The reasons for the failed US recovery are really quite simple:
Most economists agree that the US economy remains stalled because of poor consumer demand. Because so many Americans are unemployed or coping with reduced hours and wage cuts, they aren’t spending money. And owing to poor demand, businesses have stopped investing in expanded production and hiring more workers.
Prior to the 2008 credit crunch, most Americans coped with stagnant wages through credit card borrowing. However given the declining incomes of most workers, continuing to accumulate credit card debt at 15-20% interest has ceased to be an option.
Economist Dr Ravi Batra feels this is something American consumers should be up in arms about. Banks continue to borrow money from the Federal Reserve at 0% interest and rake in immense profits by charging 15-20% interest for credit card customers to borrow it.
In the following interview with Thom Hartmann, Batra points out that this is something Obama and the Federal Deposit Insurance Corporation (FDIC) should have addressed when US banks first started failing. He points out that only big US banks get bailed out when they go bankrupt. The small ones, which continue to fail in record numbers, get taken over by the FDIC. This is an independent agency of the federal government that ensures bank depositors’ savings up to $250,000. You can find a complete list of the banks managed by the FDIC at http://www.fdic.gov/bank/individual/failed/banklist.html
Once the FDIC takes them over, they effectively run these banks, though they usually appoint new administrators to manage day-to-day operations. Batra’s proposal is for FDIC-run banks to also issue Visa and MasterCharge cards charging 5% interest (instead of 15-20%) on the unpaid balance. At first there would be a mad rush of credit card holders to transfer their debt to the new low interest cards. Eventually the private banks would have no choice but to reduce their interest charges, well.
Although Batra’s scheme appears radical, it isn’t – central banks in several other countries are pursuing a similar strategy to stimulate consumer demand.
Since the Democrats currently hold the majority (3 out of 5) on the FDIC board of directors, the strategy would be easy enough to implement in the US if Obama were serious about putting unemployed Americans back to work. The FDIC is managed by a five-person Board of Directors, all of whom are appointed by the President and confirmed by the Senate, with no more than three being from the same political party.
As Batra points out, this strategy wouldn’t require a vote in Congress or any federal expenditure. In essence, it could be implemented overnight.
The question Batra can’t answer is whether Obama is on the side of struggling American workers – or the banksters who are financing his reelection campaign. I think we already know the answer.
Here is Batra explaining his proposal (html embed feature not working) - free link at
Fast forward to 8.0 min to hear Batra explain out it would work.