The Need For A New Foreign Policy

Americans have a history making opportunity to alter our foreign policy and establish new relationships with other nations throughout the world at a time when we are desperately in need of national leadership and a new strategy to energize our economy. It is a mistake to characterize the economic turmoil of our nation as a recession or the beginning of a depression. The expanding global manufacturing capacity has reached a peak in excess of the needs of the current number of product consumers. We are suffering from unemployment due to the lack of increasing consumer demand for products and services. A new national economic development requirement has emerged which is dependant on recognition of the needs of all people worldwide and must be met with a  new strategy that integrates national and global planning with new economic and financial conditions if American and global employment is to be increased. We need a global economic development strategy that will reduce the economic disparity between countries and within countries. See http://revitalizingtheusaeconomy.blogspot.com/ Please feel free to comment and ask questions.

The economic stimulus program passed by America’s federal legislators reveals a complete lack of understanding of international economies. A new study of the current global econometrics has revealed the true source of America’s economic problems. The mathematical and statistical study of global economic indicators has revealed that there are emerging economic forces that are permanently altering the old global economic paradigm that produced prosperity in the past. American commerce has arrived at the point in history where the American economic problems are not only interactive but more importantly interdependent with global economic conditions. The legislators have apparently made no effort to understand how the true economic problems that we are facing are a result of a change in global economics. There has been no mention of the new global manufacturing paradigm that has been evolving for some time. They are apparently ignorant of its impact on the global economy and how it  is creating new and unique economic problems for Americans and others globally.  It is impossible to solve America’s problems with a process that is isolated from the global economy. Unemployment globally has become a major crisis that is an integral part of the American economic problems. It will prove to be impossible to overcome the economic problems of America without understanding and addressing how American investment must be redirected to increase global demand for consumer products. 

It is the evolving global economic restraints that are decreasing demand for new consumer products and increasing unemployment. Without understanding these constraints the U.S Congress’s stimulus program will not raise the level of manufacturing sufficiently to restore the American and global economies to the former levels of production. The program does not provide for increasing the demand for consumer products by the people which is the economic principle that must be obeyed when attempting to create prosperity.

The American and global manufacturing capacity has grown to the point that it exceeds the needs and demands of the existing product consumers globally. The global economic crisis is the result of a decrease in the demand for more of the same consumer products that the consumers already own. There is insufficient demand to support our immense global manufacturing capability at the same level as in the past. In fact it has become obvious for some time that the demand for more consumer products is declining faster than thought earlier. The fundamental problem is that there are simply more new automobiles, TV’s, computers, phones, as well as clothing and other consumer products than the approximately 3.3 billion people that are sufficiently affluent to be product consumers need or want at this time. This problem compounds itself as people around the world are loosing their jobs and need even fewer consumer products.

The demand for consumer goods globally has also been decreasing due to reduction in the birth rate over and the limited increase in the population of new affluent buyers entering the market for consumer products over the past eight years while the rate of increase in manufacturing capacity continued which resulted in tremendous inventories. Bailing out manufacturers that are producing products for which there is little or no demand will not increase employment if the products are not selling. The people who are affluent product consumers globally have purchased everything that they need and in many cases borrowed money and purchased more than they could afford. Reports from around the world show that businesses are not maintaining their rate of sales and many are failing because of a lack of demand. All types of retail stores are closing. Major automobile manufacturers are experiencing large reductions in employment due to the reduction in sales globally. Car dealers are going out of business. Globally manufacturers are already terminating hundreds of thousands of jobs. Consumers are being enticed to buy one more of something by major discounts, impractical financing structures and suspension of interest payments. But it is not dramatically increasing sales. A slogan for the consumer that summarizes the economic dilemma could be: “No thanks I already have one”.

With the advent of little or no demand for more of what people already have the global manufacturing economy has entered a new phase which is merely the “replacement” economy. The replacement economy is limited to replacing a product that is worn-out or broken. To economically survive it is not possible to continue to reduce our global capacity for manufacturing to a level that produces only the replacements needed or the occasional new product, the latest phone or TV, that is a “must have”. This drastic reduction in employment will destroy our global economy. We are currently trying to accomplish just that and it is obviously creating a major global crisis.

It should be obvious even to the most cursory examination of the economic conditions that globally we can not survive economically if manufacturing employment continues to decline. We must develop a global economic development strategy that will create a demand for consumer products and services by the people sufficient to energize the current capacity of manufacturing if we are to achieve a prosperous global economy. The slow down in  the American and global economy is be being exacerbated  by the lack of alternative investment opportunities. New businesses are not being established in an environment where the people are conserving funds for fear of a major depression. Because of the lack of sales corporations are not reporting great earnings therefore the stock markets are not that attractive.

The solution is to adopt a new global economic development strategy that can establish immense investment opportunities that will create hundreds of millions of new jobs and dramatically increase product consumer demands. The following posts describe an economic development strategy based on financing the people in the emerging economies in a manner that inserts funds into the global economy at the lowest level through the hands of the people. The proposal creates hundreds of millions of new jobs and product consumers with enormous needs on a global scale and in a manner that has never been tried globally in the past

We have come to that point in history where nations are dependent on global economics.

The reason the more industrialized nations are experiencing an economic crisis is due to increasing unemployment brought on by the lack of demand for consumer products and also the excessive government taxation and increasing immigration. Attempts by national governments to adopt new internal policies that utilize tax revenue and borrowing to encourage businesses to expand and increase employment are not succeeding. It has become obvious that it is not possible to expand businesses when the demand for consumer products is declining.

The nations that have adopted an austere approach and decided to reduce government spending, in effect rejecting Keynesian economics, are doing quite well. However no nation will be able to return to the level of employment and manufacturing that they have experienced in the past until the demand for consumer products increases to former levels. This appears unlikely in the near term because of the amount of consumer spending that has occurred, the consumer attitude is "No thanks, I got one". Many believe that manufacturing employment cannot begin to increase until the consumers decide that the economy is going to recover and are willing to reenter the market place. Even then the demand will not be sufficient to restore the robust expanding economy of the past because of the enormous amount of past purchases and the minor number of new consumers entering the market.

Until recently the manufacturing capacity in United States had been expanding for over sixty years to meet the growing demands of a increasing number of new homeowners and construction workers for more consumer goods. The increase in manufacturing capacity also produced new jobs and a large affluent class of working people at all levels. This increase in the national employment  base grew in response to the enormous increase in demand for consumer products created by the spending of the proceeds from financing home construction.  This is the process that created the prosperity of the people in United States. The increase in prosperity and the spending on imports also helped many other countries to increase their employment base and product consumer class until the combined class of product consumers grew to over thirty percent of the total global population.

This process is not longer viable for the future of the more industrialized economies because of the limited demand for new products, the exporting of manufacturing resulting in increased unemployment, the increase in the number of workers due to immigration and the resulting welfare and unemployment benefits that are being paid by governments. To meet these demands governments have had to increase their budgets by  borrowing and increasing taxes which has thrown countries into economic recessions that may turn into  major depressions if a method for increasing consumer demands is not implemented..

Consumer needs and demands have now changed and are no longer sufficient to support an ongoing increase in global  manufacturing employment at the previous rate which is what is required to maintain current levels of prosperity.  In fact the existing global manufacturing capacity will exceed the current demands and future demands for some time because of the slowly expanding number of affluent product consumers and the reduction in their desires or needs. . What is required are new consumers: hundreds of millions of consumers,  with needs and demands for new services and products.

 It is impossible for the nations now experiencing serious unemployment problems to create millions of new product consumers internally and that is the reason the "stimulus" programs have failed. At this point in history it has now become mandatory that nations seek a global approach to solving national economic problems if they wish to energize their economy and create jobs.  Recently it has been reported that of the approximately 6.8 billion people on this earth, 2.0 billion still live on less than $2.0 US per day and of those 1.0 billion live on less that $1.0 US per day. There is an additional 2.0 billion that live on a minimum income and are unable to save or improve their inhumane living conditions. Currently there are reports that global poverty is rising, not falling. Even in industrialized countries there are today over 200 million people capable of working that are unemployed.

