In the 1960's TV series Twilight Zone by Rod Serling, there was an episode about aliens that brought amazing gifts to mankind and Earth. The cure to cancer, famine and many other gifts. One of those gifts was a book, but no one could translate the literature. Humans by the thousands were being given free trips to the new alien planet. When the code was finally broken, it was discovered that the book; To Serve Man, was a cookbook!
In today's volatile economy, it seems that we are all being cooked, in the soup, so to speak. What is predictable but most troubling is the blame game that is going on by our so called leaders and the media. No one wants to take responsibility for the situation, nor offer real solutions to the problems.
The blame game is an old political game to maintain power, or not to lose what power is held. The President, with his address to Congress and the nation tries to imply that the Republican Congress is to blame for the lack of jobs and delay in moving the country forward. The liberal media jumps on the bandwagon and tries to sell this to the public. Then when the validity of the plan is broken down to its total sum of parts, and there really is no defense to its chance to be successful, the current administration starts to harp on President Bush.
The problem with the blame game is that it does not help. It looks backward and not forward. It does not take into account the current situation and it does not provide reasonable methods for real solutions. Now, the Republicans are not much better, as they use their media influences to put road blocks into the system and this is not to protect us from the future "socialist policies" of the Obama administration. This is solely to make the President and Democrats look bad.
Real solutions don't have labels of Democrat or Republican, liberal or conservative, good or evil. They don't bash each other on CNBC or Fox. They come from people who want to do the right thing and move forward. Now, understanding the root of a problem is the first step to solving it. Then, having the courage to change the current problem is the real hard part. Why is doing the right thing so hard? Because then you most probably will not get re-elected!
We have been so conditioned in our lives that the person who tells us the "sky is falling" even if it is, will be the messenger. And we all know what happens to the messenger!
So we have hit the double dip turning point. The markets will be going down again, and without solid cooperative initiatives, this drop will be rather significant. So far it has hit us slowly, by attrition. The numbers are so alarming and shocking that they are almost being overlooked:
• Unemployment is at an all time high
• Housing is at an all time low
• Bankruptcies are at an all time high
• Interest rates are at an all time low
• Debt is at an all time high
• Consumer confidence is at an all time low
• Worldwide political turmoil is at an all time high
If the above was in a book given to us by aliens, when we deciphered it we would do our best to defend the world against the invaders and expel them. Rather than get in the blame game, let's discuss some real (maybe radical) solutions to our problems.
The way to build a solid financial foundation is from the bottom up, not trickle-down economics (with all due respect to my favorite President, Ronald Reagan). In September 2008, I had a discussion with our local U.S. Congressman about the financial situation we were heading into. I gave him a grave warning that the commercial real estate market was about to crash. I explained what was happening in the credit and business worlds of real estate, and to my clients. Then I offered the following solutions. And, as I see this double dip hitting the markets again, I offer these same solutions today:
• The federal government should enact an emergency law that all existing residential real estate loans under one million dollars shall become fixed at 2% interest only for the term of the current economic crisis.
• New residential loans under $1M shall be fixed at 4% interest only, as well.
• All credit card debt shall be fixed at 2% interest only. New credit card debt shall be 4% interest only.
What will these few aggressive economic moves do to help us out of this double dip and move toward economic stability?
The ability to pay a reduced interest will provide more net cash for millions of Americans. The reduced interest with the option to pay or not pay the principle until the crisis is over will allow millions to spend that saved money on things that they need or want: Better education for their kids; repairs to their cars and homes; purchases of new homes; rent a better apartment; go out to dinners and take trips.
The above economic changes will reflect in the stabilization of the housing market. It will stimulate buying and stop the massive foreclosures, and millions will see the “light at the end of the tunnel”. They will be able to afford the monthly payments and will want to make the payments because they will reestablish equity as the markets stabilize.
Having the credit card debt reduced to a monthly payment that will be manageable will make the average person also feel that they have more access to money to spend. By doing these simple emergency policies to help everyone, from the bottom up, new businesses will form. People will be hired as demand grows. We will have a vibrant growing economy that can be weaned off the low interest and get back to being productive.
Back in September 2008, the Congressman told me in reply to my ideas that “we are not going to do anything for the people". Where was my tape recorder? But I don't want to hurt anyone, nor blame a good man that did not see business from the views of an insider like me. I just want to share a real story and my ideas with you, my readers.
There are many more things we can do to help our economy. And there are good people that want to do what is right. They just get caught up in the system of the blame game. I suggest they throw out the old cookbook and get a new one, before we all end up in the soup.
