For some time now the Tea Party activists have been calling for Ben Bernanke's head to roll. I personally thought he was doing a decent job in pursuing the mandate assigned to the Fed, which is keeping inflation under control while increasing the prospects of jobs in the U.S.
After yesterday's announced intervention called Twister, I'm beginning to have my doubts. How is further lowering interest rates through manipulation of treasury markets going to put more people back to work, increase corporate spending, or build consumer confidence? The answer, it will not. The Fed is only doing its job with what they have left for ammunition. A water pistol does little against the gatling gun of economic issues facing our great country. Twister just adds more instability to an already over stimulated economy. Perhaps currency stability should be another mandated Fed watch?
May I suggest a few actions our government could take which would show us that our people in Washington have some understanding of simple economics? Let's not forget housing and the devastating impact it has on confidence. Many of my co-workers are upside down on thier mortgages and can't get re-financed at lower rates becasue they no longer qualify. They are current on payments but unable to meet the current standards for a refi. How about rewarding these people with new lower rate mortagages? Since there is no debt to forgive right now, let's just get them into a better cash flow situation and say thank you for paying what you owe instead of running away from the payback obligation. STOP trying to save the delinquent holders and reward the current holders!! This would encourage people to have faith in the system and build confidence. An added benefit would be putting cash into the hands of people who have proven they can manage their own household's income.
Repatriate the 1.7 TRILLION dollars American companies have overseas because of tax reasons. These dollars have already been taxed overseas and American companies can't bring the money back without being assesed the corporate 35% U.S. tax. Allowing return of these dollars with reduced taxes or NO taxes could have a significant impact on our economy and jobs picture. Currently, the funds are not subject to tax, as they linger in foreign banks. They can be invested overseas in factories and jobs without any detrimental tax consequences. With this huge amount of funds back here in the US, some companies will buy back stock, pay dividends, hire new workers, build new plants, and increase research and development spending. In all these events, it would be a plus to the companies and citizens of the country to have this stockpile of dollars returned home.
Another easy action would be to take some pressure off the banks. Some of the new regulations are overbearing, and as Jamie Dimon says "un-American". Let's not continue to bash the banks! Many short-sighted people had a part in the greedy landscape of the mid-2,000's, and constant slamming of the banks isn't helping the confidence indicator. Wasn't it Dodd and Frank who insisted banks lend to those that could not afford a house as determined by traditional lending standards? (Hello, Fannie Mae and Freddie Mac.). Most banks were regulated into their current situation by the SAME people who are writing the NEW regulations. Scary stuff.
See ya,
(Reminder: Check this blog's archives for other artcles.)
Steve M
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