This blog is about how to create jobs that will increase employment in industrialized countries and emerging economies by increasing global demand for consumer products. Through a home building industry an entirely new group of  product consumers is established when poverty is eradicated. Increasing demand for consumer products is required to increase employment worldwide.  Read this blog  and learn how the proposed global economic development strategy is a viable process that eradicates severe poverty  through the establishment of a global home building industry for the emerging economies. Please feel free to comment and make suggestions. 

Creating prosperity in emerging economies by the establishment of a home building industry for those who qualify for a new home loan is the key to the eradication of poverty. The strategy is based on the idea of loaning the money to the people who are working and the affluent which means that high quality homes and communities will be added to the cities not low end affordable housing. It also creates housing at the bottom of the economic scale for the lower income buyers by the Moving Up Effect. (See other posts) The increase in employment due to the construction creates demand for consumer products and additional jobs in small businesses and manufacturing which creates new buyers for homes..

Many of you who read the posts on this blog have indicated that you already understood that there were well over two billion people still living under very inhumane conditions with no real opportunity to ever find sufficient food or proper shelter for themselves and their children. You were also aware that many of them need medical attention and most do not have an adequate education if any. You now know that there is a global economic strategy that once adopted internationally would create economic freedom in participating countries enablng  these people  to become a key part of the eradication of severe poverty. With proper laws in place and financing they would have the opportunity to become employed and to invest in their own economy and become prosperous.

Now that you know there is a solution will you join us in this effort to eradicate severe poverty and create global prosperity? Are you concerned and passionate enough to give of your time and money to become a part of the growing effort to create a global home building industry? Now is your opportunity to join. You can comment on this blog or send emails to the author's web site expressing your area of interest. It is possible  for you to join others in teaching the development strategy locally and asking others to become part of a local organization to insure proper laws are in place. 

Constructing homes in emerging economies energizes the global economy.

Constructing homes in underdeveloped countries is a viable global economic strategy that has the ability to energize the global economy and impact all participating national economies. It is a proven economic strategy that economies based on protected private property rights have the power to eradicate poverty and create prosperity when affordable financing is available. It is the same economic development process that evolved in America in the late 1940’s and 1950’s and created unprecedented prosperity in America.

It all began when the Marshal Plan created manufacturing jobs in American as exports increased rapidly for the rebuilding of Europe. The wages for the workers were low and little could be saved for the future. Housing was in great demand and the concept of building subdivisions was born. However, it was the passing of legislation that created what was to become known as FHA and VA home mortgage insurance that unleashed a constructions industry that remains today the driving force in the American economy.

Mortgage insurance made available to millions of Americans for home ownership over the years increased the number that could qualify for a loan which became the key to prosperity for hundreds of millions of people. The interest rates were lowered because of the insurance and the terms were extended to reduce the payments and increase the number who qualified. The result was the birth of a home building industry that has created hundreds of millions of jobs over the past sixty years. Employment created demand for all types of consumer products.

The jobs created were not just in construction and the manufacturing of materials for construction. The employees in the construction industry from banking and real estate to carpenters and painters earned funds that were used for the purchase of consumer products of all types. This is the process that created a demand for a strong manufacturing industry for a wide range of products and sustained a prosperous America. It also increased imports and exports. As a result there are over 120 million families that can afford modern fully equipped homes in America today.

The adoption of this same business paradigm for financing homes in underdeveloped countries will eradicate severe poverty and homelessness by creating hundreds of millions of jobs. It begins by organizing an international system for mortgage insurance which insures international investors making loans to domestic banks in developing countries as the primary source of funds for home loans. International mortgage insurance will make it possible to launch a global home building industry in participating countries. The impact of hundreds of billion dollars invested in personal home loans will create hundreds of millions of jobs of all types globally. There is currently a need globally for over six hundred million modern and fully equipped homes based on five people per household. Starting a model program with a billion dollars in several countries would launch a home construction program that will prove the concept and demonstrate the need for the construction of at least thirty million homes per year for twenty years. To understand the magnitude of the construction this is thirty times the average number constructed in the America in one year just to meet the current needs. This process maintains an American economy for over 300 million people. Initially the home loans will be made through local banks in underdeveloped countries directly to homebuyers that are currently employed or have sufficient resources to qualify.

Thanks to the recent studies of the magnitude of the wealth that is possessed by middle and upper classes of people in underdeveloped countries there is sufficient evidence to prove that hundreds of millions of families have sufficient net worth or income to qualify now for the purchase of new homes. Many of the affluent still live in homes that are of a quality that is far below the level that they can afford because of the difficulty in purchasing land or a lack of protected property rights. There are also restrictions and limits on mortgage financing at practical rates of interest that prevents homes from being constructed. Instead many of the upper economic classes invest in foreign stock markets and buy property in foreign countries because of the lack of investment opportunities in their own countries.

Under this economic strategy modern fully equipped homes would be constructed in developing countries for the lower, middle and upper income groups while providing jobs for those that are unemployed. The unemployed are trained and educated to work. They then become eligible to become homebuyers. This process must be fully understood to comprehend the viability of the strategy which has been so successful in America. The infusion of funds from home loans into the economy through the hands of the people permits them to become investors in the economy while increasing demand for all consumer products globally.

In effect the borrower reaches forward over 30 years and brings income that will be earned over 30 years into the current year and spends it on the purchase of a home. When that is done by a millions of people year after year the economy is energized each year.

As those involved in the supplying materials, furnishings and appliances spend their earnings demands for a wide variety of consumer products is created in addition to construction products. As the new homebuyers move up to a higher priced home the vacated homes become available to lower income groups. In American the sale of existing homes each year is over three times the number of new homes that are constructed each year, which is approximately nine hundred thousand new homes during an average period. Moving up is a common practice in an expanding economy. Many senior citizens in American have owned more than five homes during their life time. Realizing their increase in equity in the homes upon sale has generated income that would not be possible working for wages.

Once the construction begins on homes for those with a net worth or sound employment the unemployed become employed not only in construction but also in producing all consumer products as demand is increased globally by the newly employed. The increase in prosperity is due to the flow of funds into the various product consumer industries. The workers in these industries also become qualified for home loans. This process is exactly the same process that launched the home building industry in America. This is the process that eradicated poverty and created an unprecedented American prosperity.

The lender making the loan funds the money directly to the homebuyer’s escrow. There is little or no opportunity for corruption. Each loan is evaluated based on appraised value of the home in each economy and the bank funds go directly to the builder/developer less reasonable fees and cost of insurance. The funds do not first go to a government or a corporation for disbursement at their discretion. Funding governments and corporations in the past has failed to energize economies because they do not offer the people the opportunity to participate as investors in the economy which is the key to creating prosperity for all.

Why construct homes for those that are employed and affluent in emerging economies?

The global economic development strategy discussed previously  in this blog is beginning to gain supporters. Some of your responses to this blog have indicated that you do did not understand why the homes are constructed for the employed and affluent when it is the poor and homeless that we are trying to help. The new strategy is based on the historical fact that many existing homes for the employed and affluent in emerging economies are of a size and standard that are below what would normally be owned at their level of income or net worth.  Many people because of their current employment or personal wealth could actually afford a much larger and higher quality home if they were available. There are many who are employed that could afford a home but because of problems with  local laws and lending practices are unable to find the land for a home and a home loan at an affordable and equitable interest rate.

Because those that are employed and affluent can qualify for a loan at reasonable interest rates and have the resources international and domestic lenders can rely on them as the sources of repayment. This makes it possible to fund a number of homes which create employment in development and construction for underemployed and unemployed. In addition the "Moving up Effect" discussed in this blog also opens up housing for others to move into as the new homebuyers take occupancy and move up into their new homes.

Several inquiries have been received also about the feasibility of financing housing in emerging economies based on lending to the employed and affluent. It has been done. There is an effort underway to also insure the loans to reduce risks to lenders. See other posts for more detail.

