Stop ! Catch Your Breath!

What is our Government officials thinking?  After a short pause for Thanksgiving, various Bush Administration officials were breathlessly lamenting the state of economic affairs and incredulously wondering why the steps already taken have not got the economy humming.  Why should I be surprised?  This is the same Administration that brought us Iraq, Katrina, Attorney General Gonzales, Intelligent Design, and Terri Schaivo.  Why should we expect them to know what is going on now?

 

For 8 years this Administration looked the other way, and behind closed doors (while accepting large political donations), applauded these tycoons of Wall Street.  Our economic wows are not just banking related.  We have basically a job deprived economy that for 8 years has bleed jobs to China and other lower wage countries.  For 8 years nothing has been done to regenerate new, value creating, good jobs to replace those lost.  And now the Bush Administration wonders why the economy is officially in a recession?

 

As in all tough problems one must break the problem into pieces in order to solve it.  In this case we must separate the banks’ and investment houses’ situation from the general over extended, under jobbed every day economy.  Here is what I recommend:

 

1. Banks/Investment Firms – The main risk is their collapse and the loss of retirement savings for most of America.  Of course there is the chance of collateral damage to common stock prices and even reserves for insurance companies. 

 

·        Change the “mark to market” rule with a 3 year sunset.  This would allow banks and investment firms to keep questionable assets on their books at previously established value and not require the banks to hoard so much of the  cash that the Government has pumped into them.  These institutions should be required to develop a plan on how they would operate following the three year grace period. 

 

·        Banks and investment firms that develop practical plans and execute them should be favored by the Government and those that can not or do not develop acceptable plans should be seized and liquidated in an orderly manner.

 

·        During a period of Government assistance (such as loans or buy back of assets), banks and investment firms must sharply curtail remuneration packages for their executives (all, not just the CEO), and dividends should be reduced or eliminated.  Once a firm exits Government assistance, they should be free to operate again as they see fit.

 

·        Clear regulations should be established on requirements for loans and mortgages that apply across the board. 

 

1. General Economy – The general economy will recover naturally in time.  The question is really to what level relative to other global competitors.  The US must seek to maintain its world leading position if we are to have any chance of seeing our children do better than out generation.

 

·        Initiate a jobs creation program aimed at the infrastructure.  This should be done in two phases with the first phase needing to begin within120 days.  The second part should begin within 1 year.

 

1.  
   • Through tax incentives, stimulate the private sector to create jobs outside the infrastructure programs.

 

1.  
   • Initiate an “alternate energy” development project (man to the moon type) that will insulate the US from spikes in foreign supplies of oil within 5 years.

 

1.  
   • Create a new thrust for math and science in elementary education with companion programs for high schools and colleges.

 

It has taken the US 8 years to get into this hole and it will take at least half of that to get out.  Programs such as elementary education and alternate energy development are aimed at underpinning long term growth. 

 

The most important Government activity that can not begin until January 20^th is real Presidential leadership.  President Obama must lead wisely and with his staff, by example.  Prudent, pragmatic, and strategic Government thinking coupled with a genuine concern for the average citizen.  In this manner all boats can rise, even those of the Wall Street firms.

 

 

 

 

 

 

 

Explore posts in the same categories: Barack Obama, Democratic Party, George Bush, Politics, Republican Party

Tags: alternate energy development, economic crisis, economic recovery, education, infrastrucuture stimulus, math and science, Religion, wall street

You can comment below, or link to this permanent URL from your own site.