Doom and gloom. We’re sick of it.

We have much to be angry about. Gamblers have been bailed out. We are footing the bill. It is a clear case of moral hazard, and they should be punished. But it’s unlikely to happen, not at least in the short term.

I’m not suggesting we lay off them, just that we split the spotlight and start focusing on solutions.

The credit crisis is affecting the real economy. Profitable businesses don’t have access to credit and overdraft facilities which are essential for short-term liquidity. Business is a series of peaks and troughs. Loathe them if you will, but banks have their place. Without a financial system, large-scale business simply could not function.

However, banks will not start lending again until they know the true value of their balance sheets. As we have seen, the toxic debt figures keep rising. As has been pointed out by several commentators lately, large numbers of residential mortgages are in arrears. Some are holding out for a debt deal, rightly or wrongly, others simply can’t pay and will default.

So the real economy is slowing down, due to recession, austerity cuts, and lack of access to credit. This is a terribly trinity for business owners, many of whom are doing well, but require access to essential short-term credit.

An Idea

For the last few years, we’ve been giving small micro-credit loans to businesses in developing countries through KIVA.org. 

There is money out there. There are investors waiting in the wings.

Why not come together and set up a similar KIVA type organisation? Irish businesses can set up profiles and we can loan to them, help each other out, instead of waiting for the banks to decide how toxic their balance sheets are, while the real economy stagnates.

Micro-finance institutions would need to be set up or perhaps we could work with existing credit unions?

Even small amounts can keep good businesses afloat during these trying times, and if some fail, they fail. But at least we tried?

Food for thought.