The proposed strategy to create a global home building industry as means of creating jobs worldwide will prove to be a process that developers on several continents will explore in more detail when the first prototype community is being constructed.  Attempts to build homes in emerging countries for the homeless and the unemployed are failing much in the same way they have failed in United States. Inexpensive, small homes built as "affordable" have been not been durable and energy efficient. As a result many have deteriorated and abandoned and are no longer serviceable. 

Why does home building in emerging economies create global prosperity?

In United States of America over 1,000,000 homes are often constructed and sold in one year. If you calculate how much money was paid to workers and material suppliers when the homes were sold for an average of $250,000, you will discover home building is the key to creating prosperity and is the force that drives the economy in United States year after year. Home building and home ownership are basic principles of the economic development strategy that created the enormous amount of employment and consumer demands that established the America manufacturing industry and a vast number of small businesses. Yes it is $250 billion dollars that is released into the economy creating an enormous demand for consumer products and services in just one year in United States and globally.

Consumer demand for products and services is what energizes an economy and creates prosperity. Financing home construction for the people of any nation with low interest rate home loans will bring prosperity to the people of that nation as the loan is funded and the money enters the market place and increases demand for goods and services.  Insuring home mortgages increases the number of lower income borrowers that become eligible, the largest group needing a home, has been a critical part of the success. The past economic theories about how increasing manufacturing employment  creates prosperity that fill economics books are ill founded and have failed to create prosperity. Funding new manufacturing by itself does not increase demand for goods and services. It is not possible to dramatically increase aggregate demand by the people for consumer products when they are paid minimum wages. Home building based on long term financing of homes for the working and the affluent dramatically will increase the demand for consumer products and jobs in many industries worldwide. It is the only process that provides the people the opportunity to manage their own lives and achieve their potential to become prosperous by investing in their own economy. This process becomes feasible when nations adopt tweleve economic principles that create prosperious economies.

TWELVE ECONOMIC PRINCIPLES THAT CREATE PROSPERITY 
Organizing and managing an economy according to the following principles permits the people of any nation to become very prosperous as they become employed and  invest in their own economy.

1.  PRIVATE PROPERTY RIGHTS – INVESTING IN THE ECONOMY. Establishment of Private Property Rights for individuals and businesses is the first principle of the natural law that must govern the sovereignty over any nation when attempting to create prosperity for all people.   Providing the clear and unequivocal right under the constitution of any nation for the people of that nation to own property is the key to creating prosperity. Any nation whose constitution does not provide for laws granting private property rights to the people prevents the people from borrowing and becoming prosperous by investing in their own economy and confines them to economic servitude to the governing authority. The lack of Protected Private Property Rights is creating the economic disparity between countries that is the driving force behind immigration.  

2.  JUDICIAL RECTITUDE – PROTECTS PRIVATE PROPERTY RIGHTS.   It is absolutely critical that the Private Property Rights be protected by the establishment and enforcement of a constitutional right guaranteeing such rights and the validity of legal contracts of title under the rule of the law. Precise terminology must be adopted for constitutional law and other legal documentation to eliminate ambiguous wording and reduce the number of legal conflicts that must be resolved in court. This also reduces the burden on judicial authorities in determining the rightful ownership and legal liens in the event of disputes. Reliance on the legal process is essential for the protection of the lender extending credit to prospective home buyers  and for the homeowner when entering into contracts.

3. THE WORKING AND AFFLUENT - CREDIT WORTHY BORROWERS The key financing principle that establishes the feasibility for making home loans in developing countries is the loaning of money initially to the people who are employed and those that are able to qualify for a loan to purchase a quality, modern home. These borrowers have established income records that show their ability to pay the mortgage payments. This reduces the risks to lenders and the number of defaults on home loans. Reducing risks increases the number of financial institutions willing to invest in home mortgages in developing countries. Mortgage insurance, insuring the lenders of repayment, also becomes more available. The credit worthiness of the people determines the strength of the economy of any nation where home building is the predominate industry that creates jobs.

