3 Quick Steps For the Economy

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The comments from Bill Parks and quote from Thomas Jefferson is further proof that we are faced with a void in leadership in congress... 230 years have passed... and still we find ourselves reaching back to the founders of the republic for advice...

Stan Brody of CA 3:39PM November 29, 2008

Re The financial crash of 1929, FDR and his group did restructure our nations banking policy and then went on to create the "New Deal" programs that did what they were expected to do, it seems that our congress has been giving the banks every thing that they want,and of course they took advantage and started to be less than truthful than they should be to their clients regarding the terms of the loans......My View is that they are the ones who are guilty,and they should get what is comming to them...cordially

Steve S. Roisman of CA 3:21PM November 29, 2008

The root cause of our economic depression is real estate... To paraphrase James Carville... It's the foreclosures stupid... it's the foreclosures... Eighteen months ago FDIC Chairman Sheila Bair testified before "Barney the Magnificent's" finance committee and strongly advised congress... and the industry... that loan modification was required to halt the free fall in real estate values... real estate taxes... and along with it a plunge in the economy... The Emergency Economic Stabilization Act (understatement!) contains ONE page on the foreclosures... to date nothing that has been enacted that remotely addresses the issue... Interesting factoid... The FDIC seized Indymac Bank in July, and immediately commenced loan modifications... the default and foreclosure rate at Indymac have dropped off dramatically...
Fact... the mortgage industry wrote sub-prime loans through the end of 2007... these were virtually all 2 year ARM's... thus we will not finish the 1st adjustments on these loans until May 2009... then the defaults... foreclosures and REO fire sales running through 2010... In addition, the option ARM's (neg-am) loans that have yet to play into this fiasco, are about to... and in numbers that will make our heads spin... a preponderance of these loans are about to reach their maximum negative accrual, and with that, the unlimited adjustment... due to the plunge in values it will prove impossible for anyone to refinance these loans... not even the 800 FICO "perfect" borrower, with money in the bank, and the Suze Orman "Gold Star" for having done everything perfect... thus more defaults... foreclosures and REO fire sales!! Without loan modification and true mortgage relief, we are looking at a minimum of 3-5 more years of this crisis... and a full blown depression...
A man's home is his castle... and the castle is under siege... everything in our economy is tied to this issue... "Bob and Betty" are not going to run our and buy that new car when they don't know if they will have a garage, or a wall for that new wide screen TV next week... in fact they will not buy anything that doesn't have "you need this to survive" written all over it!!!
The counties here in California will lose $1 Billion in real estate tax revenue in 2008 alone... and this is a permanent loss...and gets compounded every year... now think schools, police and fire protection, emergency services, social services and public works... all critical factors in real estate sales... thus, any of us that is reveling in the REO sales, thinking just how great this is... is truly a short sighted fool...
Yet the Cacophony of Conceited Condescending Clueless Clowns of Congress continue to fail to understand the crisis... a levee fails from it base not from the top... throw all of the rocks (money) in the world on top of the levee (Wall Street and the banks)... but fail to address the erosion at the base (real estate) and the levee will still fail...
It's the foreclosures stupid...

Stan Brody of CA 2:05AM November 28, 2008

To pay for transportation infrastructure improvements, invest in green energy, and justify the demands upon US Automakers to abandon gas guzzlers, we have to raise the Federal excise tax on gasoline significantly but steadily over time. Currently it stands at 18.3 cents per gallon raising about $800 million to $1 billion per penny per year. Over the past 18 months, we have ridden a roller-coaster with respect to gasoline prices, from below $2/gallon to over $4/gallon and back to $2/gallon. While huge gasoline taxes in Europe should not be immitated ($4 to $6 per gallon in taxes), we have to raise more money as the smallest and earliest sign of fiscal responsibility. Over the next 16 months, the federal gas tax should be raised 5 cents per gallon per month until it reaches $1 per gallon. Then the situation can be re-evaluated. This should be supported as a ncessary investment in our country's transportation and energy infrastructures, and a good way to pay for needed well-paying new jobs. I hope the new administration and Congress move promptly on this vital national need.

