In my earlier post I had referred to scarce resources. Yesterday Mr. Ben Bernanke the chairman of Fed Reserve appealed to the institutions to help the community. But interestingly these institutions were helped by the Government with trillion dollars packages. Now this is the problem. As per Keynes theory stimulus had to be introduced at the level of people not institutions. Now institutions have survived but the people are suffering and money for people is scarce. Read and mark the words in italics:
Taking an entrepreneurial approach to community development results in innovative and effective programs, making communities more desirable places to live and more resilient in hard times. The CRA regulations encourage banks and thrift to invest in activities that provide affordable housing or financial services for individuals, promote economic development, or revitalize or stabilize low- or moderate-income areas.At a time when the needs of these communities are so great and the resources available to meet those needs are so scarce, it behooves financial institutions to think broadly about their CRA obligations. By partnering with other community stakeholders, these institutions can help address existing community needs and lay the groundwork for stronger credit demand in the future.I don’t want to underestimate the difficulty of the task. The recession damaged communities of all types, but particularly lower-income neighborhoods, and economic recovery has been stubbornly slow. Nonetheless, the commitment and innovation demonstrated in communities all across the country is encouraging. Taking an entrepreneurial approach to community development and thinking about the needs of both people and places will, I believe, make for stronger, more resilient communities in the future.
via FRB: Speech–Duke, Building Sustainable Communities–March 27, 2012.
In India King Jahangir was the first emperor to provide stimulus to masses by engaging labour during the day to construct and different labour at night to demolish what was not upto the mark.(It is however not mentioned in his wiki page) He was able to generate employment and beautiful buildings. Here stimulus goes in the hands of corrupt and greedy institutions who had committed fraud in the first place by creating artificially secured instruments a.k.a. Toxic Assets.
© Sandeep Bhalla.