How to fix the economy..Everyone Has an Opinion..What's yours?
Ali Velshi |
CNN Chief Business Correspondent
President Obama and his administration are facing America’s worst economic crisis in generations. The recession is entering its fourteenth month, fast approaching the longest recession ever seen. Job cuts continue to mount: 2.6 million in 2008 and this week alone, 110,000 more cuts were announced. As Americans continue to cut back on their spending, companies will be forced to cut costs, resulting in further job losses, and even less consumer spending. It’s a continuous, downward spiral.
And nearly as bad: there’s little agreement on how to fix any of it.
The stimulus package being kicked around in Congress right now has proven extremely divisive: legislation with a price tag approaching $900 billion tends to do that. Proponents say if passed it will create 4 million new jobs, but detractors contend that burying the government in even more debt isn’t going to help anyone. They say the best thing to do is cut taxes and let Americans get out and spend on their own.
But would Americans even do that? Most of us are running scared right now: we’re afraid to spend a dime over what we have to. Our jobs seem less and less secure with each new round of layoffs. Is anybody safe?
And it’s not like loans are readily available. Remember the $700 billion bailout for the financial industry that Congress approved in October? Well a full half of that has already been spent- doled out to banks and automakers- and still credit remains nearly frozen. Millions of Americans can’t secure a loan to pay for college, a car, or a house, and small businesses are struggling just to make ends meet. Spending continues to drop further and further.
So to whom should we look for help? Those Titans of Industry down on Wall Street? Given that each day seems to deliver even wilder swings in the market and more dismal corporate reports, I think not. Oh, and the Madoffs of the world aren’t exactly helping to gain back the public’s trust, either.
So, I ask: how do we fix the American economy?
Everybody’s got an opinion.
A possible solution?
Before a workable solution can be created that will redirect and lift the current economic tsunami from its disastrous state, and once again place it on a reasonably sound footing, understanding how we got into this mess is paramount.
Most everyone we read or listen to these days, tend to lay the blame for this financial disaster at the doorstep of real estate and its attendant mortgages. Oh how Wall Street has always loved to portray real estate ownership and investment as a fool’s game and never to be considered as equal to their sacrosanct world of high finance. But who or what combination of factors is really at the core problem?
I submit that while there is no doubt a calamity of gigantic proportions is existing in the current value base of all real estate today, the cause of the calamity lies within Wall Street and its penchant for creating unregulated and valueless investment products. By giving these highly leveraged instruments exotic names, such as Credit Default Swaps and Mortgage Backed Securities which it appears few investors have understood or taken the time to examine, brokers never the less invested Billions of dollars of their clients’ funds (mostly institutions) subsequently opening the door for the ultimate mass scam that they seem to have become.
These “fail-safe” investment vehicles began providing what appeared to be a never ending availability of mortgage funding to a pent up demand for home ownership, which was then exploited by another poorly regulated industry, mortgage brokering. The undeniable fact remains that without a market for the poor mortgage products that were being created, packaged and sold to world-wide investors, the real estate debacle we now find ourselves in could not have taken place.
The oversupply of money, coupled with a gullible and in many cases unsophisticated public, sprinkled with a bit of greed and matched with many unscrupulous mortgage brokers, helped to fuel the flames of a seeming utopian world.
Assuming the above analysis is reasonably close to accurate what needs to be done?
Perhaps an effort to establish a parity of real estate values based on the economy as it exists, and creating a government-backed and mandated “slam-down” of all current mortgages to 90% of value, then adjusting all mortgage payments to the new level, would stop foreclosures and stimulate sales. The equity loss incurred by lenders could be tacked on to the end of the mortgage period, but tied to the ultimate rise in appreciated value as the economy gradually returns to normalcy.
This is just one idea. What is yours?
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Bill --
Americans have organized Economic Recovery House Meetings in all 50 states -- including 382 in California, 255 in Florida, 115 in Ohio, 199 in New York, 105 in Washington, and 149 in Texas.
That's more than 3,587 meetings in 1,579 cities and 429 congressional districts.
This past weekend, meeting hosts and guests watched a video of Governor Tim Kaine answering your questions about the president's recovery plan. Then they shared their own stories about how the crisis has affected them.
Watch Governor Kaine's video and share your economic crisis story.
The media is filled with numbers about the economic crisis. But the numbers do not tell the full story.
The story of this crisis is in homes across the country -- homes where a family member has lost a job, where parents are struggling to pay a mortgage, and where college tuition has slipped out of reach.
That's also where the story of our recovery begins -- in communities where repairing roads and bridges, manufacturing green technologies, and rehabilitating our schools and hospitals will directly impact the lives of ordinary people and their families.
President Obama's recovery plan will help struggling families right now by saving or creating up to 4 million jobs. But it will also help strengthen our economy for the future by investing in crucial infrastructure projects in health care, education, and energy.
Share your story about how this economic crisis is affecting you and your family and join your fellow Americans in supporting bold action to speed our recovery:
http://my.barackobama.com/sharestories
Thank you for organizing so much support at this crucial moment for our country,
Mitch
Mitch Stewart
Director
Organizing for America
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Bill --
Congress is preparing to vote on a final Economic Recovery bill.
President Obama is urging action in Washington because families across the country need help right now.
In the past week, thousands of you came together at house meetings to talk about how the economic crisis is affecting your communities. And thousands more shared your personal stories on our website.
Your voices were heard. Help is on the way.
Take a few minutes and read some of the stories your fellow Americans shared.
These stories are the face of the economic crisis, and they will be the focus of our recovery. Here are a few excerpts from the tens of thousands of stories people like you shared:
"As of a week ago, our family has joined the ranks of the unemployed and thus uninsured. We have two children, a 6 year old and a 10 month old. With my part time jobs and unemployment, we should be able to keep the roof over our heads, at least one car in the driveway and food in our stomachs for a few months. The state of our health insurance is what truly scares us."
Nichole H., Columbus, OH
"I live in a small rural community in central Minnesota and have run my own small business for 32 years here. These last 8 years have been a slow steady decline economically. This has caused me to continually find ways to tighten my budget. Our small towns are really struggling with infrastructure and loss of businesses to attract and hold workers in their communities."
Judy T., Motley, MN
"I am a teacher in Florida where we are 50th in the country in spending per student. I feel this generation of students is being cheated out of a quality education. I'm fortunate that I have a job. But our education system is failing our children. There are so many areas of education that are suffering because of massive budget cuts. The bottom line is: as the United States of America we can do better for our children."
Betty Jo A., Deltona, FL
Read more from Nichole, Judy, Betty Jo, and others who shared their economic crisis stories:
http://my.barackobama.com/yourstories
Ordinary people are telling the real story of the struggles and pressures families are facing right now. They drive home the importance of this recovery plan and the need to put it into action immediately.
The President's economic recovery plan is an important first step in getting our country back on track. But recovering from this downturn will require the faith, confidence, and hard work of all Americans.
Thank you for staying involved during this critical time for our country,
David
David Plouffe
Campaign Manager
Obama for America
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