Monday, February 23, 2009

It's been a while since I last posted my thoughts on what to do and where to go with regards to the economy. I wanted to see how the President and Congress would work together and what kind of package would result. The most obvious thing we can see is that nothing has changed as far as politics are concerned. To the government, I say please, "Bail me out". Why is the average joe stuck around with their hands in their pockets pulling out what amounts to lint out of this package. Why is negligence and stupidity being rewarded, while dedication and hard work are being punished by what will amount to a long term debt cycle. It makes no sense whatsoever. What am I going to get out this whole $900B that is being put forth in round one? Nada. I knew that going in, but it illustrates a point. The average family who's just getting by isn't going to see much of anything. The dunce who didn't know that their ARM (adjustable rate mortgage) is going to reset, we'll he'll catch a break. How about the genius CEOs in the banking industry who seem to think that leveraging themselves 30x over was a good idea. Sure, when times are good, you make more money. But when the boat springs a leak its down a helluva lot faster than the Titantic and a lot more lives affected.

So getting back to my original intention for this blog, which is to let the government and congress know there are simple ways to get us back on our feet a whole lot faster and smarter than what we are doing right now. Let's talk KISS. KEEP IT SIMPLE STUPID. How many times do we have to hear this and how many times do we have to see Congress and the President screw it up with all sorts of moving parts. I hope you guys are listening because this single manuever will probably stave off most of the mortgage failures that are in current process and will also add several billion in free spending dollars for americans. Make all the mortgage companies reduce their customers current mortage rate down to 3.5%. If you are currently holding a $350K loan and paying 5.75%, you'll immediately save $500 per month. That's $6000 per year. If there are 40 million households, you've basically added another $240 Billion in spending money.

Most people who are underwater have two basic options, continue to pay their mortgage at this reduced rate or give up their home. There is a reason a mortgage is 30 years long. Stay in your house eventually it will appreciate back over what you paid for it. At least that would be true for most. A second more complicated plan for dealing with underwater properties is to reduce the principal amount down to the current value and when the property is sold, the overage on the loan is first paid off and then whatever is remain would go to the property owner. That way the banks aren't getting slaughtered.

Now the next big question is what to do with all these great banking CEOs. We certainly could entertain the Chinese method for motivation, by executing one or two. Hey, Dick Fuld, any last requests? Bernie Madoff sorry but your last request is denied. How many of these guys do you think the US Government would have to put down to get the rest on the straight and narrow. Maybe if we had done that with the Enron folks, we wouldn't be in such a spot today. So besides killing these guys off, they need to be replaced. They need to be forced to work in a homeless shelter or better yet, let them spend a year on the streets. There have to be some intelligent people out there who can take over the Big banks of the US aren't there? Maybe the banks need to focus on what they did well back in the day, which was, take in deposits and loan out funds to deserving individuals and businesses. All this esoteric cover your assets derivative crud is what got you in trouble. How about going back to the face to face method of dealing with people. That would be nice. And please, don't try to sell me on your free checking plan that some how manages to charge me outrageous fees for taking out my own money. Its not nice.

Next is how do we get people working again? Rather than have all these companies summarily layoff thousands of people in large blocks, we need a matchmaking service to intervene. Not every industry is dying, some are actually still going to thrive and you know what the hardest part of their survival is going to be? First is making a product that sells, second is finding really good people to work. There needs to be a database of companies and industries that are expected to outperform the economic market. They need skilled workers, and guess what, I'm sure Goodyear just let go of whole bunch. For every worker that Goodyear can place with another firm, they should get a bonus from the government. Everybody who files unemployment should fill out a skills based survey and what jobs they worked and would like to work. Employers looking for people should be able to access that database and contact anybody who fits their need parameters. In effect, let the government become an employment agency. During this time, you need to give incentives to hire people. There are lots of companies who are making money, but they see the falling stock market and their own diminished stock price and feel they can maintain their earnings by laying off workers, which in turn will give them a better stock market value. You are cutting off your nose to spite your face. The economy will eventually turnaround and guess what, when you want to hire people back, there is a good chance they'll be working for someone else.

Now probably the hardest part for all americans will be this one. Buy American. Why will this be hard? Because we barely manufacture anything worth purchasing apparently. I went to the supermarket the other day and bought some jarred fruit. I was getting ready to eat it and took a look at the label. It was imported from China. Why are we importing jarred strawberries from China? Seriously, jarred fruit? Stores need to start bringing in US goods. Is it really that much cheaper to bring in goods that takes weeks upon weeks to get here by boat? Are the extra few pennies worth it. Aren't you tired of buying clothes that shrink to rinky dinky size after three washes? I am. Create Quality Sell Quality Make More Money!!

More stuff later!

No comments: