Wed, Aug

Mr. President and Congress: Put Away the Shovels, Solar Panels and Tax Gimmicks

PERSPECTIVE - The creation of shovel-ready jobs as a strategy to revive the economy is about as effective as using spare parts from your father’s Oldsmobile to fix a Prius.

The fixation on green jobs amounts to wearing blinders that obscure possibilities in other markets.

Playing with the individual and corporate tax rates (other than transitioning to a fair flat tax) [link] is nothing more than pandering to various interest groups.

No one is addressing the most serious problem we face: a lack of liquidity and confidence that pervades way too many households.

The President’s job creation plan is little more than a temporary employment scheme to buy votes.  

Green jobs will do more to create employment in China, where panels and components can be manufactured at a fraction of the cost, [link] and put investment capital at risk in this country.  

Congress should know better, too. Tax cuts/increases do not create wealth when there is little demand – they just reallocate dollars, and not very effectively at that.

Until we free the many homeowners who are locked in mortgage slavery – whether they are underwater or in some state of foreclosure – spending will be stagnant at best.

Where is the legislation requiring banks to modify loans and re-finance otherwise responsible citizens who were not motivated by greed, ignorance or both? These are the people we need to help.  They are the ones afraid or unable to spend for fear of losing what’s left of their limited security.

It does not take a Harvard MBA to figure out that restructuring loans is a win-win deal for banks and consumers, but the banks don’t get it.  They would rather risk the fallout from widespread default and bear the insurmountable burden of carrying non performing foreclosed homes on their books. We could very likely become a nation of squatters as the banks and legal system would not have the resources to drive millions of people from their former properties.

If people are freed from financial anxiety created by unsustainable mortgage terms, spending will resume, values would once again appreciate (although not at double-digit rates we witnessed during the housing bubble, thank God), and the banks will be able to lend again in confidence.
So, why doesn’t our government get it?

It would be an indictment of the failed policies going back decades that established the single-family home as an economic driver to be traded like a commodity.  The debate in Congress would be an embarrassment to leaders past and present who supported the biggest Ponzi scheme in history.

To the Occupy Wall Street crowd: you are picketing the wrong people.  Target the White House and Congress.  Protest outside of the Department of Justice – after all, they dropped the criminal investigation of Angelo Mozilo and his former cronies at Countrywide.  Maybe even picket Mr. Mozilo’s country club.

If the government is not going to chase after the poster boys of the sub-prime fueled meltdown, let our officials know you will never forget them.

More importantly, let our officials know you will never forget their failure to take action on behalf of the many victims of the housing bubble.


Tags:  Prius, Oldsmobile, President, Congress, green jobs, solar panels, government, housing bubble, foreclosures, Occupy Wall Street

Vol 9 Issue 81
Pub: Oct 11, 2011