The Blueprint for Community Banks in a Digital World

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Historically, community banks have been the pillar for any community, as they take care of the needs of the local businesses and families. They have been instrumental in helping the American economy recover from the 2008 financial crisis, as they are highly capitalized and better prepared to withstand an economic crisis than their larger counterparts. Nonetheless, community banks are disappearing at an alarming rate. The total number of banks insured by the FDIC decreased from 7,087 in 2008, to 4,938 in 2017 – a 30% decrease in less than 10 years; this was mostly due to abundant M&A activity, as well as more than 500 bank failures.

Heavy regulations account for a large part in the growing consolidation. A new survey from the Federal Reserve and Conference of State Bank Supervisors found that community bank compliance costs have increased to 24% of community bank net income, in the past two years alone. For almost all bankers (96.7%), regulatory costs were the deciding factors when considering an acquisition.

Bank regulations are a two-edge sword, with both edges cutting deep into community banks’ ability to survive. First, overregulation heavily handicaps community banks from competing for their vital place in the financial ecosystem through increased regulatory costs, increased requirements for capital with fewer sources, burdensome new risk management requirements, new rules dictating every consumer financial product, etc. Eighty-two percent of U.S. bankers claim that government regulations are not on par technology advancement, severely impeding growth.

Second, and equally important, regulations create friction between banks and their consumers. They make it difficult for banks to offer their customers what they want and how they want it. The nail in the coffin: these friction points serve as inspiration for fintech entrepreneurs and other nonregulated competitors to come up with innovative solutions.

The only way to escape from between a rock and a hard place, is to be BOLDER.

The biggest adjustments banks will have to make, is to become the masters of their own fate. Banks cannot expect to survive by simply navigating the regulatory environment and waiting for interest rates to rise.

As financial technology brings a myriad of new capabilities with exponential uses, the banking industry is heading into a new, untapped market, which has not yet been regulated. It is imperative that bankers do not wait for regulators to leisurely catch up and introduce static rules, which often inhibit growth. Bankers understand their industry’s challenges much more deeply than regulators; they have the most skin in the game. They either get ahead of the technological curve, by embracing new technologies and taking action, or fall behind. Behind their competitors, behind the banking industry, behind the needs of their customers. Banks must aim to shape the new competitive landscape, or risk being an outsider in other players’ environment.

Although community banks find themselves in an impossible situation, being the cornerstone of communities for decades, comes with certain advantages over their financial technology and banking competitors.

ADVANTAGES AND RECOMMENDATIONS:

Advantage #1: Trust. In 2017, eighty-six percent of U.S. consumers still place community banks as the number one institution to securely manage all their personal data. Community banks still have the people’s trust, and they must capitalize on it. Trust is power. Trust is something many fintech companies can only dream of earning. The fact that customers trust community banks to protect their information, execute transactions and hold on to their money, puts community banks in a position of power, when competing with the banking and financial technology industry.

Advantage #2: Deep relationship with their communities. Technology alone will not be able to replace community banks, at least not in the foreseeable future. This is because community banks have specialized in the exact things technology severely lacks: emotional intelligence, personal relationships, and as previously mentioned, having the trust of their community.

Community banks focus on providing traditional banking services in their local communities. They are “relationship” bankers as opposed to “transactional” bankers. Long-term relationships with their communities allows to better understand their borrowers and gives them nonstandard data, which they can use to make credit decisions. In many cases, local businesses/startups can only depend on community banks for loans, as they might not always be able to satisfy the more rigid requirements of big banks.

No other institution/technology can support their local communities better than these banks. Big banks are too rigid, and technology alone could never fulfil the role of a bank. Technology can only enhance and automate processes, which make banks more efficient. Innovative technologies are there to serve the banks and their communities, not the other way around. The community bank, as an institution, is here to stay. However, individual community banks’ fates depend on how well they adapt to the new market.

Recommendation #1: Focus intensely on helping customers achieve their goals. That is it. To do so, they must focus on “changing the bank” rather than “running the bank.” The old way of running a bank is making them irrelevant, unable to meet the demands of their customers. The way banks take charge of their own destiny, is by taking an aggressive stance to “change the bank.” It all starts with the team.

