As we all know the mantra and basis for free enterprise and capitalism is PROFIT. Without the promise of profitability there is no sensible reason to invest money or to do any business. Of course, we all agree on this statement because it is a no brainer. What we in America have never been able to grasp is “profit gridlock” where both domestic and international pressures have rendered the buying public financially impotent. Savings have been compromised, real estate equity lost or reduced to meaningless amounts and liquidity even increasing due to rising fuel, taxation and inflation due to all sorts of pressures = GRIDLOCK. Why hire when the economy is still threatening to retract and grow smaller. The budget cutting wave of the conservative political movement may be the correct path to many but it does have the price of reducing jobs and economic growth which adds greatly to the “GRIDLOCK”. According to most economists, American corporations are sitting on nearly $2 Trillion in cash and are hoarding it, not hiring and not expanding. If anything, they are still retracting despite some glossed over political over generalizations about the economy rebounding. The housing crisis in the USA alone could send us back into another double dip depression. We have amateurs in high government places making critical decisions while learning on the job starting with our President and more recently with many tea party members just entering politics for the first time. How can we expect to rise out of the problems of housing, energy, taxation, healthcare, education and budget control. The truth is that even the most seasoned professional politicians have difficulty making the right decisions but in the hands of the untrained and inexperienced a disaster could easily take place. Electing a President based on generalities and not a proven track record is terrifying. Remember, the President is entrusted with that red nuclear strike button and can get us involved in a war overnight as just demonstrated by President Obama’s ill advised screw ups in Libya.
Let’s be very clear about what caused the current crisis in the first place. Large lenders, mostly the largest banks lobbied Congress in the 1990’s to eliminate laws which prevented them from merging with Wall Street investment banks and other non bank corporations such as insurance companies. In 1999, Republicans sponsored a bill that Democrats signed in law without a wimper which was intended to modernize capitalism in the next century. What the banks and Wall Street didn’t tell the public, was that it allowed the use of speculative gambling (derivatives using CDO’s and swaps) of public funds and equity. The result was the over heating of the real estate market by creating to many buyers and sellers. That increase in activity caused the prices of housing to artificially rise to unimaginable heights and the result was the housing crash and credit crunch which caused the recession of 2007 which we still are a long way from recovery. Corporations eliminated over 15 million jobs, small businesses failed and many millions of entreprenuers in all sorts of businesses lost their sales and income streams. It is estimated that over ONE THIRD of THE NET WORTH OF AMERICAN CITIZENS was lost because of this banker wall street screw up. This caused most of the foreclosures and not the smaller group of subprime borrowers as most conservatives will try to tell you and the foreclosure problem has now moved squarely into the confines of middle class America. In my opinion, President Obama does not deserve another four years in office, since most of his decisions have been wrong and poorly executed. However, we must avoid jumping from the frying pan and into the fire by electing another bigotted or clueless person from the other side. In 2008, the American public had no real choice to elect a competent President and I wonder where we would be now if John McCain/Sarah Palin would have won instead of Obama. My guess is that things would be no better and probably worse, despite Obama fumbling adolescence.
We need leadership to force the banks to stop all foreclosures and modifications should allow Americans hurt by the recession to get their lives back in order. The banks should be forced to reduce all loan amounts to current taxable appraised amounts, grant long forebearance based on how long the homeowner in default occupied the home, reduction of interest rates and abolition of all variable rate, negative amortization mortgages. Use of long balloon mortgages with guaranteed refinancing to lower monthly payment. In addition, the Gramm-Leach-Bliley Act of 1999 should be eliminated and replaced with a new tougher version of the Glass-Steagall Act of 1933. The big banks should be forcibly broken up and banks should be made to be banks or suffer the penalty of losing their charters and right to deal with the public.