Really Pissed Off!

A month has passed since our take on the Economic Crisis, and all the great minds advising President Obama have little to show for their efforts. Although we may be in uncharted territory, there is one possible solution to finding the bottom of this Depression. Unfortunately, it comes with a big price and a heavy heart for the tax payer. We have to fix the banking system, as that’s where the solution is. It’s in the same place where greed began. We’re not singling out the Banking industry on greed, as greed has been the engine behind the rise of the Economy by everyone who took part in it. We have to get to the bottom of this disaster as soon as possible and the devil is in the details!

Unfortunately for the American taxpayer, the government is the only one who can try to solve this. With consumer confidence dashed and Wall Street afraid of its own shadow as every potential investor hoarding away any investment capital into Treasury Notes, the only one left standing is the United States Government. So far, they have dealt with the problem inadequately and with indecision. A band aid here and there will not solve the problem. The first thing that the Administration and Congress must due is what the TARP was originally authorized for in the Bush Administration. That was to remove all of the toxic assets from the banks and create a “bad bank” for the “zombie banks.” It was done during the Savings and Loan fiasco. This “bad bank”, however, is going to be one big son-of-a bitch! This Economy is going nowhere until the banks start lending money, and with these toxic assets on their books, they are like squirrels socking it away for the winter! We, the taxpayer, will bear ownership of these toxic investments, but over time, we should recoup the taxpayer’s money, and hopefully with some interest. It will take time. It is difficult to even suggest that we buy the useless paper that a few made their fortunes on, but we really don’t have much choice.

The next move is to re-capitalize the banks, once the toxic assets have been removed. If we’re going to continue to throw money at these banks, we might as well do it so it does some good. This time, however, there will be strings attached. The first is to clean house by removing the top management for bad behavior. Any bank who requests Federal assistance will have to comply. There is no reason why most of the people who are responsible for this disaster should continue holding on to their jobs. Secondly, any bank participating must renegotiate all outstanding first home mortgages, whether they are in good or poor standing. A fixed mortgage rate of 3.50%, or 31% of a family’s income should be the standard. This may hurt investors, but someone is going loose in this recovery so it might as well be those who were the risk takers. To many, this is blatant nationalism of the banking industry. Perhaps they may have a point. The problem has gone far beyond philosophical differences and the banks can eventually buy back their independence. In the meantime, with the toxic assets gone from the books and re-capitalization, the banks can begin to move money. When that happens, we’ll reach the bottom of the housing crisis and then Economy will begin to grow again. If we do not, then we will be in the dark tunnel of a deep Depression! If there is one thing that we’ve learned is that Reagan’s “Trickle Down Theory” only applies for those wearing Pampers or Depends!

Even Republican Sen. Lindsey Graham agrees with RPO!