Recommendation #2: Assemble a team with a high market intelligence: hiring banking executives with 35 years of experience in the old banking model is not recommended, especially if they do not have an elevated level of current market intelligence. They will not be able to change the bank. As with most other industries, banking needs to adopt and embrace the modern workforce, based on freelancing, flexibility and scalability. As of today, 16 percent of bank’s workforce already engages with freelance workers, and thirty percent of bankers believe this number will increase by fifty percent in 2018. The bank needs to become an agile, efficient, on-demand institution. The workforce needs to reflect these values.

The benefits of the modern workforce represent a new, albeit indispensable access to a wide-ranging pool of in-demand skills and knowledge, that transforms the bank from a static and rigid institution, into an agile entrepreneurial and innovative organization.

Recommendation #3: Employ artificial intelligence and other digital ecosystems, on a large scale. Technology can outperform all employees when it comes to matters of the back-end office and operations. However, the motivation here is not to eliminate the need for employees, but rather to free the employees from tedious and menial tasks, and allow them to focus on engaging with and serving their customers. As the bank evolves to a digital-first business model, bankers must step up their efforts to create relationships with their communities, and actively help them accomplish their goals.

In the end, banks need to once again become the leaders of their communities, helping and enabling their customers to achieve financial success in any way possible. When banks help people achieve more, people will become increasingly confident in this partnership, and will renew their commitment. The old way of “running the bank” will only achieve running the bank into oblivion. As new technologies and systems emerge, banks cannot wait for regulators to tell them how to engage. Banks must learn and adopt these new advances, in a way that makes them leaders of their communities once again, and in the process, teach regulators how to create a more functional regulatory environment.

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Why Keep the Mortgage Interest Deduction Intact for Now

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Arguments over the mortgage interest deduction are not new and arise from both sides of the political spectrum. It’s important to remember that when Congress first imposed a federal income tax, they made all interest payments deductible. At the same time, the Tax Foundation contended that Congress wasn’t thinking about middle-class homeowners in the early part of the 19th Century. They excluded the first $3,000 for individuals and $4,000 for married couples, so only about one percent of the population of the country paid federal income taxes back then.

In those days, Congress may have considered business or farm interest but probably not typical home mortgages. As time passed, notions about interest deductions and exactly who would be impacted have obviously evolved. Today, the home interest deduction and the related property tax deduction remain as the two sacred cows in the tax code. It’s fair to say that they remained intact after other interest-related deductions had been gutted because lawmakers believe that they provided incentives for homeownership, and because homeownership was something that Congress hoped to encourage.

Why Keep the Home Mortgage Deduction Intact?

First, the latest tax code proposal doesn’t ask to completely do away with these two deductions, so it’s important to look at the latest bill to learn exactly what it does do.

This is a brief summary of the changes for home mortgage deductions:

  • You cannot deduct interest on a second home but only a primary residence.
  • You can still deduct home interest on any loan or part of a loan up to $500,000.
  • It’s worth noting that the related deduction for home property taxes would be capped at $10,000.

Arguments in favor of these changes usually underscore the additional revenues that the government can collect by eliminating these home deductions. Since the proposed changes aren’t eliminating all home deductions, it’s also easy to argue that they won’t impact the majority of Americans who only have one home, don’t have a mortgage over half a million dollars, or who pay more than $10,000 for property taxes each year.

How Could Changes to Housing Deductions Impact the American Economy?

A lot of Americans may not think that this sort of change to the tax code will impact them that much. Such expensive homes are rare in most counties and probably don’t represent more than four percent of all American homes. It would be possible to apply a similar argument to the property tax deduction. Lots of homeowners don’t pay $10,000 in property taxes every year, and many of those don’t even pay enough to allow them to itemize deductions.

