American citizens have been hit so many times by the effects of greed and the self-serving attitudes in Congress that a rippling crisis was imminent. I believe we needed a collapse in order to pause and reflect on the price of conspicuous consumption and complacency.
Americans, on the whole, are the world's most prolific consumers. That's because our incomes are higher than anywhere else, and merchants have found highly sophisticated techniques for getting us to spend our money. Unfortunately credit has been abused in three major markets - housing, automobiles and credit cards. The result of rampant consumer spending is the current global financial crisis.
So, what else is new?
If you are a TV channel surfer, you are aware of the focus on the economy from every popular financial talk show. I am amused by some of these forums because they are repetitive and often confrontational. The problem I have with the media, which I have expressed boldly over the past decade, is that the commentators hardly get it right when presenting their views on solutions to our economic dilemma. I am convinced that they are more interested in being photogenic.
That doesn't deter me from espousing on the way our nation's plight is being treated. Economic growth is measured by one thing only: how businesses and consumers spend money, in that order. Layoffs are infectious and they must be stopped.
Strategic capitalization is the answer to that problem. Since banks are in business to finance corporate America, a remedial program must be activated to help restore this basic principle. Apparently, the only source for available capital, at this juncture, is the United States government, in which case, a commission should be set up to safeguard all capital that is earmarked for America's struggling corporations. If anyone ever asked me, I would propose a standardized business plan that would be implemented when companies receive new bank loans.
Corporations and large institutions have been left alone to treat money as if it grew on trees. The sad truth is that these groups will continue their monetary practices until something really bad happens, such as total insolvency and bankruptcy. While these robber barons are enjoying their spoils, the rest of the public has been enthralled in repetitious conundrums about the solution to our national financial crisis. It bothers me, and possible some of you, that so much time is spent on talk and criticism.
I gave our situation a lot of thought. Naturally, I consider myself to be just as reasonable as any of the so-called gurus on television. It has been my view that the solution to the nasty mess we are in is not very complicated. I believe the more we argue about it, the more indiscernible the solution will become.
Looking at a problem from the bottom upward is most often an efficient way to solve a problem. In my opinion, the economy would begin to grow again if consumers had job security and money to spend. Ok. If small businesses had sufficient cash flow they would not have to layoff employees. Instead, they might even be able to increase their human resources. If that were true, banks should be able to provide business loans to businesses to make all this happen. There are no arguments to refute these principles.
So, how does the grand scheme of finance come to life? The answer to this question is not so simple, but it's also not a rocket science. Given, there extenuating circumstances involved with stimulating the economy, an extremely well planned, simplified funding program (no, it's not TARP!) should be designed to provide liquidity in the credit markets. It would be systematic, measurable and accounted for by the Federal Reserve Board. The FOMC meetings would include a thorough monitoring and evaluation of the funding program periodically, as needed.
The Fed has the money. Why don't we bypass as much governmental posturing as possible, commit to a $500 billion guarantee to commercial banks and get on with it? The GDP could grow by 10% in the second half of 2009 if consumer spending increased by 15-20%. Yes, I am aware that I'm too late and missed the congressional invitation that was sent to the wrong address. I believe springs eternal.
God bless America. Cheers to President Obama!
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