Hey Jim what do you think of this FACT based solution?
The Cascade Effect, the collapse of the US economy.
How did it happen, and how do you stop it.
September 17, 2008
Sean Lewis
I have been writing about this before the Iraq invasion.
I had hoped that if I wrote about it, someone would have
heard the warning and avoided this financial collapse.
The bottom line the Bush Tax Cuts are the main cause.
The US government needs income to run.
Without the income the US government must borrow funds
from other sources.
The more the US borrows, the higher the US Debt goes and
the larger the payment on the Debt Interest becomes and the
more money the US needs to borrow,
The double edge is that as the Debt grows the faith in the US
Economy and the US Dollar declines.
The US dollar has fallen by almost half against every major
currency.
The Bush Tax Cuts did not fulfill any of the claims promised.
More money to the rich did not stimulate the economy, did not
create 15 million jobs, did not balance the budget or lower
the debt and did not increase revenues.
When people make more money than they need they keep it,
they do not give it away. Greed creates Greed.
The increase in revenue came from the increased profits from
abroad either from exports or profits from US international companies
taking advantage of the US currency drop and padding their
Earning Reports with profits made overseas.
Add to this mix US companies exporting not only jobs but
entire industries overseas to maximize profits at the cost of US
citizens and you have the second leg of the collapse.
The American middle class, the true engine of the US economy was
under siege.
Americans were losing their jobs at the same time interest rates were
rising and core inflation WITH food and fuel were exploding higher.
Interest rates were rising so that Foreigners would buy the US
Treasuries
to finance the DEBT. Unfortunately the American middle class had
Adjustable
Rate Mortgages tied to the interest rates. So American Mortgage
payments
increased beyond their ability to pay.
Foreclosures began, and created a falling real estate market. The
more
foreclosures the more home prices fell. Middle Class Americans had to
make a decision, sell their homes at a lost or hold on in hopes that
things
would turn around.
Unfortunately not only did things NOT turn around, things became
worst.
The Fuel from Food program accelerated the decline of the economy. It
created a spike in grain prices and food costs and did little to
reduce the
price of oil products.
The new law making bankruptcies harder and also no longer protecting
people from losing their homes, which means Americans could not
attempt any financial remedies to restructure their debts.
Financial institutions looking for a new way of making money, linked
up with mortgage brokers to securitized loans in early 2001 to 2003
with creative vehicles such as no money down, interest only, 5 year
balloon ARM's.
Everything looked good on paper but was hinged on one thing, the
continued
strength of the Middle Class, which I have shown was under heavy
siege.
As America's fell behind on their payments the securitized mortgages
were
not receiving payments so began to lose value. As the housing market
continued to collapse so did the securitized instruments.
So here we are. I streamlined this, there were a few other issues,
irresponsible spending, off budget expenses of two wars and Katrina.
How do we fix it?
Painfully.
There is no easy fix.
The US Debt most be reduced. The economy must be stimulated.
The middle class most have jobs. The long term costs of Medicare
medicaid and social Security must be addressed.
The tax cuts must be rescinded.
Government spending must be reduced and pay/go instituted.
The age at which retirees can claim benefits must be extended by one
month a year and benefits will have to be means tested.
The alternative minimum tax must be raised to exclude individuals who
are single at $120,000 and Couples to $200,000. (middle class tax
break)
Social Security taxes need to be raised to 12.5% split between
employer and employee and also raised to include the first $200,000.
(I need to double check this percentage it may be less)
Businesses will receive tax breaks equal to the gross expense of
bringing US jobs BACK to the US for 7 years of continuous employment
of the position as long as the net jobs of employed are increased by
the same number of jobs at the job site.
Health Care should be bottom up.
$10,000 of health credits per tax payer for preventative care. The
individual Must get a physical check up each year or lose a portion
of
the benefits. Give the Taxpayer a lifetime Budget of $250,000 for
medical care of their choosing. Pro rate this by age 18 to 72 at the
start of this program.
The way to keep medical costs down is early treatment. If a person
does not address a medical problem reduce their benefits.
This is not to REPLACE medical insurance but to give a minimum level
of medical care.
All of the above is the medicine to get the country back on track.
Ending the tax cuts to the rich will lower the debt, which will
strengthen the US dollar, which will mean oil will cost less, which
means inflation will go down, which means core inflation including
food and fuel will diminish, which means the economy will become
stronger because US workers will be able to afford to buy
discretionary products, which will employ other Americans who will
now have jobs so they will not lose their homes which means the
housing
market will stabilize, which means banks will be more solvent, which
means money will once again become liquid which means loans for
investments will once again become available which means industry
will grow which means increasing GDP growth and more jobs
On Sep 17, 8:56 pm, Jim Willis <[EMAIL PROTECTED]>
wrote:
> 1.Since Fannie and Freddie has been introduced to the American
> vernacular let’s start here. The government needs to get out of the
> mortgage business, once and for all. Both of these companies have been
> suckling at the teat of bloated federal plutocracies far too long.
> Fannie and Freddie need to be broken into a thousand pieces and
> privatized. The federal government should have no attachment or
> responsibility. And, the bailing out ends now, for good.
> 2.In promised entitlements our government is indebted $57 Trillion
> dollars. If not dealt with, it will destroy our country. Since
> government has proven that they are incapable of running anything…
> Social Security, Medicare and Medicaid should be privatized. The
> switch to privatization will be costly and take time to implement. To
> cover the initial cost increases see solution three.
> 3.There are far too many people in this country who have chosen to
> ride in the wagon while too few of us are pulling. Our tax policy
> rewards failure and punishes success guaranteeing less of one and more
> of the other. We should institute the, “Fair Tax” which abolishes the
> IRS and incorporates a federal sales tax instead of a payroll tax.
> With the fair tax, the burden is shared and pimps, hookers and drug
> dealers will finally carry their share of financing our federal
> government. Just maybe, with everyone pulling the wagon and sharing
> the burden, those not paying attention to federal spending might start
> doing so. Forty percent of Americans pay no federal tax yet take
> advantage of a great and greater share of our services.
> 4.Stop corporate pillaging, called the Breck girl law. Corporations
> spend billions of dollars each year defending themselves from John
> Edwards and the trial lawyers. A recent study found most of the
> plaintiff suits to be unworthy of litigation. The most egregious
> caveat of these suits is punitive damages. Compensatory damages
> compensate a plaintiff for any loss of earnings, medical bills or even
> the loss of life. Punitive damages are a punishment to a corporation.
> Yet, the corporation is not punished, the shareholders are, the actual
> owners who had nothing to do with the original wrong. Settlements
> should be limited to compensatory damages only.
> 5.As long as we are speaking of lawyers let’s right another wrong of
> jurisprudence. I’ve had it with perps across the fruited plain
> escaping punishment because their rights were violated. This is the
> dumbest ruling ever to come out of the United States Supreme Court.
> It’s known as fruit of the poisonous tree. Look, if some child rapist
> has his rights violated by some flatfoot in Podunk Louisiana then
> punish the damn cop. The raped child violated no ones rights, the cop
> did, punish him and lynch the rapist. The fact that his rights may
> have been violated does not affect his guilt or innocence.
> 6.Drill for oil everywhere. Let’s start by drilling through Harry
> Reid’s head, though I doubt we’d find anything. We have enough natural
> resources in this country, and off our shores to make $2 dollar gas
> plentiful for the next three hundred years. Standing in the way of
> this are Harry Reid and Nancy Pelosi. Energy is the engine of our
> economy and must be secured at a reasonable price. So, first we drill
> through Harry and Nancy’s head and then we put oil derricks in the
> well of the senate and the house.
> 7.In a massive, “Manhattan project like” energy solution we approve
> licenses for 500 additional nuclear power plants. This will create
> millions of jobs while helping to make us energy independent. And, we
> should insist that they are breeder reactors allowing us to use the
> spent fissionable waste over and over. We shouldn’t stop building
> until America has that fluorescing green glow. Now that’s going green!
> 8.We should stop pussyfooting with countries who have sworn to destroy
> us. Iran has threatened to annihilate Israel and the United States.
> They are currently building nuclear weapons to do so. What in the hell
> are we waiting for? We should squash these little pissants like the
> bugs they are. How do you negotiate with those animals intent on your
> destruction and are building weapons to do so?
> 9.In Chicago, just recently, a teacher was caught on film, not
> teaching but robbing a bank at gunpoint. Because of the teachers union
> this extra curricular activity was punished by removing the teacher
> from the classroom and giving him a much higher paying job in
> educational administration. In some cities we are spending as much as
> $25 thousand dollars per student, per year, only to have a drop out
> rate of more than fifty percent. Education must be privatized and the
> teachers union emasculated. Hey, aren’t liberal always harping on,
> “the children”? If they really cared, many teachers and union leaders
> would be hanging in our town squares.
> 10.The federal government needs to get back to enumerated powers,
> those authorities given to them by our constitution. The federal
> government enjoys the constitutional ability to provide for a common
> defense, print a national currency and settle disputes between the
> states in the area of commerce, PERIOD. {emphasis mine} The tenth
> amendment provides, “The powers not delegated to the United States by
> the Constitution, nor prohibited by it to the States, are reserved to
> the States respectively, or to the people. Simply put; if powers are
> not within the text of our constitution then they don’t exist. The
> federal government has their respective fingers in every pie and we
> the people need to cut them off and remind them of our founders’
> intent. After all, if we don't do it, who will?
>
> Conservative Springfield 18 Sep 08
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