I figured I would give President Obama the day off . As for Congress, I have never seen such a maliciously useless bunch as our representatives in Congress whose main job seems to be getting re-elected and making sure nothing gets done so I have decided to ignore them. I would suggest that the American people just go all Amish on them and shun them. If we stop listening to them, they still probably won’t shut up, but at least we’ll stop being annoyed. They stopped listening to us long ago.
The Four Largest Problems with the US economy as I see it are:
1. Jobs
2. Mortage/Banking/Securities Mess
3. Dependence on Foreign Oil
4. Transitioning from a Manufacturing Economy to a Technology/Information Economy (That’s the toughest and most painful.)
So, with three cups of coffee in me, I am well-equipped to solve these problems.
JOBS
Government statistics put unemployment at about 14.8 million. Reality is more like 20 - 22 million.
There are approximately 26 million small businesses in the United States. Yes, you got it. Every small business hires one person. Ta-da!
“Wait!” you say. “I can’t afford to hire someone. I am just barely making it myself.”
What if you hired an outside sales person on a commission only basis or a small draw against commission? What if hiring someone to do the admin worked gave you more time to bring more revenues into your business? What if taking on another worker helped you produce more goods? The idea here is that the person pays for themselves and then some. Will it work in every case? No. But what if it works in 20% of the cases? We just beat out the government and big business in getting people employed again.
Can’t afford to pay someone at all? Hire an apprentice. Could you teach someone business skills so that they might be able to go out and get a job? Could you teach someone to do what you do and end up with a skilled worker who could make a difference to your bottom line? Can you and another business (or businesses) co-op an employee such as a bookkeeper or sales person?
What about withholding taxes, Social Security, health care for this new employee? Hire the person as a contractor. 1099 them at the end of the year. Screw the details. People are going hungry and losing their houses. Get ‘em a job. Worry about the taxes later.
Jobs are the key to getting the economy moving again. Big business isn’t going to do it. They are too big to adapt to the new economy fast enough to make a difference. Many won’t survive. (But we’ll talk about that later.)
STEP 1 FOR FIXING THE ECONOMY: HIRE SOMEONE
MORTGAGE/BANKING/SECURITIES MESS
You’re gonna like this one. Screw the banks and screw Wall Street. Nobody ever received a loan without someone on the other end being willing to give it. Banks saw an opportunity to make big money by selling their loans to Wall Street so they gave loans to everyone and anyone who could fog a mirror. Literally. Wall Street over-securitized the loans, had the ratings companies in their pockets and sold bad securities to investors. They created servicers to handle all the paperwork and then didn’t do the paperwork. They then went back and MADE UP PAPERWORK which is FRAUD on top of FRAUD on top of FRAUD. HELLO! CAN ANYONE IN WASHINGTON SPELL RICO??? And we’re covering their losses?? They defrauded the states by not paying transfer fees (in fact, set up fake entities to avoid paying fees legally owed), they defrauded investors by lying about the safety of the securities and the government is saving their asses?? I DON’T THINK SO.
Time for Washington to cut the cord. (Yeah, like that’s gonna happen.) They aren’t too big to fail. They have failed. Get them out of our misery, cut off the leg before the infection kills the rest of us. In mommy words, “I’m going to take the Band-Aid off quick and it will only hurt for a minute.” I have no idea what the Brazilian wax girls say but I think that pain level is closer to what will happen.
So, stop making any government payments to lenders who have foreclosed or done a short sale (oh, yes, they have been collecting big money from the government on those). Any PMI on a foreclosure needs to go into an escrow fund until the true note holder can be discerned.
Any bank that kept their notes in their portfolio may continue to collect payments. If they want to do loan modifications for their clients, fine. They have the note, they have the right to do that.
Immediately halt any ongoing government funding of banks and Wall St.
Allow mortgage payments to be made into escrow accounts until the proper holder of the note can be found. Too many people are paying a servicer who either doesn’t legally exist or their monies are not being allotted properly. No note, no money. No foreclosure, short sale or loan mod either.
Make special efforts to save small banks that held onto their notes instead of selling them off to Wall Street rather than having the FDIC shut them down and allow some big bank to come in and take it over.
Prosecute the offending lenders and Wall Street firms (and individuals) under RICO.
Work on disengaging our monetary system from the Federal Reserve. Why a private company is in charge of our currency… don’t get me started. Just ask Greece what happens when you don’t control your own currency. This whole mess is going to be painful. We might as well go through the pain of firing the Fed while we are at it.
What can you do? Put your money in small, local banks and credit unions that hold their own loans. You know… like banks used to do.
CUT OUR DEPENDENCE ON FOREIGN OIL
Our foreign policy is based on the fact that we need oil from other countries. Do you really think we’d be spending ONE TRILLION DOLLARS to fight a war in Iraq if we weren’t concerned about access to oil? Of course not. We would have bombed the shit out of the Saudis since they grew our 9/11 terrorists. But… oh, we can’t touch Saudis. They’re our “friends”. With friends like that…
Our dependence on foreign oil is expensive. In this report from the Federal Reserve Bank of San Francisco (I hate to say it) issued in 2006 (I’d find something more recent, but these numbers will do nicely and I actually have a life), the effect of oil imports on the national deficit is staggering.
” … the overall monthly trade deficit went from $30 billion to $68 billion, and the petroleum-related trade deficit went from $6 billion to $26 billion. These numbers imply that higher oil prices and the resulting higher cost of petroleum imports have accounted for over 50% of the deterioration in the overall U.S. trade deficit during this period.”