However, the CBS report pointed out a couple of impacts that the news of the tax code has already had on the U.S. economy:

  • Home builder stocks: For example, the SPDR fund dropped by over five percent on the news reports. Even home-improvement retail chains like Home Depot and Lowes lost value.
  • Vacation homes: An analyst for Cowen named Jaret Spielberg said that his firm found the news negative for the market of vacation and second homes. Obviously, the tax code will also impact more homeowners in pricier markets. For instance, home prices average around $276,000 in Austin, Texas but over $1 million in San Francisco. This change may impose an additional burden on people who already struggle to afford housing in more expensive cities. Even if the old deductions get grandfathered in, the change is still likely to impact future home sales, and thereby the availability of different financing options. This, in turn, may affect the ability of these expensive housing markets to attract new people.

Also, the tax proposal included an increased standard deduction. It’s not accurate to only view the way these changes will impact future home buying decisions at the top end. More people with modest homes in areas that don’t have such high property taxes may also find that homeownership doesn’t give them the tax benefit that it used to.

In any case, the National Association of Realtors felt strongly enough about the impact of these changes on the real estate market to speak out. Because it can eliminate the tax incentive of purchasing a home for many taxpayers, they believe it will weaken the real estate market and result in higher taxes for many Americans. According to NAR’s president, William E. Brown, the changes would result in a “one-two punch” that would end up reducing America’s homeownership rate, which has certainly never been a goal stated by the political platform of either party.

A key resolution to consider…. If the intent is to make America greater than ever.

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Turning around the US Economy:- My Top Recommendations for President elect Trump

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The people have finally spoken. Donald J. Trump has won and will be our next President for the next four years … and if things are done right, maybe the next eight too.

It is not going to be easy given the mess he inherited from President Obama which basically sums up as below.

  1. Total US debt, including private and business debt, is today $67 trillion, or just under 400% of GDP.
  2. We have 95 million people not in the labor force; 15 million of them not employed. That’s twice the number officially unemployed.
  3. We have almost 2 million prison inmates, 43 million people living in poverty, 43 million receiving food stamps, 57 million Medicare enrollees, 73 million Medicaid recipients and 31 million still without health insurance.
  4. The US federal government debt will be slightly north of $20 trillion before Obama leaves office in January. Local and state debt is another $3 trillion. That is a total of more than $23 trillion of government debt and a debt-to-GDP ratio of somewhat over 121%. That debt has risen roughly $10 trillion under Obama, in just eight years. This US debt total does not even take into account the over $100 trillion of unfunded liabilities at local, state, and federal levels that are going to have to be paid for at some point.

Bottom Line:  We are still witnessing a disaster in the making. The more we increase our debt, the more difficult it is going to be to grow our way out of our problem with the debt.

Something like $5.5 trillion is “intergovernmental debt.” And even if we did dismiss this internal debt, the government’s debt-to-GDP ratio would still be almost 100% when you include state and local debt….And after eight years of the slowest economic recovery in history, we are growing our debt dramatically faster than we are growing our country—even when we include inflation. Go figure.

My recommendations for President elect Trump

Cutting corporate and individual taxes, effecting significant regulatory rollback and fixing the Affordable Care Act may help stimulate growth but will not be a sufficient condition to stimulate growth. Significant regulatory rollback will help. It is also necessary but not sufficient.

Some more serious actions should include but not limited to:

