Saving the Economy: The Mortgage Meltdown & Beyond
by Jack Random
While the candidates for president and their enablers in the media seem lost in an endless cycle of scandal involving the statements and misstatements of associates, the economy is dangling on the precipice of total collapse.  

The Federal Reserve has done all it can to turn the tide, with a series of interest rate reductions and a massive infusion of treasure to bolster the security of our financial institutions. 

 

Every move has had only a temporary effect, the latest on Monday triggering a 400-point rally on the Dow Industrial Average only to lose all gains by the end of the week.  

 

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The Federal Reserve is running out of ammunition.  The Fed rate stands at three percent and its treasury is virtually depleted.  More money can be printed but its value will be proportionately reduced.  Clearly, though its part in creating the crisis is little doubted, any solution must come from other quarters.  

Congress and the White House have come together to offer a stimulus package that will accentuate the national debt by putting checks of some $300 in the hands of millions of Americans.  The checks are scheduled to reach us in May but few believe it will have anything but a minor effect on consumer spending and consumer confidence.  

Having exhausted all readily available solutions, saving the economy will require a consensus among legislators and the executive branch born of desperation.  

The first step is an acceptance of the depth and breadth of the crisis that renders the usual partisan approaches pointless and in fact counterproductive.  There must be agreement that the Bush tax cuts favoring the wealthy and contributing to the debt of the nation are dead.  There must be agreement that the bipartisan push for deregulation exacerbated by the Bush White House is a significant part of the problem and can have no part in the solution.  

Diligent state and federal regulation of the financial markets, as promised after the Enron debacle and the technology bust, should have prevented the mortgage meltdown.  Instead, deregulation accelerated and commercial banking was allowed to merge with the securities industry.  Government regulators turned a blind eye to the kind of predatory and abusive loan practices that were used to secure loans that should never have been made.  

To save the economy we must first deal with the effects of deregulation that have turned home ownership into a liability and unleashed a plague of home foreclosures that has infected every aspect of our financial institutions.  

A moratorium on home foreclosures should go into effect immediately.  All predatory, fraudulent and abusive loan practices should be declared illegal and all contracts fitting that description should be declared null and void.  Homeowners who entered into such contracts should be reimbursed for relocation costs and all costs over and above what could reasonably be charged as rent.  

This would by no means erase the damage done but it would ease the suffering of millions of Americans who have either been pushed out of their homes or are facing that prospect in the coming months.  A process of healing would begin in the victimized homeowners as a process of purging would begin in the abusive financial institutions.  

Next, with an eye to the future, a cap should be placed on mortgage interest rates.  A homeowner should never have to pay double-digit interest on his or her primary residence.  

Further, those portions of the Glass-Steagall Act of 1933 that separated commercial banking from the securities industry repealed under President Bill Clinton in 1999 should be reinstated.  

Finally, the entire financial industry from Wall Street to banking to real estate trusts should be subject to rigorous regulation.  If the White House is unwilling to fulfill its constitutionally responsibility then the states must compensate until the chief executive is replaced.  

All these measures should be considered essential but insufficient for the economic crisis we are confronting goes well beyond the mortgage meltdown.  It is a crisis that is felt in insurmountable debt, declining wages, loss of job security, and declining health and retirement benefits.  The causes, while intricately linked to government neglect, are directly traceable to the global economy – an economy created to maximize corporate profits at the expense of the working class.  

Saving the economy requires repealing NAFTA, CAFTA, the mandates of the World Bank and the International Monetary Fund, and all other existing trade agreements created under the banner of Free Trade.  It requires rewriting all trade agreements on the foundation of the rights of labor internationally.  It requires establishing an international consensus on labor rights, including living wages, the right to organize, decent working hours and conditions, and an absolute rejection of indentured servitude, sweat shops and child labor.  

This comprehensive revision of trade policy would create a new international standard that would lift up workers everywhere, creating a vibrant middle class upon which to build the new economy.  

Of equal importance, we must take the forefront in building a green economy.  On purely economic grounds, we must end the three trillion dollar waste that we call the war on terror.  The Europeans knew all along that the destructive bludgeon of war was a crude and self-defeating weapon against terrorism.  Rather, it requires intelligence, police work, alliance building and strictly targeted action.  It requires embracing the concept and constructs of international justice.  

With the trillions of dollars that would otherwise be wasted building the profit margins of war mongering corporations, we could construct public works that would benefit all and serve as a model to the world.  

We could assume our place as a world leader in technology, education and innovation, building comprehensive mass transit, pervasive systems of renewable energy with solar panels on every structure, wind farms across the plains and the most fuel efficient designs ever conceived.   

This is the way forward and we must either lead or fall into the bottomless pit of spiraling economic decline.  

Jazz.  

JACK RANDOM IS THE AUTHOR OF THE JAZZMAN CHRONICLES (CROW DOG PRESS) AND GHOST DANCE INSURRECTION (DRY BONES PRESS).  THE CHRONICLES HAVE BEEN POSTED ON NUMEROUS CITES OF THE WORLDWIDE WEB, INCLUDING THE ALBION MONITOR, BELLACIAO, BUZZLE, COUNTERPUNCH, DISSIDENT VOICE, THE DAILY SCARE, THE NATIONAL FREE PRESS AND PACIFIC FREE PRESS.  SEE WWW.JAZZMANCHRONICLES.BLOGSPOT.COM 

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