SIX STEPS TO SOLVE THE NATION'S ECONOMIC CRISIS

The economy is steadily getting worse, and we have the keystone cops in Washington running the show. Unfortunately, the longer this goes on, the more difficult it becomes to solve the problems, and Congress isn’t helping. It also doesn’t help that Obama is saying one thing, but his Democratic counterparts on the Hill are ignoring what he is saying. It is one of two things: either he agrees with what they are doing but giving the public rhetoric; or, he has lost control. Notwithstanding, in Mark’s humble opinion, here is what needs to be done to fix the problem:

1) The banking crisis is the immediate problem, but the long term problem is energy. It is at the root of our balance of trade problems and was the tipping point that pushed the economy over the edge last summer. The proposed bailout package should provide funding to accelerate development of alternate power sources for cars, including a super battery that can take a car 100 miles on a charge; accelerate development of natural gas and hydrogen powered cars along with the infrastructure to allow mass marketing of these vehicles; allow off shore drilling for more domestic oil supplies as well as development of oil shale in the country's mid-section; increase funding for development of fiber optic solar panels which would allow for cheaper and workable alternative sources for heating and cooling our homes.

2) The government can shove money into the economy all it wants, but several articles have indicated that while the Treasury Department is giving money to the banks to loan, the Federal Reserve (an independent agency) is quietly increasing bank reserve requirements and micro-managing bank loans, the net effect of which is to prevent the banks from loaning anything. This is what happened during the depression, when the unemployment rate reached 15% by 1937 regardless of the huge amount of money Roosevelt was spending. Can’t someone coordinate these matters? In addition, The Fed and the Treasury Department need to coordinate the efforts to STEM BANK WRITE DOWNS OF BONDS. UNTIL THEY DO SO, NOTHING WILL GET BETTER, ONLY WORSE. It is like trying to keep a leaky bucket full of water. This can be done one of three ways: 1) buy the bad bonds at an agreed rate to get them off of the bank books to allow them to recapitalize themselves; 2) change the mark to market rule to reflect a more realistic value of these bonds; 3) guaranty the bonds up to a certain amount to allow the free flow of the bonds through the system. Anything less means we are in for some very hard times.

3) Take the pork out of the stimulus package and do what Obama said it was supposed to do: fund shovel ready projects. Not the National Endowment for the Arts; not anti-smoking campaigns; not re-sodding the national mall; not programs to stop sexually transmitted disease. Build roads, build bridges, build buildings, build mass transit, build schools…build, build, build!

4) Give the business community a sense of permanence. Nobody will invest a dime unless they know the rules. Keep the Bush tax cuts. All of those rich people who have lost their jobs funded New York City and the states of New York and California. It the so-called rich guys aren’t making money, they aren’t paying taxes. Extend the Bush tax cuts. Extend the capital gains tax cuts. Lower the corporate tax rate.

5) Change health care as follows. Everyone is required to have it. Make it a requirement to get a driver’s license. This spreads the risk over the healthy 20 somethings that currently won’t buy it. The government can subsidize those who can’t afford it either by direct grants or tax credits. Health care plans should be based on a national pool rather than a state by state pool. Require insurance companies to insure pre-existing conditions at reasonable rates, who in turn can buy government sponsored re-insurance to cover catastrophic conditions.

6) Restore confidence in government by cleaning house. No tax cheats in the cabinet. President Obama promised transparency and honesty. So far, not so good.

These steps will insure an economic recovery. Anything less, get a shovel and bury your money in the basement.