4.  MOVING UP EFFECT - HOUSING UPGRADED FOR ALL PEOPLE. The purchase of new homes by the employed and the affluent creates vacancies when they move into their new home. This creates an opportunity for others to move up into the homes and apartments vacated by those that have moved into their new home. Those moving up into the homes vacated by the new home buyers also leave behind vacancies that become opportunities for others to move up into a better home or rental and the cycle repeats itself. It is very important to understand this phenomenon when attempting to provide homes for the homeless and the poor. The annual number of buyers changing homes and moving up into existing homes averages three times the number of new home buyers in most economies once the process begins to increase employment and wages. This process makes homes at the bottom of the economic scale available to those moving into a home for the first time. This is a process that increases the number of quality homes in every city eliminating the need to construct low end  or affordable housing. Housing becomes available as people move up  for first time owners that have become employed due to construction of new home homes in planned communities. 

5. OWNING APPRECIATING ASSETS – INCREASES NET WORTH OF OWNER. The solution to the problem of how to create prosperous nations in developing countries is the establishment of a home building industry where all the working people have the opportunity to purchase an appreciating asset. It is the process that  creates prosperity for all people in a nation whose laws include Protected Private Property Rights.    It is in essence a forced savings program that continues to increase in value over time. The most important characteristic of the process is that the money being borrowed from a bank is only for the specific purpose of buying an appreciating asset. The borrowed funds are based on appraisals and spent only for acquiring products and services that needed for the construction of a modern home and their share of public services. Money spent by governments, corporations or by the people for any other types of products or services will not increase the net worth of the people. Increasing the net worth of the people through the ownership of an appreciating asset is the essential requirement for the economy of any nation to become prosperous. It is the willingness of those with jobs to take risks and their credit which energizes every successful economy.

6. INSURED MORTGAGES – INCREASING THE NUMBER OF QUALIFIED BORROWERS. An important financing principle requires the incorporation of international mortgage insurance and reinsurance into the lending process for developing economies to increase the number of qualified buyers. Mortgage insurance greatly increases the number of potential lower income buyers that can qualify. It lowers the interest rate on the loan to the lowest achievable rate.  Lowering the interest rate is very important for this strategy to be hugely successful because this income group is the largest and has the greatest need. By this procedure international financial institutions are protected when extending credit to a subsidiary or a domestically owned bank in emerging economies. Foreign lenders can rely on the loan being backed by specific loan values based on appraisals in the local economy provided by the domestic banks. Some mortgage insurance companies in the United States are already insuring mortgages in other countries for international lenders. The funding of each mortgage for a specific home in a specific amount eliminates past corrupted attempts to fund development in emerging economies by making loans directly to governments and corporations.

7. GUARANTEED TITLE – ESTABLISHES LEGAL OWNERSHIP. The establishment and public acknowledgement and/or recording of the legal descriptions for private property are a fundamental requirement for private property ownership and transfer of land. In some countries this will require the establishment of legal descriptions for the land for the first time. It is now a very practical and precise engineering process made possible by the various Global Positioning Systems (GPS) that are currently available. Once any specific point is selected as the base line, measurements of what is thought to be the property boundaries can be taken utilizing standard engineering procedures and checked by additional GPS readings. In the event land that was formerly held by a government or large tract owner is sold for the development of homes and communities the seller must provide proof of ownership and the right to sell.

8. CONSTRUCTION WORKER – BECOME EDUCATED AND TRAINED. The construction of the homes for the employed whether they be teachers, policemen, government workers or any affluent group increases the number of people that must be educated and trained on the job in the real estate disciplines including construction, engineering, legal title, escrows, designs, appraisals, financing, and banking. Education coupled with the creation of jobs is the strength of this strategy which has been proven to be tremendously successful in the past as demonstrated by empirical evidence of the real estate experience in prosperous nations. Developers constructing homes will be able to invite members of other countries to participate in the training and take the education and experience home for the management of their own program.

9.  PROSPEROUS PEOPLE - NEW QUALIFIED BUYERS. The newly employed and those that are being trained on the job in the real estate disciplines become qualified for buying one of the homes vacated by others moving up or a new home for themselves. This further increases the number of homes to be constructed and the number employed that can afford a new home. This increase in employment also expands the demand for all types of consumer services and products domestically and globally as the income of the people from the construction of the homes passes through the hands of the people. This is what creates prosperity. The home loans are actually funding manufacturing through the creation of consumer demand.

