Psychologist Abraham Maslow had a saying, "When all you have is a hammer, everything is a nail."
For American economists and politicians, all they have are two things-- prime rate cuts and tax cuts-- so it seems. And oh yes, a horrendous, record setting economic disaster that many are already saying has set off recession, not to mention losses of of millions of homes by default and losses of tens of billions of dollars.
So how will a tax break plan help? How will rate cuts help?
The way the Dems, GOP and Bush are talking, using a general tax break, makes no sense.
A lot of people will buy imported crap or pay off credit cards.
One polls shows that 58% will use it to pay off debt, 25% will save it and 17% will spend it.
This is stupid and it won't work.
Then we have our one button Ph.D. Bernanke. Poor guy. He has a job where all he can do is push the button to raise or lower the prime rate. Fact is, with all the other economic factors influencing the economy, this has a smaller and smaller real effect. Sure, it generates a one day blip up in the DOW. But it also decreases foreign incentive to invest and probably contributes to the decrease in the value of the dollar. Import prices (read that computers, Walmart stuff, clothing, shoes, toys) go up.
There's no doubt that Bernanke will lower the rates soon, and probably a few more times. It's like crack cocaine to the investment world-- a quick fix, big high, but short lasting. It is an act of desperation by a man attributed with a lot of power who really doesn't have that much power. I was going to say it's not his fault, but as the "czar" of the economy, it is his job to come up with tools for affecting and influencing the economy-- to provide options and solutions. Sticking with the same failed tool-- the one Greenspan used to take us into this economic disaster (only to sign up with someone who profited enormously from it)-- is to ride the same failure train down into further disaster.
It's understandable and reasonable that the leaders of congress and Dubya want to do something-- to come up with an economic stimulus plan-- or something to slow or stop the descent into further economic trouble, or should I say disaster?
But it is irresponsible to just throw out tax rebates-- flagrantly, stupidly, brazenly pandering to the easy fix. It is shameful. Of course, Bush, the worst president in history, is too dumb to come up with anything intelligent, and too bad a leader to have any advisors who will give him reasonable counsel-- or too bad a leader to listen to any who provide reasonable counsel. He just wants to give out money to consumers, "so they will spend it."
That leaves the congress to prevent Bush from throwing away hundreds of billions more dollars. Fat chance that they will do anyting. It will take some guts to say "no" to Bush. So far, the Dem congress has not shown any ability (slight inclination yes) to actually refuse to give Bush what he asks.
CNN reports that in 2001, when $400-$600 was given in tax rebates, two thirds of the money "entered the economy" within a few months. What kind of languaging game is that? Entered the economy? SOunds like the description of a stallion impregnating a mare-- entering her. Well, money entering the economy is meaningless. It must help people and businesses financially, and help the economy. There is sex, sex for procreation and love-making. Money entering the economy is like mindless, loveless, sloppy, mindless sex, and nothing more. And the question is, who is being screwed, or screwed over?
There are a few million people who will lose their homes and probably their life savings in the next year. This bandaid will not help them.
There are banks and lending institutions that have lost tens of billions of dollars. This will not help them.
There are construction workers, electricians, plumbers, drywall hangers, carpenters, painters-- who will all lose work and jobs as the housing market worsens. This will not help them.
Rob Kall is executive editor and publisher of OpEdNews.com, President of Futurehealth, Inc, inventor . He is also published regularly on the Huffingtonpost.com. He is a frequent Speaker on Politics, Impeachment, The art, science and power of story, heroes and the hero's journey, Positive Psychology, Stress, Biofeedback and a wide range of subjects. He is a campaign consultant specializing in tapping the power of stories for issue positioning, stump speeches and debates. He recently retired as organizer of several conferences, including StoryCon, the Summit Meeting on the Art, Science and Application of Story and The Winter Brain Meeting on neurofeedback, biofeedback, Optimal Functioning and Positive Psychology. See more of his articles here and, older ones, here.
