood, with good public schools for my son. I would probably also buy a newer car that was more reliable. If everyones credit was reset, and banks and credit card companies were regulated from basically forcing people to default when they have to whether a small personal storm, then I believe you would restart the economic engine with consumers reengaging on falling prices, thereby creating more demand, and raising the boat for everyone, not just the fat cats on wall street.
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