Peter Martin of AZ 1:34AM November 27, 2008

Who could have imagined after years of prosperity that we would be in the throes of the worst financial meltdown in our history, one that has wiped out over $15 trillion of wealth from stocks, bonds, and real estate? Who could have imagined that the entire global financial system would be in distress? Or that the savants running our major financial institutions would inflict life-threatening wounds on themselves as well as on us because they didn't understand their own risks?
We can start with Thomas Jefferson!
“If the American people ever allow the banks to control the issuance of their currency, first by inflation, and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property, until their children wake up homeless on the continent their fathers conquered. The issuing power of money should be taken from banks and restored to Congress and the people to whom it belongs. I sincerely believe the banking institutions having the issuing power of money, are more dangerous to liberty than standing armies." ~ Thomas Jefferson

Bill Parks of MD 8:35PM November 26, 2008

The number one problem is JOBS JOBS JOBS there would be no mortgage crises nor would there be a housing crises if americans had jobs. every week I read articles in this magazine that talk about 900,000 jobs lost this year and 1,000,000 forclosures well DUH! No JOB means no MONEY to pay the mortgage DUH! and let's start to get a true number for unemployed since that unemployment rate that everyone likes to talk aboout only counts those on unemployment not those offered buyouts or those who are "independent contractors" or who work for the family business.
It is time you folks in the INVESTIGATIVE NEWS WORLD started to focus on JOB LOSSES and where are they going?
That is the problem with the auto industry. The very FOUNDATION of the auto industry was started by Henry Ford when he said "pay a man a good wage and he can buy a car" That is something that the auto people just do not get. How can they sell cars when they lay off all the people at the bottom, so that the few at the top can ride corporate jets and get millions for firing people?

Carl Bidinger of MI 8:39AM November 26, 2008

Youve missed the mark completley. Youve offered your version of an economic solution to the current problem, but no insight what so ever as to the root causes of this problem. Evan Zuesse comment comes the closest. However much more is involved.
Fact: The entire economic model is flawed and has no mechanism for dealing with downturn. A grow, grow, grow economy is doomed to failure. Hate to burst your bubble Zuck, but the underlying problem is too much borrowed money floating around the system. Adding more BORROWED MONEY to it wont solve the underlying issue. It will prolong it until next time. Every major economic correction has been prolonged since the Johnson Administration.(when he glommed the social security trust funds to pay for his economic disaster) Another pass the buck solution will not work in this case. In case you forgot, the Social Security/medicare economic nightmare is about to bloom. The federal govt. would probably be better investing that "infastructure" money into soup kitchens.
Bottom line, if you havent seen this coming for the last 10-12 years, you are in serious denial. Come on, everybody with half a brain knows the fed govt politisises (LIES) about its economic data. Who in their right minds beleives the govt. inflation data? Its all BS. Anybody who lives in the northeast can attest that inflation has been 9-14% every year for at least a decade. Anybody watching the construction boom knew there werent enough people to fill those houses and shopping centers. Prices have risen dramaticaly, only because of the devaluation of the dollar. Only idiots inject a 40% rise in the M1/M2 with multipled leverage.
I mean really. The past 25 years has seen an exodus of quality manufacturing jobs leave our shores and white collar jobs outsourced. People forced to take part time only jobs, ect. Hasnt anyone noticed that the work force in this country has been decimated? And how do the powers that be respond, they open the flood gates of illegal cheap slave labor labor, thats how they respond. Who do they think can afford to buy anything, unless it is with credit?
So this country has the greatest GDP and is the economic engine that runs the world? How do we do that? Not by earning it. By borrowing it. There is a vast difference. When credit cards become long term instruments of debt, when mortgages are refinanced to pay for consumption or to pay off other borrowed money, and there is no real underlying economy to pay it back, there is a problem.
But dont blame the average Joe, hes just following the lead of his govt. You dont have to look farther than social security to see how the govt operates. The credit economy has been DC policy for 30 years. Back to the drawing room boys, cause your economic policy dont work.
You say you didnt see this coming? All executive compensation committees did, hence the 2x-3x payouts, knowing that anyday that long term compensation and or options might end up being wiped. They knew.