The framed magazine cover, with the word "IDEAS" spelled out in lightbulbs, is based on an article Rob wrote for Writers Digest, telling the magazine's quarter million readers how to come up with and pitch article ideas.
To learn more about me and OpEdNews.com, check out this article.
and there are Rob's quotes, here.
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A few declarations.
-While I'm registered as a Democrat, I consider myself to be a dynamic critic of the Democratic party, just as, well, not quite as much, but almost as much as I am a critic of republicans.
-My articles express my personal opinion, not the opinion of this website.
But a large proportion of the American people are not very savvy about these things, and all they need to hear is “tax rebate”, and they’ll jump for joy, and vote for anyone. Politicians pandering as usual. Not looking for real solutions.
Obviously, one way to fix the economy is to pull out of Iraq now, and use the savings on infrastructure projects in the US.
What chance is there that Democrats will try that? Zero.
So, tax rebates, here we come, and there goes the debt way above $9 trillion.
by
John R Moffett (78 articles, 14 quicklinks, 2 diaries, 591 comments)
on Friday, January 18, 2008 at 9:09:40 AM
The US government invested a shipload of money in Iraq and they did it for good reason. They have now illegal access to the Iraqi oil, billions of dollars worth. Of course this will mostly benefit the superrich, but it will also help poor americans because the oil price will stay at an acceptable level.
It would help much more if the government would simple admit they are robbing another country and stop terrorizing the population of both countries with their phoney stories about terrorist organizations which they clearly organized themselves.
by
Han (0 articles, 2 quicklinks, 0 diaries, 195 comments)
on Saturday, January 19, 2008 at 7:02:52 AM
because getting this nation in more debt, paying higher interests will certainly not help.
What we need are job training programs in which the apprentice is paid while learning on the job, we need subsidized day care so that people can afford to go to work, we need new apprentice programs that would train carpenters, plumbers, electricians, health care workers with a provision that they give back in kind to their community.
We need to put America back to work and create social services for those who are unable to work . Let's put our money where it would do the most good.
Athena
by
Athena88 (0 articles, 0 quicklinks, 0 diaries, 22 comments)
on Friday, January 18, 2008 at 11:07:16 AM
do not want America to work.... at least not until we are ALL well and truly serfs to the elites. It is well past time for doing something a bit more drastic.....
by
richard (0 articles, 3 quicklinks, 0 diaries, 664 comments)
on Friday, January 18, 2008 at 6:23:19 PM
DRASTIC WHAT ARE WE TALKING ABOUT, A WORD LIKE THIS , YOU COULD LOSE YOU HOUSE, YOUR FAMILY CAN LOSE THEIR HOUSES, YOU FREINDS COULD LOSE THEIR HOUSES, YOUR BANK ACOUNT, ALL YOUR MONEY, YOUR WIFE, YOUR KIDS, EVEN YOUR DOG, HAVE YOUR FINGER NAILS PULLED OUT ONE AT A TIME, MAY BE WATERBORADED, INJECTED WITH A POISON, THIS WORD IS ON THE TORROREST LIST. AND THIS IS CALLED BRAINWASHING.
JUST JOKING, BUT THERE IS A POINT TO THIS MADNESS.
by
RICHARD SHADE (0 articles, 0 quicklinks, 0 diaries, 460 comments)
on Saturday, January 19, 2008 at 3:14:19 AM
I sometimes worry that the only solution will be to let the bubble 'pop' and let all the bad air out. In the past it seems that every attempt to 'fix' the issue is somehow manipulated, the bubble is 'patched' and we pump more bad air into it.
Granted, it is horrific to think of the downward slide we will take if it (the pop) does indeed come about. However, it might take wide spread cold and hunger to sharpen the civic responsibilty and participation of the average US citizen.
I quickly assert, it certainly isn't my choice, but it might be necessary. Certain things, once they have broken completely, can't be 'fixed'.
Rob, keep up the good work. I do, and will, 'appreciate' your endeavors.
