Suggested Fixes for the Economy

As promised the following are the suggested fixes for the economy taken from the best minds* who are thinking, writing and speaking on the subject. At issue is whether Joseph Stiglitz( 10% unemployment may be the new normal) is correct and if so can we alter that outcome.

We need to learn from our major competitors to combine the forces of private enterprise with long-term government strategies and assistance to produce growth and prosperity.

America needs to change its perspective and theory about how our economy(or any economy works). All the models to date fail to account for one important element: Trust. People do not only behave or make economic decisions based upon macro or micro accepted Keynesian or Adam Smith theories. People also make decisions based upon their "gut instincts" for good or bad!

The government must stimulate the economy with enough money to kick start a growth cycle. An analysis of both the TARP and The Stimulus Package(TSP) reveals they were both on target, necessary and if anything not large enough. We must use the power of the Federal Reserve Bank and Congress to change the present course.

TARP which had $700 billion to be loaned actually spent $540 billions on 829 applicants. To date $194 billions have been paid back.*

TSP is working and when combined with the extension of unemployment benefits, the Small Business Stimulus Bill just enacted, letting tax cuts expire for those earning more than $250,000 a year will continue to keep growth from going negative or staying flat.

Wall Street and the Banks have not been reigned in and continue to behave badly(foreclosure scandal now hitting) They have proven that they can not police themselves. The government must use all of its powers to monitor and regulate their activities.

Is flat or going negative good enough?

Growth requires a different strategy. Business must come on line and invest the trillions of dollars held on their balance sheets. It is not a chicken and egg strategy, it is a cause and effect tactic. If business provides long term jobs, people will earn and put the money back into the economy.

Here is one that will send many of you into orbit: deficit spending is not going to hurt us long term. Getting our industries back to work, having them actually produce something and then selling the output world-wide will keep us from sliding into a third rate nation status behind China,India and even Germany who propers at the expense of its European neighbors.

President Obama has set the tone and direction. He is poised to spend us, yes I said spend us, to a kick-started economy. The existing political structure is unwilling to support such a plan. Demagogues from all segments with opinions based upon platitudes rule the day. Misinformation and an uninformed( by choice)electorate all have a say.

Examine the use of Targeted Credit. That is, credit should be extended to those who under normal conditions would be economically capable of using it and qualify for it.

Restructure Freddie Mac and Fannie Mae to break the dream of every one in America can own a home.

No one of these tactics will in it self fix the economy. It requires a change of perspective, a willingness on the part of the electorate to sacrifice and become informed, an ability for the political structure to put aside partisan demagoguery and to understand that what is broken in the nation is Trust

Please support our president and our government. Have they done it all right? No. Have they had the foxes guarding the hen house? Yes? But the foxes are leaving and the president is showing courage and clear thinking on a range of issues.

Vote on November 2

* Sources
Joseph Stiglitz, Robert Shiller, Paul Krugman, George Akerlo, David Brooks and Noriel Roubini, The Wall Street Journal, The NY Times.