Politicizing the Financial Crisis
Both parties are using this national crisis to further their own agendas. Instead of focusing on the good of the country, they have used this emergency to beat up each other up. Early Thursday afternoon, there was basic agreement reached until McCain arrived and the political games began. Within a couple of hours, the bi-partisan spirit had evaporated.
Greed and stupidity created the credit crisis. Financial companies who became top heavy with exorbitant salaries and bonus for the management was the fuse. The deceptive loan practices combined with loans made in bad faith by both parties were the match. However, it was the gluttony of the oil companies who were the explosive. The domino effect of the rapidly rising gas prices destabilized the economy, increasing the cost of living and forcing businesses to cut back on payroll. While jobs were lost or down sized, people were paying more just too simply exist. The cost of living increases combined with the escalating interest rates were more than some households could withstand. Solvent households began to dissolve under the financial pressure, which in turned destabilized the already fragile balance of the financial system. The undermining of the financial institutions has had a cascading effect on the whole economy. Although governmental intervention is not the preferred route, it is the only one left at this point in time that will act as stopgap to the collapse of the country’s financial structure.
McCain suspending his campaign to jump on his white horse to rush to save the economy look more like a fool riding a hobbyhorse instead of knight in shining armor. Both Obama and McCain are only two senators out of a hundred. Neither of them were serving on any financial or banking committee; therefore, they didn’t need to have their boots on the ground for an agreement to be hammered out. On September 19, a bailout agreement had been written; there were still issues to be worked out. However, at a press conference at 1:41 pm eastern on September 25, a bi-partisan press released announced that an agreement had been reached. Yet it was soon after McCain’s arrival that Republicans suddenly withdrew their support. Without a doubt, McCain used his influence within his party to squash the agreement in order to further his own political agenda. It was quite clear McCain and his comrades wanted to bolster his falling numbers by attaching his name to the bailout. Who knows what was said behind Republican closed doors that made the agreeing member change their minds. The end results revealed that they cared more about partisan politics than effectively dealing with the issue at hand.
If politics and partisanships were replaced by common sense and good business, the solutions would be simple. By addressing the core issues appropriate measures could be taken.
1. Rising gas prices have increased the cost of living and eliminated jobs.
2. Rising interest rates from flexible loans have caused people to default on their mortgages.
3. Excessive salaries and bonuses for loan executives as well as for those in oil companies and the oil speculation have caused harm to the companies involved as well as country’s economic health.
4. The defaulting mortgages have caused the financial institutions to become unstable.
An immediate cure for the energy crisis won’t happen over night. However, a great deal of the price increases are based on oil speculation. If a mandate was set that purchaser had to accept delivery of the oil within 30 days of purchase, the speculator would be forced to rethink their investment. It would not be a permanent solution, but it would make the price of gas drop.
The bailout would have to not only shore up the economy from the business end, but help the consumer as well.
1. Flexible mortgage rates would be immediately lowered back to the initial rate and permanently fixed with credit given for any monies paid in interest at the higher rate to be immediately taken off the loan.
2. Those in foreclosure should be given the opportunity to refinance at the original rate and start fresh.
3. All bonuses paid to the management of the loan companies for the past 12 months need to be immediately be repaid. If their company is failing they weren’t doing their job and don’t deserve to be rewarded. If they can’t write a check, then assets and property need to be seized.
4. No golden parachutes for anyone in the failing companies. Their actions have caused people to loose their homes; it is only right that the favor be returned.
5. There should be extreme oversight to how the people’s money is spent. If an administrator uses a tissue to blow her or his nose, there needs to be a full explanation in triplicate to how many tissues were used and why.
6. The bailout is a loan not a gift. Stockholders accepted profits that their company didn’t have the financial stability to give. Until the company has paid back the taxpayers in full, no dividends will be given.
7. Executives will no longer be paid exorbitant salaries or benefits. In businesses in other countries, CEO’s are paid 20% more than the person who takes out the trash. There are no expense accounts or special treatments for sitting behind a desk.
8. Each company will be assigned nine executors. There needs to be a 2/3 major in order for an expenditure to be approved.
7. There needs be a public accounting of all business activity every month. Every expenditure and the reason for it needs to be released to the media for prime time release. Shuffling the information out in the late Friday afternoon dump will not be acceptable.
9. All restrictions will remain effective until the loan has been repaid and the company has once again become solvent on its own.
Uncomplicated and practical, these simply stated restrictions will not only stabilize the economy but also rebuild the financial base of the country.