  1. Reinstituting first and foremost the Glass-Steagall Act because Wall Street cannot be trusted to manage their risk properly. This would separate true banking activities from the high risk gambling that brought the economic system to its knees. Privatizing the profits and socializing the losses is unacceptable.
  2. Appointing the right next four people out of the seven governors to the Board of Governors of the Federal Reserve. People coming from the business world; neither economists nor academics please. Also having a Federal Reserve that is more neutral in its policy making and that realizes that the role of the Fed should be to provide liquidity in times of major crisis not to fine tune the economy, will do much to balance out the future.
  3. Putting the value of the dollar relative to the currencies of other countries under the purview of the Treasury Department, not the Fed. Too much power to the Fed already.
  4. Having the currency of the US backed by hard assets. A basket of gold, silver, platinum, uranium, and some other limited hard commodities would back the USD. If politicians attempted to spend too much, the price of this basket would reflect their inflationary schemes immediately.
  5. Directing to have the FASB to make all banks and financial corporations value their assets at their true market value. An orderly bankruptcy of all insolvent financial firms involving the sell-off of their legitimate assets to well-run risk adverse banks that didn’t screw up should ensue. Bondholders and stockholders would realize their losses for awful investment decisions. The economic system would be purged of its bad debt.
  6. Having the Social Security System completely overhauled. Anyone 50 or older would get exactly what they were promised. The age for collecting Social Security would be gradually raised to 72 over the next 15 years. Those between 25 and 50 would be given the option to opt out of Social Security. They would be given their contributions to invest as they see fit if they opt out. Anyone entering the workforce today would not pay in or receive any benefits. The wage limit for Social Security would be eliminated and the tax rate would be reduced from 6.2% to 3%.
  7. Dismantling Obamacare in its entirety and converting it from a government program to a private market based program. The Federal mandates, rules and regulations would be eliminated. Senior citizens would be given healthcare vouchers which they would be free to use with any insurance company or doctor based on price and quality. Insurance companies would compete for business on a national basis. Doctors would compete for business. The GAO would have their budget doubled and they would audit Medicare fraud & Medicaid fraud and prosecute the criminals without impunity.
  8. Repealing the healthcare bill. Insurance companies would be allowed to compete with each other on a national basis. Tort reform would be implemented so that doctors could do their jobs without fear of being destroyed by slimy personal injury lawyers. Doctors would need to post their costs for various procedures. Here again, price and quality would drive the healthcare market.
  9. Dismantling completely the entitlement state.  The criteria for collecting welfare, SSDI, food stamps and unemployment benefits would be made much stricter. Unemployed people collecting government payments would be required to clean up parks, volunteer at community charity organizations, pick up trash along highways, fix and paint houses in their neighborhoods and generally keep busy in a productive manner for society.
  10. We must make a serious effort to have a balanced budget and to fund healthcare and Social Security. I would propose some form of a value-added tax (VAT) that would specifically pay for Social Security and healthcare. I would also propose that we eliminate Social Security funding from both the individual and business side of the equation and take those costs from the VAT.
  11. We also need to get rid of the shackles on growth and get the incentive structure right with the proper tax mix. Then American entrepreneurs can probably get us out of the hole we’re in without it getting too much deeper. With the amazing new technologies that are coming along, we can probably get to a point where we can in fact grow our way out of our debt problem over the next 10 to 15 years.
  12. It is one thing to talk about unfair trade agreements—and we have certainly signed a few. But we also need to recognize that some 11.5 million jobs in the US are dependent upon exports (about 40% of which are services). If we drop our corporate tax to 15% and work on reducing the regulatory burden, I think we will be pleasantly surprised by how many jobs are created just by those steps alone.

As a conclusion, let me be very clear. If we don’t get the debt and deficit under control—and by that I mean that at a minimum we bring the annual increase in the national debt to below the level of nominal GDP growth—we will simply postpone an inevitable crisis. We have $100 trillion of unfunded liabilities that are going to come due in the next few decades. We have to get the entitlement problem figured out and we must do it without blowing out the debt. If we don’t, I am afraid we will have a financial crisis that will rival the Great Depression and maybe worse.

We’re in a world where most major economies are also in trouble. If the US starts printing again money merely to service its debt because people don’t buy its debt, then I foresee total global debt in the $500 trillion range and global GDP topping $100 trillion. A total global economic disaster.

I have tremendous faith in President elect Trump and his team and just hope all those prescriptions will not go unheeded although they certainly go far, long-term, in fixing a system which is quite dysfunctional and broken.

“Draining the swamp” of our present economic morass will certainly require drastic action tantamount to a real revolution in both thought and practice.

The Old Order has gotten us into this mess, and cannot, or is unwilling, to get us out. It is past time for them to go.

Nothing much in a positive, productive sense can be accomplished under our government, as presently constituted, as it has devolved into a Fascistic, crony-corporatist construct.

Until those who govern are forced to experience outcomes consistent with those experienced by the governed, I am afraid the Republic will drift ever further away from the establishment principles envisioned by those rebellious Founding Fathers, who were intoxicated upon the fumes of liberty, fraternity, and equality of opportunity.

