What will it take to end the economic crisis?

It would appear that the damage has been done and nothing can alliviate the prospects in the short term. It seems that the Fed and the Treasury had ample opportunity to jump in front of the economic tsunamis that were headed our way but did not recognize the warning signs in time to evacuate the village. Time and again they are seen chasing after the destruction with a handful of money trying to figure out how to get in front of it. The basis for our economic dire straits is that we have people who, while being very smart, are either tied to studying the past or just plain part of the current problem. Ben is a student of academia, the guy could to tell you every which way from Sunday why the depression of the 30's happened and how to keep something that transpired the same way from happening again. Hank on the other hand is a Wall Streeter who knows the ins and outs and the repercussions of a nuclear bomb of this magnitude. He also knows how to profit from a bomb this size going off inside America. Lets not forget that Hank up until the mid 2000's was CEO of Goldman and was very well aware of the problems going on in the mortgage industry. Unfortunately at that time it was more profitable to be a part of the problem than the solution which I'm guessing is one reason he was given around $500 Million as a departing gift before being recruited to try and fix some of the previous problems he helped create. Who better to fix a major FUBAR than the one who helped engineer it?

So here we are. Things are completely out of hand and no one knows how to slow it down. All the money in the world is obviously not doing the trick, and why not. Seems that if you throw enough money at any problem you are bound to have an effect on its course of destruction. Well that would be true if the money were being thrown in the path of the problem rather than in the wake of its devastation. This seems to be another maneuver to transfer vast sums of wealth from those who have little to those who already hold the vast majority of it.

A couple of things from someone who claims not to know much but can see the cause and effect of the problem.

1) the freaking unrealistic mortgages have got to be addressed. Somebody who bought a $400,000 house with next to no money down that is currently being valued at $290,000 does not have much incentive to stay in the house making payments. Readjust the mortgages to reflect the true intrinsic value and give the home owner a reason to stick it out and make the payments month in and month out. Don't penalize somebody who either got caught in the downdraft or even somebody who was playing the flipping game. We bailed out the banks for their involvement in the mortgage crisis with taxpayer money, now lets bailout the tax payer. End of story. Problem on it's way to being fixed.

2) Make the proposed 4.5% mortgage rate available to not just new home buyers but to refi's as well. I know this will cost a huge amount, but it will stoke the economy by getting people to buy new homes and refi old ones.

3) Make credit available to those that are credit worthy. With the credit markets frozen nothing is happening and it is the taxpayers money that these banks are hording that was given to them with the express purpose of leading it.

4) Put some people in Jail. Starting with Henry M. Paulson. This man has done more to sabotage the bailout of of America than the banks did by getting us in this freaking mess. Take back all the Golden Parachutes and bonuses that have been paid in the last couple of years starting with Paulson, O'neil, Prince, Dimon, Blankenfeld, and all the others ( Morgan, Bank of America, Wachovia, Wells Fargo, Citi, Wamu, IndyMAc, National City.......etc

5) Get rid of this Mark-to-Market valuation that makes a specific asset or security made to be valued at current prices regardless of the underlying value. This rule is what effectively crushed, Lehman, Merril and AIG. In a bad market values go below what the assets are worth and what was paid for them. Having to account for them in this way reduces the sustainability of positive cash flow company's in adverse economic times.

6) Bring back the up tick rule - this was another blunder that was enacted in 2007. It states something to the effect that a short sale must go off at a price above the last sale of stock. Removing this rule allowed for a steady decline in the absence of any buys.

I'm sure I could come up with a couple more but the point being, we can not get in front of a massive tsunami. The best we can hope to do is limit the destructive nature of such a beast with some effect backstops in place. At this point we should stop chasing the problem down the street and examine the devastation it has caused a proceed with measures that would sure up those aspects of the economy most beaten down in an effort to contain the continued fallout.


Good evening until later............