User:Shajeelmalik

FINANCIAL CRISES
After studying the new package launched by the prime minister on the 8th October in regards to the financial crises, I believe that minor changes to the policy could strength the government and Labour party. All political parties agreed to support this decision as this was the only potential way to improve the British economy. However if simpler changes were applied to this decision the outcome could not only resolve the economy but it would benefit the public, and Labour.

The proposed amendments would be as follow;

i.The public should have some kind of a security of their money being spent to rectify the bankers or political mistakes. I would propose that a body should be formed to buy stakes in banks in need of support. This would be a governmental body and maybe formed temporarily (until necessary). The body should have its own officials managing and overlooking at the banking activities to ensure the public that the banks wouldn’t make mistakes that would put their investments at risk. a)Moreover in the interest of the public, the regulatory body should issue a percentage (ideally at least 35%). These shares to be divided between the amounts of tax payers in the UK and issued to them accordingly. The calculated shares should be paid out to the public, this would not only inject more finance into the financial market but also into the UK as a whole. The extra cash would allow more people to start up small business and invest money which will then again be put into the cycle. Many people would be in the position to pay more towards the taxes and the majority of the capital will remain with the financial institutions.

Advantages • The tax payers would have security for their money. • Money being injected into the financial market and the public. • More people in favour of the Labour party hence make it stronger. • British economy will rise consequently inflation rate will drop. Disadvantages • The government would have less capital available to distribute to councils and social services (but this is being done anyway.)

b)The above shares could also be sold to overseas investors to bring in investments from all around the world into the UK. These investments would pay back the tax payers monies and at the same time it would inject money into the banking system. This way the public wouldn’t be at risk, yet the financial crises would have the funds in circulation. Foreign investments can be attracted by assuring their investments.

However I do suggest that the foreign investors should be put under an agreement to hold on to the investment for a minimum of two years (depending on their investment), this will allow the banks to stabilise. Moreover the contracts should also bind the investors to only sell the stakes to the regulatory body. Advantages • Foreign investments put on stake. • Other foreign investments would also be attracted to the UK. • May increase employment. • Labour party in a stronger position. • Tax money secure and available to spend in a normal routine. • British economy rises. • Employment will increase if foreign investors introduce businesses in the UK. Disadvantages • Foreign investors may move their income to their countries (can be put under a contract to negotiate in this respect), however taxes would still benefit the government.

The both policies have strengths and weaknesses. If (a) is applied it would bring benefits to the country’s financial crises, the public and ultimately the political party taking the step forward. Whereas (b) would also bring similar benefits and moreover it would bring in capital from foreign investors and may bring in foreign industry which will reduce unemployment. I think that (b) is the best option forward, however to make it successful it is very important to set right policies towards the investors and to secure the investments for a period of time. ii. As mentioned in the parliament on the 8th October that the government should also assure the public that the money will not be paid to the directors of the major banks as “bonuses”. I think restrictions should be applied to the hierarchal members in terms of the bonuses and any additional cash taken out at least until the crises are over.

This would also punish the bankers for not taking the relevant steps and in some cases making errors that had a major impact on the British economy.

iii. The banks should start lending to more clients to allow small businesses running which will help increase employment. The fundamental aspect that triggered the financial crises is where the banks stopped lending to public. These errors lead to many small businesses collapsing and many potential home buyers were unable to make a purchase.

I understand that the prime minister made it clear that the funds will be released subjected to the conditions and I believe the conditions may relate to the proposed above.

The above are purely proposals aimed to assist the prime minister and other members and authorities concerned. I am confident that the members can amend the above to enhance the proposed policies and that this proposal may be considered as an outline. The above is a basic proposal and if interest is shown it can be developed more in depth.