God bless our new President elect Trump and the United States of America…. Time to roll up our sleeves and start making America great again.

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What Would Our Founding Fathers Think if They were Alive Today?

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I believe the Founding Fathers would surely be proud of the vastness and strength of the United States, but they would be strongly disappointed with how we’ve come to interpret the Constitution.

Furthermore, they would be even more disappointed with the fact we have created a central bank that artificially foments growth and debases our currency through fraudulent monetary policy.

The Framers warned about our country and capitalist structure suffering from a central bank that purposefully imbalances the market in order to create phony credit and fake booms in the business cycle. The size and scope of the federal government, the incredible power of the Federal Reserve, and our empire overseas all would be considered perversions of the U.S. Constitution.

Surely they would be very proud that the United States has built some of the most amazing cities that the world has ever seen. They would in fact probably be surprised that the country they founded went on to become the greatest economic machine in the history of the world, and they would be absolutely astounded by things like our interstate highway system and the Internet.

However, there are quite a number of things that they would be horrified about as well and they never would have believed this would ever happen to the United States of America. Things such as …

  1. The Federal Reserve devaluing the U.S. dollar by over 95 percent since 1913 and using this strategy to create the biggest mountain of government debt in the history of the world.
  2. The U.S. Court of Appeals for the Ninth Circuit ruling that U.S. government agents can legally sneak onto your property in the middle of the night, place a secret GPS device on the bottom of your car and keep track of you everywhere that you go.
  3. The U.S. government accumulating a national debt that is rapidly approaching the 18 trillion dollar mark.
  4. Americans now owing more than $1.1 trillion on student loans, which is more than the total amount that Americans owe on their credit cards.
  5. Americans wasting an astounding amount of food. According to a study by the California Integrated Waste Management board, 63 percent of the average supermarket’s waste stream is food. When you break that down, it means that each supermarket wastes approximately 3,000 pounds of food each year.
  6. Manufacturing employment in the United States falling by 40 percent since 1979.
  7. The number of Americans with manufacturing jobs today in 2014 being smaller than the number of Americans who were employed in manufacturing in 1950.
  8. Over 45 million Americans enrolled in the food stamp program now considered “the new normal” and Americans continuing to drop into poverty in astounding numbers.
  9. Barak Obama backing a proposal to create a national database that will store the DNA of all individuals who have been arrested, even if they end up not being convicted of a crime.
  10. The average American worker now paying literally dozens of different kinds of taxes each year.
  11. Christians now being arrested and thrown in jail in some areas of the United States for quietly passing out Christian literature on public sidewalks.
  12. Nearly half of all Americans now using prescription drugs on a regular basis.
  13. Americans now spending large amounts of cash now viewed as “potential criminals” by the U.S. government in 2013.
  14. New full body security scanners going into airports all across the United States now actually seeing through our clothing and producing very clear and very detailed images of our exposed bodies as we walk through them.
  15. The U.S. government spending an amount of money equivalent to approximately 25.4 percent of GDP this year.
  16. 10,000 people making today 30% of the total income in the United States.
  17. 61% of Americans between the ages of 44 and 75 saying today that running out money was their biggest fear. The remaining 39% saying death was scarier.
  18. 28% of all U.S. households – according to one recent survey – having at least one person that is currently searching for a full-time job.
  19. Major international organizations actually proposing that the United States start considering the adoption of a truly global currency.
  20. One group of high school students making national headlines recently revealing that a security guard ordered them to stop singing the national anthem during a visit to the Lincoln Memorial.

