MAKE THE BANKS LEND MONEY AGAIN!

The Penguin's answer to the recession/depression woes? Make the banks (and other lending institutions) LEND MONEY!!

I'm extremely distressed that the money-holders (banks, etc.). They are the main reason we are all in trouble: we can't get credit. No one can lay their hands on money. We can't get houses, small businesses can't improve themselves, we can't buy new cars, we put off buying consumer products. It's difficult for new businesses to start up, and established businesses can't expand, so jobs are hard to find.

We are in a period of economic stagnation. Banks made some incredibly stupid mistakes and say they have been burned and are afraid to lend money, lest they get burned again. They forget that the situation was of their own making! The banks are loathe to lend money again until/unless they get free money or guarantees from the government! Banks created this huge, historical mess and no one has gone to jail over it. (Sarbanes-Oxely in not being enforced.) This ludicrous situation has created a new class of the population: The Entitled. They are "entitled" to their money and everyone else be damned. They are sitting on huge stockpiles of money. Did you know that CEOs of financial companies make greater than 300% more than their average employee?? That's more than any other industry, at any other time in history, in any country in the world.

Consider this scenario: Imagine that the H/VAC industry created and developed a new product that was going to revolutionize air conditioning. However, the CEOs and other principals within the industry knew there were huge problems with the new product. But they promoted and sold the hell out of it nonetheless. Everyone, everywhere bought the new product. The product was touted in everywhere, by everyone, and people clamored for it. H/VAC companies jumped for joy as untold amounts of money started flowing in.

But, the flaws in the product were exposed and they were bad - really bad. 

Lawsuits loomed large and the industry knew they had to pay the piper. H/VAC companies lost huge amounts of money and faced the enormous backlash from people who were duped. However, the companies would be able to write off a certain amount of their debt on their taxes. The industry knew that asking for a government to bailout would be unacceptable, so they did not ask for help. It was their mistake that created the problem, plain and simple, so why ask others to shoulder the blame? They took their chances and they lost. Yes, they made lots of money in the beginning, but they had to pay out when the problem couldn't be solved. There were congressional inquiries and new regulations imposed so this wouldn't happen again.

Yes, there are huge differences between the financial industries and air conditioning technologies, but didn't the lending institutions do the same thing (created a new product that was extremely flawed and they knew about it)? But, instead of having to pay for their mistakes, the banks have gotten away with murder. They are holding America hostage and no one (save for the Occupy Movement) is making a fuss about it.

If you look at any other period where the country experienced huge downturns in the economy (the Great Depression included), it was the ability for people to obtain credit that made the difference. Why isn't that happening now? There are any number of academic papers on the subject that bear me out, but no one is paying attention.

(See 

http://www.clevelandfed.org/research/workpaper/2012/wp1214.pdf) As much as I hate for the banks to get away with what they've done, the government needs to create incentives for banks to make the money flow again. I see no other solution. Not that I believe in trickle-down economics, but it's true that, when people have money, they spend money. And, when people spend money, businesses and the economy flourish.

This is what I learned in high school economics and it's a solid model:
* Joe's Schmoes is a company employing 10 people.
* The bank increases Joe Schmoes' line of credit so it can increase production on a product that is quite popular and selling well.
* Joe's Schmoes can afford to hire ten more person to help with the increase in production, due to the help from the bank.
* Adam is one of the new employee at Joe's Schmoes.
* With Adam's job, he and his wife can finally have the child they've wanted so long, but felt they couldn't afford it.
* With a steady income, Adam can buy the baby furniture he needs.
* With a steady income, Adam can trade in his old car and buy a new one.
* With a steady income, Adam can now buy more products at the local grocery store.
* With the increase in sales from the new employees at Joe's Schmoes, the grocery store can hire a new stock boy.
* With the increase in sales from the new employees at Joe's Schmoes, the local Wal-Mart (where Adam bought the baby furniture) can afford to hire a new employee.
* With the increase in the number of people living in Adam's town (due to the increase in employment opportunities that started with Joe's Schmoes), a number of apartments are rented that had been empty for almost a year.
* With the increase in the number of renters, more property owners are able to pay their mortgages and not go into foreclosure.
* With the increase in renters, the property owners can now afford to pay their property taxes.
* With the increase in property taxes, the town can fix the streets.
* The streets need to be fixed, so the town hires a local contractor to do the job.
* Since the contractor needs new hires, more people have jobs, which increases the amount of money flowing directly into local businesses.
* With the new money flowing, the banks are optimistic and approve loans for new businesses, business improvements/expansions, new homes, and car sales.
* ... and so on, and so on, and so on...

This is not just the American Dream, it is an economic certainty. Make The Banks Lend Again!!