K'ny
by
Kahnaya Wasahtoha (1 articles, 0 quicklinks, 5 diaries, 27 comments)
on Friday, January 18, 2008 at 12:15:22 PM
THE BUBBLE NEEDS TO POP, A RECESSION IS A BANDAID, A DEPRESSION IS A CURE. AND IN THE END A NEW AMERICA WILL RISE, HOLDING HANDS AND SMILES EVERY WHERE.
(" WE ARE CURED")
OF THE GET GET GET,MORE MORE MORE, THANK YOU GOD.
by
RICHARD SHADE (0 articles, 0 quicklinks, 0 diaries, 460 comments)
on Saturday, January 19, 2008 at 2:05:50 AM
My Plan:, So Why Aren't They Paying Me Bernake Wages?
That's right Daniel, and never mind the idea that just because a persons religion is against War, doesn't mean the US government won't stop taking money from your check each week to fund their wars. Freedom of Religion exists in America? Not a chance. It's the very reason I left for China to find a job, and knowing I would not support their War with my tax money, as they disregard my religion.
And getting back to the solution to our current mess, these war trolls think a quick fix, tax rebate stimulous package is going to work is ....I am still laughing,,,is a joke,,,no not a joke because really it's not funny,,,but a essentially sad,,,because their bag of tricks only contain those worthless solutions,,,that in my opinion really never worked in the first place. If they really worked why do they keep on using them to fix the problem. We have always had a housing problem. It's just now the War in Iraq has magnified the situation.
This is the solution, and it is not tightening loans to the public, or giving pennies which tax rebates do, when we need to be giving dollars.
The 2 Loan Mortgage Statue Stability Act
Dear Mr. Ben Bernake,
The way to fix the problem especially for home mortgages is to forget the one loan that is always given to home buyers.
What is needed is to give two mortgages to the home owners. Just like we need two arms, two legs, two ears, and really two brains to think in this world; we need two loans. One loan is for buying the house. The other loan is used to make payments on both loans.
This way no one ever faces default. Sooner or later the money runs out, but it is enough time to prove a worthy credit history, then another loan is taken to replace it. This can go on indefinitely because banks will always be in the loan business.
Home values should not be based on equity accumulation. It needs to be based on credit worthiness. Home values are also found according to regional services that have impact on a stablized economy, with a predetermined depreciation index.
Banks will not have to worry about losses because investors will look to bank profits from a dual interest accumulation from a 2 loan Mortgage policy.
In other words it will not be so much the value of the home that is the consideration, but the value of the banks who sevice the loans. In fact the more loans a bank has with flowing capitol the more value that bank acquires.
Really it is everyones fault because we buy a house hoping to build equity so we can have the security to use the money for something else, such as buying a new home, or using it as a basis to have better credit to pay for other things, be it education, medical bills, a new car, or whatever.
We should not continually think it's the governments fault. I knew this would happen even before 911 happened. It's our fault, because many have low equity accumulation and hope when we buy we can inflate the house value under a false assumption the market will support it, and we end up losing. People always expect a profit from Real Estate, instead of thinking homes are something we intend to keep forever. We set the market values, and now we see what is happening. We are building Default City USA.
Banks are in the business for giving out loans. People want credit, so it is not about equity we build. It is about credit worthiness in making payments and never thinking about defaults. If banks adopted the 2 Loan Policy for mortgages, we would never have these issues. People would not be worrying about how to pay their loan, because the bank offers help in how they can do it. This makes the bank more secure, and it makes the housing market more secure and stable.
People won't have to worry about being layed off from work, since most people are on fixed incomes. As long as payments are made, and the banks obligations are met, then banking and home buying will go on indefinitely.
Their plans now to tighten the banking loans because of questionable risk is more of a disaster than the present, because it causes shut downs, and deep despair in communities. Presently Banks create the risk, because they don't provide a means to cover the risk. Banks can't blame the public. Banks need to step up and do their best to create a system that can not default or fail.