It is clear that most of the challenges that are found in the US today and for that matter, throughout most of the developed world stem from a number of causes including but not limited to the facts that:

  • industrialization is maturing, which creates a huge systematic failure as there were no proactive measures taken to address it – middle income jobs are and will continue to disappear, which creates a huge hole in a society
  • values have shifted since the founding fathers, including a world of much more self-interest and creativity versus hard-work and benefit ‘for all’
  • many individuals with no conscience are now running government and businesses – on the surface they will give the appearance of caring but actions speak louder, and clearly others do not matter
  • financial system has become very mature and is run by brilliant self-serving individuals that have one goal – higher and higher profits short-term, which creates systematic failure and risks that sooner or later will break the system
  • governments inability to run such a large system, as what the US has become – goal is to get re-elected which creates huge problems given their perception (and maybe reality) that the populace wants benefits today, not the future
  • overall values of people have shifted from community to self; from giving to receiving; from kindness to aloof – we may be forced to change back
  • Unparalleled hubris and arrogance getting people in more trouble, and the US is unfortunately perceived that way – empires have fallen based on such beliefs
  • general level of unhappiness in society and people, shown by such things as the masses on anti-depressants to try to get through life; or the addictions in society including drugs, alcohol and television – all clearly not leading to a productive society

But perhaps most of all, our founders would be absolutely disgusted that the land where Americans could once be free to pursue life, liberty and the pursuit of happiness has become so tightly regulated and controlled that Americans dare not even squeak without the permission of the federal government.

Needless to say, our founders would certainly not understand many of our institutions or many of the advanced technologies that we have today….. But without a doubt they would be able to grasp how far we have fallen as a nation and how far we have strayed from the fundamental principles that they enshrined in our founding documents. The United States is a much different place today than it was in 1776, and unfortunately many of the changes have been for the worse.

The Founding Fathers did THEIR job, and now it is up to us to do OUR job!

Are you up to it?

Share your thoughts…

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The Power to turn the US Economy – Financial Policy Council

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People keep asking me what would I do if I had the power to turn the US Economy around given my 25 year experience on Wall Street

Well here’s my 2 cents…. Fasten your seat belts.

I believe the first thing to be done is to abolish the Federal Reserve. It is owned by and operated for the benefit of the biggest banks in the world. Its sole purpose has been to enrich the few at the expense of the many through its insidious use of inflation and debt issuance. It has been around for less than 100 years and has debased the USD by 96%. The U.S. Treasury has the authority to issue the currency of the country. It did so from 1789 until 1913.

The 2nd thing to do would be to reinstitute the Glass-Steagall Act because Wall Street cannot be trusted to manage their risk properly. This would separate true banking activities from the high risk gambling that brought the economic system to its knees. Privatizing the profits and socializing the losses is unacceptable.

The FASB would be directed to make all banks and financial corporations value their assets at their true market value. This would reveal the mega Wall Street banks and corporations like GE to be insolvent. An orderly bankruptcy of all insolvent financial firms involving the sell-off of their legitimate assets to well-run risk adverse banks that didn’t screw up would ensue. Bondholders and stockholders would realize their losses for awful investment decisions. The economic system would be purged of its bad debt.

The currency of the US would be backed by hard assets. A basket of gold, silver, platinum, uranium, and some other limited hard commodities would back the USD. If politicians attempted to spend too much, the price of this basket would reflect their inflationary schemes immediately.

The 16th Amendment would be repealed and the income tax would be scraped. It would be replaced with a national consumption tax. The more you consume, the more taxes you pay. Wages, savings and investment would be untaxed. The tax code is the source for much of politicians’ power. Its demise would further reduce Washington DC control over our lives.

A downsizing of the US Military from $1 trillion to $500 billion annually would be initiated through the withdrawal of troops from Afghanistan, Iraq, Germany, Japan and hundreds of other bases throughout the world. Policing the world is bankrupting the empire.

All corporate, farm, education, and social engineering subsidies would be eliminated. All Federal employees would have their pay slashed by 10% and the workforce would be reduced by 20% over 5 years. Federal health benefits and pension benefits would be set at average private industry levels.

The Social Security System would be completely overhauled. Anyone 50 or older would get exactly what they were promised. The age for collecting SS would be gradually raised to 72 over the next 15 years. Those between 25 and 50 would be given the option to opt out of SS. They would be given their contributions to invest as they see fit if they opt out. Anyone entering the workforce today would not pay in or receive any benefits. The wage limit for SS would be eliminated and the tax rate would be reduced from 6.2% to 3%.

