I am not an economist . I am not a banker nor do I broker stocks - I am a human being and looking at the last 6 years . I am considering what I see in a novice way. I can not present to you a graph, mostly because even if I could link one I wouldn't understand it. I hate graphs and pie charts , wow, things suck in multi color !
The recession we are still in started with gas prices rising out of control . I know homes were being foreclosed on, but a large portion of the country started 'not spending' when gas was climbing towards $5 a gallon. We all felt it then and in my humble opinion that was what started he ball rolling for all of us.
Layoffs are still prevalent , gas prices are rising , housing prices are still at unsustainable highs (they have to drop another 30% to be remotely sustainable) health insurance premiums raised for all of us 13 days ago and no regulations have been passed to combat Wall Street and Bankers from tossing our economy down a well.
These are my observations, I hope you can enjoy them.
Exxon put another nail in the coffin of hope with the purchase of a fairly large natural gas company. 2 refineries have been closed in the North East, laying off about 1000 direct employees and untold numbers of contractors .
The closures of a Valero and Sunoco refinery may sound like a ridiculous way to start a diary about a double dip recession , but hear me out.
Was it 2 or 3 years ago the rising cost of gas was placed right on the shoulders of democrats and environmentalists due to lack of refining capacity ? It is easy to forget while gas rests at an outrageous $2.75 a gallon nationally, but the price was barreling down on $5 a gallon and it started the panic. Now, the same people who were blaming their lack of refineries for sky rocketing prices are closing refineries down. The cries of lack of capacity will be heard when gas hits $4.25 in the coming months, but what will be overlooked by our free and independent media is the closures that were 100% voluntary . Our president will be Cartered(trademarked) . Big oil wins, and they win big. I do believe that before June that the cost of gasoline will be the anchor that keeps our economy from sailing - but what else needs fixing ?
The price of homes. I look at my own family as a clear example as to why debt relief and debt forgiveness is the only way out of these foreclosures and a complete crippling of our economy. My parents. Their first home cost $10,000. That home now is on the market for $150,000. It was a fixer upper , but was reasonable at the time.
My dad did some work and sold it for 22K in 1980. They purchased their second home that year for 34K . A decent place, and it is valued at 280K. We did some work to it, but I don't think the quality of our workmanship is garnering that kind of value. The home when originally built in 1970 cost 18K.
From decade to decade home prices have risen, but between 1990 and now the price of homes has become outlandish. The simple rise has buried home ownership and makes it nearly impossible for anyone under 30 to purchase a home. In many countries people protest banks for debt relief and forgiveness , and I feel regulations coupled with that could save us, but it won't happen. My idea is simple, but it could ruin us - but doing nothing for the working class will bury us. Homes currently valued under 300 K should be dropped in price and regulated to not be allowed to sell for over 90K. Yes, a regulation of the home market. Now, the % of the value drop should be forgiven by banks on the homes FIRST mortgage. Example- Home is worth 300K now, it is regulated to 90 K. The homeowner owes 200K on the home, that is dropped to 20K. The formula needs some work, but in a nut shell fair home prices would be law and the out of control value of homes would be reigned in. This idea will never be popular, so I expect to be scoffed at for the idea. It is an idea, I am more than willing to hear other ideas to have reality put back into the house market.
Another part of that formula would be another tax- a 2 income tax. YES, a new tax. Any family with children that had both parents working would be taxed 10% more than single income families . WHY ? Because the forced drop in home values would allow for families to only need a single income. I am not suggesting women go back home, I am suggesting 1 parent stay home. I will happily stay at home with the kids, fix the house and do other stuff while my wife is the bread winner - I WOULD BE THRILLED TO DO SO ! Now couples with no children that both partners work will have an extra 5% tax , not the 10% .
I know, you can't live on that - yes you can. The price of homes was regulated down. Your home is now affordable on one income. To stop the drop in real wages regulations would be put in place on wage DECREASES on workers making under 150K - which is most of America.
I realize there are some kinks and I am working them out, I am brainstorming here . None of this will happen anyway, so who cares about my silly ideas ?
I see Home Prices as the 1 big thing keeping us from getting out of and staying out of this recession.
I have some ideas on how to deal with the price of gasoline and how it could cripple us, but it would take a minimum of 2 years to put in place.
HEMP ! What ? Yes, HEMP ! Hemp and Steel make an alloy (for lack of a better term) that is nearly bullet proof, 100 % biodegradable and surprisingly light. If we mandate all cars in this country are made from Hemp and Steel we could boost the economy and end SOME of our dependence on crude oil since everything plastic was at one point crude oil - and all the paint on it as well.
China does sell an electric car that is insanely popular in Central America, why not steal the technology for once ? Use China's engine technology and the Hemp/Steel blend as the body - BAM. We have to do something, I am all for anything that keeps us from sending another Trillion Dollars to Saudi Arabia . Any Ideas ?
After home prices and the cost of energy loan shark interest rates and mob like interest calculations have to be addressed, or that is going to doom us. With such high unemployment people use their credit cards until their cut off and then it is to late. No job, no money and no way to pay back the vultures leaves people desperate . Bankruptcy no longer protects you, you still have to pay back your creditors , which seems criminal after be humiliated in court . Predatory lending seems to be the entire banking industry and regulations should be passed before January 30th to protect US. Lobbyists won't allow that and Congress can't write a bill without a lobbyist anymore so that is a utopian hope, but something must be done to save this countries economy. We can no longer accept that the people we bail out get $3 for every $0.75 we borrow .
Regulation has become an evil word, shit, congress won't even try to regulate a monopoly - example Comcast. We need strong leadership before we go down the tubes. If gas prices continue to rise companies that close refineries should be forced to pay fines that become rebates to Americans.
There is so much wrong and so much not being fixed we could go on for weeks - at some point we have to start with helping the working class . I don't want to say the sky is falling, but I can taste some jet fuel.