If banks don't do their job as I suggest housing markets will never recover, and the same old problem will remain. We need to get banks to loosen up and enact a 2 loan Mortgage Policy so home mortgages remain stable. This plan is not like taking a 2nd mortgage on a loan. It is the idea that one loan covers the house, while the other loan makes payments on it and itself, until the money runs out, but then you will have a solid history of repayment qualifying the person to take out a new loan again to keep making the payments.
Everyone is happy.
In today's world we do it with credit cards all the time. Paying ones installment with the other. Borrow from Peter to pay Paul is a strategy that saves the markets, and saves creditors their credit ratings. So open up the loan system and provide a two loan policy, instead of tightening it up as they are doing now. This will establish a new banking regulatory called The 2 Loan Mortgage Statue Stability Act.
Sincerely,
Mr. Dominic E. Jermano
by
Dom Jermano (20 articles, 0 quicklinks, 40 diaries, 934 comments)
on Friday, January 18, 2008 at 6:41:45 PM
"Bottom line-- there are no simple solutions for our problems. Attempting simple solutions will delay serious interventions that have a chance at succeeding."
Amen and pass the plate. Easy and quick fixes are a way of life in Congress. As you mentioned in the article, giving away money as a means of stimulating the economy is without foundation.
It would be necessary to "give" people the money each and every month forever.
We treat symptoms as if they were problems. How did the U.S. reach recession to begin with? I'll take a guess; perhaps lack of viable employment? This results in no pay on Friday. So the solution? Send money for a government that has no money. Easy.
by
Mike Folkerth (104 articles, 0 quicklinks, 2 diaries, 503 comments)
on Friday, January 18, 2008 at 2:16:31 PM
Americans are proud of their unfettered 'creative destruction' capitalism, supposedly superior to every other types capitalisms in the free world. Americans, especially the neo-con, hate European and Canadian 'defeatist' 'socialized' capitalism. Traveling around the States in the 90's, I frequently heard how America's corporate elites will come and save the world when 'defeatist' capitalism bankrupted Canada, much of Europe, not to mention how they will 'buy up' China.
So after 20 years of 'creative destruction' capitalism, here is the current situation:
- A middle class reduced to third world status, up to their eyeballs in debt - A 1% rich class owning 25% of all wealth, and shipping ever more of it overseas where it is safe - A national government deep in $9tn debt, a private sector debt of $5.5tn, and need to borrow ever more just to pay the interests - A currency drop in value by 50%, a chronic trade deficit that has no hope of ever fixing due to rotting out of industrial base to produce products and shift to service which cannot be exported - As if that's not enough, we now have a large population who demands bailout after burning their own houses. Amazingly, we have a neo-con Administration who actually offers to dig the hole deeper with a government bailout of people who screw themselves by their own unfettered greed and stupidity!
Americans are creatively destroying America. The economic system should be renamed as 'Dig holes as deep as possible, then dig deeper and faster when in trouble.'
The Bush Iraq war is all about control of the region for economic exploit. But that didn't work, leaving a trillion-dollar spending hole with no compensating return. Keep digging the domestic economic hole and soon America will have to start a real world war as the country goes down in flames. That's exactly what Hitler Germany did in the 1930's.
by
TomK (0 articles, 0 quicklinks, 0 diaries, 201 comments)
on Friday, January 18, 2008 at 2:19:15 PM
You forget the $53 TRILLION unfunded debt! When Bush is forced to appear on TV and tell the nation that we are in economic trouble...it's far worse than one may imagine. Perhaps a few million additional immigrants might do the trick.
This one is for real and Middle America may not survive intact.