That’s MONTHLY and, yes, here’s the link: http://www.frbsf.org/publications/economics/letter/2006/el2006-24.html
People are eager to point out the lack of viability of alternate energy methods. Maybe that was true in 1970, but the landscape has changed considerably. Technology has become more efficient and prices have come down. It’s time to start putting this technology into play.
1. Tax heavy-weight vehicles that eat a lot of gas. Bad enough they had a f-ing tax credit (oh, did someone want to sell more gas because their families make money in oil? Yes.) And yes, an exemption for actual working vehicles for farm and industry. But there’s no reason a mother of two needs a HUMMER to go back and forth to the grocery store.
2. Increase tax credits for electric, hybrid and alternative fuel automobiles. Just don’t count on those cars being made by the Detroit Big Three. They are dinosaurs. And they move slower than molasses. They can’t keep up and we can’t wait.
3. All new homes must incorporate passive solar energy and high grade insulation. Any energy saving upgrades that can be built-in, should be. There should be additional tax credits for any house built with more aggressive methods of alternative energy — active solar, wind turbine, whatever.
4. Self-sufficiency really has to come from a grass-roots level. Energy alternatives need to become affordable for the average person to incorporate.
The U.S. will never be free until it can provide its own, renewable energy. Yes, the cost of alternative methods is high. But a trillion dollar war gets pretty pricey, too. You want to add in the lives lost and destroyed?
TRANSITIONING FROM A MANUFACTURING ECONOMY TO A TECHNOLOGY/INFORMATION ECONOMY
This one is the toughest and it’s one reason why the economy is in such a painful place right now. We are transitioning and that’s never easy. And this is going to take more research and segmenting than I have time for here. But let’s look at the obvious.
If we are going to a technological and information-driven economy, we need better educated workers. We are losing manufacturing jobs because frankly, we can get the work done much more cheaply overseas. But what of the American worker, the guy who has worked the line for 20 years and was hoping to retire? He’s basically screwed. Is it better if he’s screwed now or five years from now when he goes to retire and his company ain’t there anymore? (See Band-Aid ripping, above) Do we try to get him into a re-training program. Sure. But there’s a certain level of personal responsibility that needs to kick in. If you are working for a company and you can see the writing on the wall (and if you are working at a company, the writing probably IS on the wall), you need to start your own re-training. Is there any auto worker in the United States who doesn’t know his job could disappear tomorrow? For that matter, is there ANYONE in the United States who doesn’t know that their job could end tomorrow?
So personal responsibility first. Wrap your head around the idea that you may need to move fast and you better be prepared — that’s some sort of training or education in a field that is growing, not shrinking, having a resume ready to go, meeting people in your new industry and putting out feelers. Hope for the best but prepare for the worst.
We have to ask ourselves what industries are going by the wayside (how many people use a travel agent anymore?) and what industries are growing? What are people’s basic needs? They’re going to need food, shelter, clean water (that’s going to be a big one), clothing, meaningful work, good health. Those industries have a built in market. Does anybody learn Gregg shorthand anymore?? No. Technology can now take a person’s voice and convert it to text. Good bye steno pool. Hello, $300 software program.
We are entering the information age. That means we have to educate our young people like never before. It’s time to go to year-round schools — kids lose too much of their education over the summer and spend the first month or even two months of the next school year basically re-learning material. We need to give them life training — how money works, the concept of working for a living, how to freaking survive outside the cocoon. More importantly, we need to teach them HOW to make decisions, not tell them what to do, HOW to assess people and things, rather than just doing the sorting for them. Create classrooms where the teacher poses a question and allows the kids to work out the solution using reason and research. If you want to see how fast kids can learn and teach other kids, Google “TED Hole in the Wall”. Kids are brilliant thinkers (as well as being curtain climbers, rug rats and germ incubators); we kill them with our educational system. It’s about engaging, not training parrots.
Would it be stepping on too many people’s rights to suggest that kids do two years of service to their country after high school (and anyone else who wants to volunteer would be welcome)? Yes, we have Americorps and the Peace Corps. All volunteer. What if the two years after high school were spent teaching young adults how to be adults? How to defend themselves and their country; basic first aid, how finances work, exposure to other ethnicities and geographical areas to enhance their understanding that we are all just people. Helping rebuild houses after Katrina taught many people basic carpentry and home care skills. Could spending time on a farm or ranch open their eyes to the way food gets delivered to their table? Would two years of service help mature them before they got into college and had to decide what to study and how to best allot their time? I’m thinkin’ yeah. And, could two years of service equate to at least one year of tuition payment at the college of their choice? Would private industry sponsor those scholarships? Could Pell Grants be restructured for this? Just asking.
And we as a nation need to look at technology and information with an eye to exporting it to other countries. Look at Maslow’s hierarchy of needs and you will see what is most readily marketable, within the country and outside of the country: health care/sanitation, food, energy (renewable, please), education, computer software.
The transition to an information/technology economy is happening right now. It just happens to be going on during one of the worst recessions (I’d say depression, but gee, that’s not politically correct) we’ve ever had. But again, it’s Band-Aid time. Hemorrhage all at once. Throw it all up. I’ll hold your hair. We might as well get through it all at once.
So, that’s my three-coffee take on how to fix the economy. The solution will not come from Washington. The strength of the United States is in her people. Stop being distracted by tea bagging, gay marriage, a mosque at Ground Zero, etc. Those are all items designed to keep the American public busy while the country gets raped and pillaged by the politicians. Screw the politicians. Screw the banks. Screw the people on TV who take turns blowing sunshine up your butt and then make you feel like committing suicide.
YOU are the solution. Hire someone. Learn a trade. Mentor a kid. Use a credit union. Invent cheap, renewable energy (I know there is someone out there with the answer. Come forward please!). And do it now. The quicker we get through this, the better for everyone.