Hasan Yasar Ofidan Writes... firstname.lastname@example.org
02.03.2009. I believe that my proposals will be useful in fixing many problems of consumers about credit cards, and in recovering consumption permanently, and will relieve both banks and markets, without passing money, and will provide an economic buzz, with these new credits given to credit card holders of banks which are ow will be in difficulties.
THAT'S THE WAY HOW A MARKET RECOVERY PACKAGE SHOULD BE!
Previously, I had shared my views on real reason of crisis and its solution in my "Radical Solution to Global Crisis" article dated in December 21, 2008. You may also have access to this article of mine at http://www.ekonomikcozum.com/koseyaz/kosehas/172.Radical_Solution_To_Global_Financial_Crisis.htm. Despite the elapsed time, the reason of why the crisis happened is still not identified exactly, not to mention finding solutions. In order to find solutions to problems, the problem must be diagnosed fully first, and then one should search for solutions. In the field of medicine also that is exactly the case. The disease is diagnosed exactly first, then treatment methods are applied against this diagnosed disease.
As the result of Global Crisis of today, various countries, especially the United States of America, repeatedly present packages to get rid of congestion they have faced, and there are unnecessarily excessive number of packages . In short, we face a package inflation. I consider all of these as non-permanent reflexive actions, taken with panic against the crisis in the short term.
I had written the causes of the crisis and the things to do clearly in my previous article. What I've said is not only valid for this crisis, but also is valid for all times. It's a fixed rule which should be obeyed. There is no any other solution other than this! Even if there is, it can't go beyond of showing its effect in the short term.
I'm bored to see those flying packages, introduced in a desperate and hopeless manner. First, the problem must be fully diagnosed, then the solution must be produced. After performing these, one should intervene the appeared part of the crisis, just as they do now.
In this article, I'd like to share one of my projects I developed as a method of intervention to the visible part of crisis with you. For me saving companies, passing money to markets under the name of money rescue package is wrong and pointless. What would you get if you save companies, and choke on the money? Unless these recovered companies sell, market their products and services, a permanent monetary ease cannot be reached! In the same way, increasing short-term demand is not the solution. Passing money to markets, recovering the short-term demand, makes the crisis more profound. Here, there is a single place to intervene. And it's the opening the consumption blockages, and increasing the consumption, which is decreasing permanently at the moment. For this, various methods should be created.
My own project, aims to recover consumption permanently by making fundamental changes in credit cards regulation, and consists of 2 phases. These measures, although aren't welcomed by banks which see credit cards as a revenue meta, are very important in terms of eliminating many problems in both social and economic manners.
1st Stage: The most important change to make this happen is to remove credit card cash advance purchases, by issuing a law. In other words, credit cards must be reorganized legally, to be used only in deferred payment sales, and to take advantage of campaigns announced by companies. Thus, people who use credit card won't face any difficulty, as in paying the prices of purchased goods and services bought in one slip with its cash price, won't be in the minimum payment quagmire, and the risk of falling into default fine or enforcement will be eliminated. This application is very important in terms of not to face credit card holders, which are or which will be in payment difficulties, with default fines and enforcement costs, which are way higher than the money they had used.
If we give an example on this subject from Turkey, a card holder with a 1000 TL limit, won't be required to pay the amount of 1000 TL at the end of term, even if he/she uses the entire limit, since all of the shopping has a deferred-payment. It will be well below that. If one assumes that on average 10 month of deferred-payment shopping has been made with all of the limit of this credit card, at the end of the term the card holder should only pay 100 TL in total. A card holder with a 1000 TL limit, even if he/she uses the entire limit, the final payment won't be more than the total amount of 100 TL, and the card holder's card will be used most efficiently automatically. Banks however, again in the same manner, ask for the card holder a payment between 100 TL and the minimum amount 20 TL as the amount to be paid for the time period. With this application, default fine risk will be decreased and credit card problems will be eradicated.
However, in the legal regulation it's very important that the deferred payment time should be set to minimum of 6 months and the credit card limits should be unchanged for a period of at least 3 years. And the newly given credit cards should be given with the same methods and limits, and in order to not giving new cards with extreme limits to consumers the sanctions and regulation should be stated clearly in the new law, and the application should be monitored closely by the corresponding control mechanisms.
2nd Stage: And this is the stage where the current credit card debts are reset to zero. Several methods can be applied as appropriate. One of them can be to freeze or shift the credit card debt to bank, with low interest rates and with a certain payment calendar. And the other, the credit card holder's debt to related bank can be paid via taking credit from the same bank, with fixed deferred payments and low interest rates, in a long payment calender, and should be collected from the same credit card in time. It's possible to add examples like this. The important point here is that, each bank has to do this process for its own credit card.
I believe that my proposals will be useful in fixing many problems of consumers about credit cards, and in recovering consumption permanently, and will relieve both banks and markets, without passing money, and will provide an economic buzz, with these new credits given to credit card holders of banks which are ow will be in difficulties.
Measures to be taken shouldn't be limited to domestic land, but should address a broader area. It should be noted that this problem is not the problem of countries. I's a global problem affecting the entire world. Other countries who see positive developments and revived demand will also begin to use this same method, and these measures will spread itself throughout the whole world.
Hasan Yaşar Özfidan.
Lawyer - Economist
You may also find my awarded studies at: www.ekonomikcozum.com
And my columns at: www.haberx.com
- Sent With Email to some related organizations and the media throughout the world.
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