Michael Curr of NY 8:37PM November 25, 2008

1. Approve "bailout" for the Three auto makers if:
a. they end, forever, gas hog lines;
b. sell off those vehicles at a loss (tax deductions - we won't have to GIVE them money in a bailout. They can count those losses as part of the deal;
c. Will provide a $10,000 rebate check to any American who buys American owned company cars that are fuel efficient. The most fuel efficient model gets $10,000, and the lesser mileage winners get less;
d. Agree to cover unemployment for auto workers taken off gas hog lines for two years;
e. Sponsor, among American auto makers, some kind of joint government/private enterprise effort to give American cars a boost in at LEAST, fuel efficiency. American auto companies could, say, incorporate composite metal use on cars, much as is used for American fighter aircraft. HOW the individual companies designed their own models for the consumer is their business. The R & D on say, composite metals would be funded by the Government;
f. Begin rebates as soon as Obama is sworn in, with the emphasis always on energy efficiency, alternative energy, and improvement in the environment as well as on employment.
2. Partner with T. Boone Pickens, and any other moguls he can lasso, on a Government-Private Enterprise effort to bring on a goal of x% or xx% increase in wind, solar, tidal, and biomass alternative energy production within the first 4 years of Obama's tenure. This would include setting up a certification program so that people who are willing to switch jobs and even living areas, could move into the business of alternative energy technology. Give them training that will be required to do any alternative energy product that a tax payer wishes to claim for energy rebates. We create a cadre of individuals who might turn out to be excellent entepreneurs.
3. Massive infrastructure programs. No new highway lanes if not already projected. All possible funds go to Mass Transit for any city, town, village that wants more Mass Transit. Highways, bridges, culverts, etc., get a heavy dose of overhaul. Everyone working on these projects must be a legal citizen of the United States. Again, if people are willing to move to locations where, say, a new subway or elevated railway is being built, the government assists with moving expenses, if individuals are certified as competent in the trades needed.
4. The Bush tax cuts on the richest 2% are done with. They've had a great run. Now, it's their turn to pay more in taxes. I don't want to hear anything about "trickle down" economics. It's crap. Look at who is benefiting the most from these "bailouts." Richest of the rich! The heck with that. The Bush tax breaks for the wealthiest go out of effect. No, that money won't cover much of our problems for taxes, but it will cover some. If we're going to go into massive debt, then some of it -- the part that's deserved -- comes from these wealthiest of the wealthy.

Jerry Eagan of NM 1:42PM November 25, 2008

There is a widespread media assertion that unregulated "free market" greed produced this crisis. The opposite is true. In 1977 Jimmy Carter's Community Reinvestment Act was passed, the biggest single factor in the origins of massive sub-prime lending. It was Affirmative Action applied to the financial system, aiming to revive decaying minority neighborhoods. Bill Clinton revived the Act in 1995, and banks were forced against their will to give home loans to low-income households without proper security safeguards, but this was sweetened by allowing the banks to pass on the risk to others by repackaging them as derivatives (Bear Stearns pioneered this in 1997), and with the bank risk avoided and money thus recouped, the banks could extend yet more sub-prime loans. In effect, the entire financial system became hostage to leftist Affirmative Action. The bubble had to collapse eventually, and the whole financial system now wears the result. We are now asking Paulson and others who operated the sub-prime loan system, and promoted it, to cure it, using regulatory methods that created the failure the first time around. Zuckerman's suggestions effectively call for the same sort of "New Deal" that dragged on the Depression until World War II, pulling down the entire economy. This does not seem to be a good idea.

Evan Zuesse 3:26AM November 22, 2008

I absolutely oppose any attempt to raise the gas tax or any tax that is regressive and whose impact is felt most by people with low to middle incomes. Funding research into advanced energy technologies is vital but not through an increase in the gas tax. Quit trying to punish the average people of this country!

Scott of MN 12:23AM November 22, 2008