How to solve the subprime crisis

Thomas Friedman

Leave it to a brainy Indian to come up with the cheapest and surest way to stimulate our economy: immigration.

“All you need to do is grant visas to two million Indians, Chinese and Koreans,” said Shekhar Gupta, editor of The Indian Express newspaper. “We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate — no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans.”

  • UJ

    Tell me you’re just posting this to see us flip out. My god the whole piece is just so terribly wrong…it’s almost offensively bad!

    OK, so first of all, I’m glad Friedman has figured out which races of people are or are not good at math. That’s whatever, he admits its only half serious, but then he goes on to talk to a billionaire CEO who makes his billions from Indian visas whether or not giving Indians visas is a good idea, and then just sucks up his answer and quotes him like its nothing!

    Gosh, I wonder if the CEO of Exxon thinks offshore drilling is a good idea, or if Osama bin Laden thinks Jihad is cool. Maybe Friedman can get them to tell us what our “attitude should be” next time.

    Also, did he really say the most “ENERGETIC” immigrants? WTF? Exactly which immigrants are NOT energetic? Is there some particular race or nationality he’d like to single out as the lazy ones?

    And Old Europe!? And what the hell is a clean-energy space?! And Grraaaghh!! Freidman is just so terrible!!! Why do you do this to us, Bob?

    • Because it’s fun to watch you squeal?

      Wait no, that’s not the reason.

      Seriously, I don’t necessarily agree with everything I post here. But that Friedman piece is getting major coverage everywhere, and hey, even a stopped clock is right twice a day. Not that I think he’s right, of course.

  • Amitabha Mukhopadhyay

    At a time when time is running out very fast and the very stability of the American economy is at stake then it is meaningless to consume precious time in endless debating. The way the American economy is going downhill because of continuous fall in aggregate demand caused by millions of unemployed Americans and total disinclination of the remaining employed Americans to consume which in turn is creating further unemployment, the economy will very soon fall into a deep hole. It will be very difficult to come out if solid action is not taken right now.
    If all the toxic assets are purchased by the government and a new entity is formed by the name STOCK HOLDING CORPORATION OF AMERICA then the crisis may be solved. All the trillions of dollars required may be printed and so the debating may be avoided since taxpayers money is not involved. It will not cause any inflation as the total goods and services in the economy is still intact neglecting deflation but the matching money supply is not there. This act will make the banks strong again and they will start functioning properly. If some inflation occurs then the prime rate of fed may be increased. Apart from that all the major economies of the world will purchase dollar to keep its value artificially high.

  • UJ

    Here’s someone who agrees with Friedman. I still don’t, but I’m willing to hear more from better writers 😉

    “Friedman’s comments are likely to cause howls in some corners, but his basic arguments are sound. Recessions feed on themselves because businesses shed workers creating fewer consumers which causes greater concern, less demand, and more layoffs. The key to ending the current recession is job creation. Legislators around the globe who are considering stimulus packages should ask themselves the same question about every piece of legislation they see: will this help create jobs? I know that many of the bills will include items aimed at saving jobs in dying businesses, but in the long run, those jobs are going to be lost anyway. Traditional tactics for saving jobs in dying industries include protectionist measures.”

    Amitabha Mukhopadhyay,

    Do you have any more information on this “Stock Holding Corporation of America” idea? It sounds kind of interesting, post any links you have, I’d like to hear more…

    • Not sure how the government could buy all the assets and banks without printing huge amounts of money which would be either be (take your choice) inflationary or hugely deflationary.

      Maybe a better plan is what I think is going to happen. Nationalization. The government seizes all the banks, presumably brings them back to health, then sells them back at a profit.

  • DJ

    Nationalization? I doubt it. That would be contrary to recent historical trends, which favor globalization and localization. In the current economy, localization seems to be where things are headed. Conservative local banks– especially privately-held banks– weren’t as profitable during the pillage years, but many of them remain stable now.

    As for Friedman, he’s presented his idea in an outrageous manner– perhaps intentionally so– but his contrast between India and the U.S. bears critical merit: as a nation we WON’T work 18 hour days, we DON’T save, and we think nothing of walking away from our debts. No wonder we’re in dire straits. We’re a nation of spoiled brats banging on our high chairs when confronted with real life.

    • The feds just sent teams of examiners into all the major banks to in effect, perform triage. Some think this is being done to pave the way for nationalization of at least the weakest banks (which include some of the largest ones too.)

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