10. GLOBAL EMPLOYMENT – DEMAND FOR CONSUMER PRODUCTS.  It is the increase in employment in the home building industry that provides the income for the people to be able to increase their demand for consumer products. This is what creates prosperous nations. As the capital expended for the land, construction of the building, acquisition of equipment and labor is released into the economy of a developing nation it passes through the hands of the people involved in the development, financing and construction. As they in turn make purchases the funds begin to turn over and over as they move through the economy creating a demand for consumer products and services many times greater than the original cost of the home even after paying taxes on each turn over  As the economy begins to expand in the developing countries the demand for skilled and educated people to work will increase in other countries as well. It creates demand for products and services many of which will not be initially available domestically within an emerging country. The demand for imports will impact the economies of other nations. The demand created by initially expending fifty billion dollars annually in a home building industry globally will succeed in creating prosperity and energizing the global economy where aid in equivalent amounts has consistently failed. Empirical evidence shows that when housing construction is booming in the United States imports increase drastically. When housing construction slows the economies of other countries are impacted.

11. HOME EQUITY – FINANCING SMALL BUSINESS LOANS. The increase in the value of the equity invested in the purchase of an appreciating asset such as a home or a parcel of land over time becomes the predominate source of collateral for personal loans. The equity in personal assets make it possible to borrow funds for financing the operation of privately owned small businesses. Small businesses are the principal employers in prosperous countries when the economy is based on Protected Private Property Rights. In countries where protected private property rights exist well over 66% of the employed work for small business. Home equity loans are the critical component for increasing the number of small businesses that are the driving force of every national economy where the people are truly prosperous.

12. GOVERNMENTS TAXING THE PROCESS – FUNDS THE SERVICES. Taxing the home building industry strengthens the viability of governments for the payment of loans whose funding provided for the construction of infrastructure, medical facilities, schools and supporting the needs of the people throughout the cities.  The increase in taxes also provides the capital for the repayment of loans used for construction of services and infrastructure needed for the home development such as streets, waste treatment and water treatment.  The home building process also includes fees to be paid to governments on the construction of each new home to fund the new homeowner’s share of the cost to extend and provide utilities and roads to each home.  It fact, through taxation which includes all sales tax, income tax and government fees charged at every level, the governments will receive 100% of the mortgage funds expended for development and construction of the homes over a period of  eight to ten years as the home loan proceeds move through the economy and are taxed at each turn over.

How many homes are needed globally and how will they be financed?

Some of you have asked how many homes are needed now. The answer is hundreds of millions. This blog describes a viable economic development strategy to meet this need based on the same process that has created prosperous economies in the past. To adopt the proposed strategy a financing program must be established for a  Global Home Building Industry to finance builders in emerging economies that have laws providing for Protected Private Property Rights.  It would be an  international financing program for the development and construction of hundreds of millions of new, quality homes as part of newly developed communities that include retail and commercial buildings.  It will create a billion or more new jobs and eradicate severe global poverty. Latin American leaders alone estimate that they desperately need a minimum of 54 million homes to house their people properly; not including future population growth. It is almost impossible to estimate how many homes are needed in India, Malaysia, Africa, Southeast Asia and other emerging economies because the need has been neglected for so long.

If you read the data published by the World Bank on poverty you will find the conditions have been worse. When 1,000,000 are constructed in the United States it energizes not only the United States economy because of the increase in employment it increases imports. Imagine what would happen to the global economy if 5,000,000 home were constructed in emerging economies in one year. Many of them of course would be less expensive but the rate of 5,000,000 home per year we would never catch up with the need. If 5,000,000 were constructed every year in Latin America it would take ten years. By then millions more would be needed. Think about how this would apply to Africa, India and others.

In the past sixty years industrialized countries have been expanding their manufacturing capacity to meet a general increase in the demands of an increasing population of affluent product consumers. All of this economic growth has produced an affluent class of people that is approximately thirty percent of the people on the planet. Of the approximately 6.6 billion people on the planet nearly 4.3 billion have not been participating in the increase in prosperity. For them there has been a lack of housing, an increase in poverty creating major health problems, epidemics and needless deaths. Many live in nations where the governing leaders live in luxury while the vast majority of the people are not permitted to participate in the investment economy.