The Medicare system is unsustainable. It would be converted from a government program to private market based program. The Federal mandates, rules and regulations would be eliminated. Senior citizens would be given healthcare vouchers which they would be free to use with any insurance company or doctor based on price and quality. Insurance companies would compete for business on a national basis. Doctors would compete for business. The GAO would have their budget doubled and they would audit Medicare fraud & Medicaid fraud and prosecute the criminals without impunity.

The healthcare bill would be repealed. Insurance companies would be allowed to compete with each other on a national basis. Tort reform would be implemented so that doctors could do their jobs without fear of being destroyed by slimy personal injury lawyers. Doctors would need to post their costs for various procedures. Price and quality would drive the healthcare market.

The entitlement state would be dismantled. The criteria for collecting welfare, SSDI, food stamps and unemployment benefits would be made much stricter. Unemployed people collecting government payments would be required to clean up parks, volunteer at community charity organizations, pick up trash along highways, fix and paint houses in their neighborhoods and generally keep busy in a productive manner for society.

A free market method for stabilizing the housing market would be for banks to voluntarily reduce the mortgage balances of underwater homeowners in exchange for a PAR (Property Appreciation Right). The homeowner would agree to pay off the PAR to the Treasury (and administered through the IRS) out of future price appreciation on the existing home or subsequent property. The homeowner would be excluded from taking on any home equity loans or executing any “cash out” refinancing until the PAR was satisfied. The maximum PAR obligation accepted by the Treasury would be based on the value of the home and the income of the homeowner.

I’m sure there are many more solutions which non-captured, intelligent, reasonable citizens could put forth to save this country. None of these ideas would be acceptable to the country’s owners. They would reduce their wealth and power. What these oligarchs do not realize is that we are in the midst of a Fourth Turning. Those who experienced the last one have died off. The existing social order will be swept away. It is likely to be violent and bloody. Good people and bad people will die. When the Crisis reaches its climax we will have the opportunity to implement good solutions. There is also the distinct possibility that our increasingly ignorant populace will turn to a messianic psychopath that promises them renewed glory. Decades of delusional decisions will lead to a future that will not be orderly or controllable.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained growth and recovery. If the suffering becomes great enough, change will inevitably come, but it may not be orderly or as controllable as the moneyed interests often like to think.

I just hope all those prescriptions will not go unheeded although they certainly go far, long-term, in fixing a system which is quite dysfunctional and broken.

Draining the swamp of our present economic morass will certainly require drastic action tantamount to a real revolution in both thought and practice.

The Old Order has gotten us into this mess, and cannot, or is unwilling, to get us out. It is past time for them to go.

Quick fixes to jump starting a moribund economy would include: blowing another bubble of some sort, and/or promoting a policy of economic growth driven by technological innovation (not likely due to policy constraints and dearth of investment in technology in this country); reduction in interest rates and/or taxes (interest rates cannot be further reduced because they are already close to 0%, and a tax reduction is not permissible in an environment of planned government expansion); stabilization of a tax code which promotes savings and investment (a real hot potato in a society guided by elites who are staunch supporters of egalitarianism for the masses); debasement of the dollar to stimulate export growth (with serious inflationary implications); and austerity (where the gains of the malefactors who profited in the economy’s demise will stay in guilty hands, and the ever-shrinking middle class which generally attempted to do the right thing will become progressively pauperized).

Nothing much in a positive, productive sense can be accomplished under our government, as presently constituted, as it has devolved into a Fascistic, crony-corporatist construct.

Government is where the real change must occur. Our venal Solons should be term-limited to a maximum of two terms per position and have to live most of their lives as common citizens in the legal environment they have helped create. Campaign contributions should be tightly restricted and controlled (no more obscene, billion dollar campaigns). Congressional retirement should be provided only via Social Security or other funds which are open to all persons who choose to join – no more special congressional sweetheart programs. And health insurance would be afforded either privately or within the same public health program available to everyone else – no Obamacare exemptions.

Until those who govern are forced to experience outcomes consistent with those experienced by the governed, I am afraid the Republic will drift ever further away from the establishment principles envisioned by those rebellious Founders, who were intoxicated upon the fumes of liberty, fraternity, and equality of opportunity.

Now you know

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