by
Mike Folkerth (104 articles, 0 quicklinks, 2 diaries, 503 comments)
on Friday, January 18, 2008 at 3:53:56 PM
The fixing of the economy is going to be, if it is ever done, like pulling a wisdom tooth without anesthesia, ouch!. It is simple math, but very complicated politics. Government, like any of us, has to learn to live within its means, and we must realize that every time we get something from government, we are paying for it directly or indirectly. When for political expedience, government starts spending more than what the providing of basic services require, there are only two ways the money needed can be obtained: more taxes or deficit spending. Taxation is the forceful garnishment of the product of your labor, by a group in control of the power of the state, to be distributed as that group decides is the best way. Deficit spending is the way the politicians force you to repay in the future the debt they incur today to give you something that realy can not be afforded. Who is going to say: hey guys, we can not afford everything we want?. It is easier to demagogue the issue and talk about taxing the rich and helping the poor. Notice that many of those talking about how selfish are the rich usually are rich, or would like to be rich? Give humans to much power and they will end up abusing it, we can not give anyone or any group, political or economic, the power to control the economy, when that happens only a few benefits and the rest suffers. To correct the economy requires the free market to work, within a legal system that protects everybody's rights and prevents abuse from the government or the private sector.
by
E J Antunez (0 articles, 0 quicklinks, 0 diaries, 9 comments)
on Friday, January 18, 2008 at 5:22:12 PM
This tactic was done 33 years ago by then President Gerald Ford. Please remember that in the early 1970's the US economy was in a recession, we were experiencing double digit inflation ( remember the WIP buttons....wip inflation now!) & our manufacturing was was beginning to move south.... as in Mexico. My Treasury Dept. cheque was $50. which I spent on taking a much needed vacation. As I recall, on my 1976 Federal & Ohio Income tax forms, I had to report this rebate as income! More than likely about $20 of it actually went back to the government as income tax! I 'm afraid the same thing is in store again. If the rebate becomes taxable for the following year, you may be giving as much as 50% of it back to the Federal, (your) state & local governments, depending on your tax bracket & income for the year. Folks, I have spent over 40 years studying economics, even earned a BS in the subject & let me tell you now, this is not going to work one bit! The economic problems this nation is now experiencing go back to almost the turn of the 20th century. It can't be explained in a few paragraphs. It requires a knowlege of both economics & history & unfortunately most Americans are ignorant of both topics. There are going to be no easy solutions & keep in mind there may not be solution. We are dealing with a social science (sic) were there really are no right answers but we're really going to be in trouble if there is a wrong answer(s).
by
iman (0 articles, 0 quicklinks, 0 diaries, 89 comments)
on Friday, January 18, 2008 at 8:31:57 PM
What you see is what you get. OUR GOVERNMENT ASKED FOR THIS. Also Banks and Mortgage corporations are at fault. (they should never have given people with bad credit loans and morgages. Bush has done a job on middle class america. his tax brakes have helped the wealthy in america. also he has helped corporate america with corporate wealfare. HUGE TAX refunds. our no good congress has passed the free trade agreement WITH ON REGUARD TO JOBS being lost to south america. BUSH SAID IT WAS A GOOD THING FOR JOBS TO BE OUTSOURCED TO OTHER COUNTRIES. he said its good for there economy? Boy what a dipshit. Bush and Chaney's war in Iraq have taken a toll on our economy. If it was not for this unjust war in Iraq america would have over (2.6 Trillion dollars that could be put back into the economy. and create more jobs.) well we the people have to kick ourselves in the behine for letting this happen. we elected a MORON not once but twice. bush got left out with BRAINS. he dont have any. people we are in very bad shape. i dont know if america can recover. we have a 10 Trillion National Debt. cosumers owe over 5.5 Trillion debt mostly in plastic. THE VERY BAD PART IS A WAR THAT IS FUNDED BY BORROWING FROM OTHER COUNTRIES. we are broke. no money honey like little richard says. the 1920"s will not compare to what is going to happen. i say good bye america. unless we can get people with a brain to figure out how to get us out of this mess. one thing our run away government can not afford to keep spending every penney america has (STUPIDLY). and stop these idiot wars.
by
vincent passiatore (0 articles, 0 quicklinks, 0 diaries, 141 comments)
on Friday, January 18, 2008 at 9:59:28 PM
Why do people always blame people with bad or poor credit risk? You know if the economy was so great those people would make their payments on time. In fact since there are so many people called bad credit risks tells me something is fundamentally wrong with the way the Banks have been doing things for a very long time. Let' s not blame the people with credit risks, better to show how the bank doesn't live up to reality by insuring against such risks, and having banking services that eliminate those risks and actually helps people to protect their credit, and promotes their credit worthiness.