The economic disparity within the struggling nations has increased as well as the disparity between them and the more industrialized countries creating inhumane living conditions for billions of people. All of the wonderful and loving humanitarian efforts to help people trapped in these economies have made only minor improvements when compared to the total number of people that are born, live in abject poverty and then die year after year.

This proposed economic strategy eradicates the severe poverty and adds billions of people to the product consumer class over the next twenty-five years. It increases the global demand for manufactured products and energizes the global economy. To eradicate poverty there must be a substantial increase in employment for the poor. It has been proven that for a population of 3 billion people it is not possible to increase prosperity by increasing manufacturing employment in underdeveloped countries when global demand and employment is limited while wages are set at a minimum to increase manufacturing profits.

The proposed new paradigm for global economic development energizes the global economy by establishing an increase in global demand for manufactured products to a level equal or higher than our current capacity to manufacture products. It is a process that energizes the global economy while eradicating poverty expeditiously.

In addition it has been projected that the population on the planet will increase by at least 3.0 billion over the next forty years. It is also expected that the population increase will occur primarily among the lower income families in underdeveloped countries. If this were to occur while poverty was being eradicated it would serve to further increase the demand for consumer products. However, it should be remembered that history has shown that as societies become more prosperous birth rates diminish

If you are interested in the eradicating severe global poverty the time has come for us to act. The Economist magazine and others have reported that currency wars have started between nations because those holding large sums of currency are concerned about how inflation or deflation both locally or in other countries is going to impact their holdings. There are efforts being made by some nations to insure the currency of other nations loose value in an attempt to protect the currency being held on the side line. The knowledge that there are enormous amounts of capital in the global economic system that are languishing because of the lack of viable investments creates a perfect opportunity to make direct investments in mortgages on homes in the emerging economies.

The lack of investment opportunities is because more housing is not needed in United States at this time and corporate stocks are not attracting investors because the limited consumer demand for new products is impacting sales and profits. The proposal to establish a global home building industry not only provides investment opportunities it will increase the global employment and demand for consumer products that energizes manufacturing. What is needed now is for those who read this blog and are interested eradicating poverty begin to teach others about how a  Global Home Building Industry is a viable economic development strategy for the increasing global employment.

Reversing immigration reduces economic disparity between countries.

The economic disparity between countries and within emerging economies is the principle cause of the current global economic crisis. It is generally known that the lack of employment opportunities in the emerging economies is forcing workers to migrate to the more industrialized economies world wide in the search for  employment opportunities.  The problem of unemployment in struggling economies has turned into a global crisis because of the decline in demand for consumer products has reduced employment opportunities in the industrialized nations.

Because the more industrialized economies currently have more workers than they can employ the situation is creating a major cost burden for their tax payers. Large expenditures by governments for welfare, unemployment benefits, medical treatment and housing subsidies, to meet the needs of the unemployed are increasing taxes on the working people who are already having trouble making their income meet their basic needs.  Governments have resorted to borrowing money to meet the challenges of the immigration cost burden which is increasing the debt to an unsupportable level and transferring the cost of the incoming immigration and unemployment to future generations.

The postings to this  blog describe a strategy for  Creating Global Prosperity for all  people in every nation,  including those in the  emerging  economies,  by establishing a Global Home Building Industry that will generate jobs for hundreds of  millions of workers worldwide and reverse the need for migration. Trillions of dollars  invested in home mortgages in emerging economies will create opportunities for employment worldwide. Loans would be made to qualified homebuyers that are employed and the affluent for the development of quality homes constructed to modern standards.


Workers from around the globe will go to or return to the booming emerging economies to take advantage of opportunities to share in the enormous increase in prosperity. The spending of the money disbursed during the development and construction of homes and communities will  increase the demand for imports by the emerging economies. This will require that the existing global manufacturing capacity be revitalized,  putting  millions back to work. Read the following posts to learn how the strategy can be implemented. Please feel free to comment and make suggestions.