Banks do none of this, and so their failings they want to blame the people? Such outlandish BS. Come on Big Bankers you can do a better job than that.
I am not going to repeat myself, with the idea in creating a 2 Loan Mortgage Policy, I have written about it in the above Posts...and so that's what we really need. You know banks don't have to make the money available to the people on the outside, in other words the 2nd loan would be held in a Bank Management Fund, where these funds are strictly used for making payments on the 1st loan. If the banks are worried about losing the money, such as people maybe using it for something else, then make a 2nd Loan Management Fund so money is easily transfered to pay on the 1st loan.
People and Banks will not have to worry about outside economic forces ruining the pay back process to the banks. This creates security and stability. When people have their homes assured of being paid, they can go about doing other things in making money, and creating products for the economy.
Where we fail is when we do not have the 2nd loan policy, and we leave everything up to the production forces in the economy, hoping that we will keep our jobs, and make the needed money to make the monthly payments on the loan. Things fall apart, people lose jobs, they can't sell the home, they have to move. There is just too much pressure on the individual to do all these things, and think they are going to maintain some sort of worthy credit rating. It doesn't work and certainly that is why everything is crumbling, and will keep crumbiling until we pull our heads out of our A$$ AND RECOGNIZE WHAT REALLY NEEDS TO BE DONE.
We need the 2 Loan Mortgage Policy. Can anyone out there help me get this message across? It's like talking to myself until I am blue in the face. How many letters do I write to Government? Who ever really hears from the President? I have never heard from him. That is another huge problem in which we are so disconnected from the Government in actually talking to them, and we expect things to run smoothly?
The Bush people have blinders on, they think they are right, and never want to see the evidence on the contrary. Our financiual services are changing from an Equity in acquiring a loan system, to a credit worthiness in acquiring a loan.
Might as well flush equity down the toilet, because no one ever gets enough equity to outsource the banks available resources to money availability for loans. There is no competition. If you want to compare it then how about comparing a dog sled to a Formula One Race car. That is the striking difference.
We need to sew up the hemmorage, and stabilize the patient, and get this 2 loan policy package unveiled across America's Banking system. We need to go through every loan in mortgage default and make the 2nd Loan Mortgage available and with security in mind develop the 2nd loan Manangment Fund, where the Banks pay the 1st loan from their internal management with the authorized 2nd loan. Hopefully we can consider this repayment plan will benefit the homeowner in making them credit worthy and eliminate the risk everyone mistakenly gives them.
by
Dom Jermano (20 articles, 0 quicklinks, 40 diaries, 934 comments)
on Saturday, January 19, 2008 at 12:53:39 AM
and yesterday ...before I heard about the Dow Jones slipping. So now that you're wide awake with freshly brewed recession coffee in cup, I can move on to something else. Thanks for listening. Oh, prove me wrong and make my day and yours too.
I think I'll now focus on Frankfurt, the €uro and their DRPs. I've been told they have a failsafe, redundant system that can be "switched" away from the US$ and on to -whatever- at the blink of an eye.....a lot like Network Elements (are supposed to) do on the backbone.
Notice how the theme song at the pResidential Debates has shifted ? Snake Oil. Be sure to getcha some ! Might wanna hide it in the cellar.
by
Tony Forest (4 articles, 10 quicklinks, 119 diaries, 1064 comments)
on Saturday, January 19, 2008 at 5:45:38 AM
You know Rob, when you evaluate all the reasons............
for a failing Economy............all the reasons for a failing Democracy...........they become very synonymous to warnings of fascism.......take time to read Naomi Wolf's, "The End of America: A Letter of Warning to a Young Patriot".............
My question is.........which will come first?...........
by
Ernest (0 articles, 0 quicklinks, 0 diaries, 130 comments)
on Saturday, January 19, 2008 at 6:10:36 AM
