Posted by Michael A. Kamperman on October 30, 2011
The Occupy Wall Street movement has already had two huge successes. First and foremost it has altered the debate from deficit cutting at all costs back to lack of jobs are the number one issue America is facing, not deficits. Secondly, it has given our President a much needed wake-up call that it’s all about jobs, jobs, jobs. Finally, the President has made a couple of moves in the right direction. He has acknowledged many graduating students have student loan payments that are too high for their too low incomes. He has also moved forward to insist that Fannie Mae and Freddie Mac refinance mortgages that are current without an appraisal and without a new title insurance plan forcing the transfer of the existing plan to the refinanced mortgage. But why not offer the same terms to FHA and VA mortgages? Why not offer the same terms to all mortgages held by all federally backed financial institutions like banks and credit unions? And where have these low hanging fruit moves been hiding at the White House? These moves should have been made months before the last election, not months before this one. The reason these moves are being made now is the President is feeling political pressure from the Occupy Wall Street movement. The lost and forgotten have risen up and the President has sat up and taken notice.
Now the President finds himself boxed in by the deficit cutting super-committee he approvingly signed off on just a couple of months ago. In fact, if a deal is not reached on how to lower the deficit, then across the board cuts will automatically go in on all discretionary spending, including defense. If the President is serious about helping the young people motivated to have their voices heard, then he will reject any deal that cuts their future Medicare and Social Security benefits period! It is the wrong way for our country to go and it is not necessary. Secondly, he needs to give up his politically charged class warfare rhetoric about raising taxes on the rich and call for the passage of jobs bill by using all of the savings from the ended Iraq war as the pay for. The jobs bill has a chance to put some of those young people into a good job, while raising Warren Buffet’s taxes may feel good but it won’t create one single job.
The Occupy Wall Street movement is also providing cover for the Federal Reserve to move forward on quantitative easing 3, probably this week. In Ben Bernanke’s famous helicopter speech he talked about the importance of coordinating monetary policy with fiscal policy despite the supposed independence of monetary authorities. Look for the fed to go big once again on purchasing mortgages to lower the cost of refinancing distressed mortgages even further. This is sound policy and will even be more effective if the President expands it to all federally backed mortgages. I want to give a shout out to Chris Wallace who criticized Rick Perry’s jobs plan for only aiming to create a far too insufficient 2.5 million jobs. Finally someone in the media is asking where are the plans to create tens of millions of jobs. Wake-up President Obama, he is talking about you too.
Posted by Michael A. Kamperman on October 14, 2011
The Occupy Wall Street movement is all about an economy that is unable to support the aspirations of the majority of its participants. If people had access to good jobs, they wouldn’t be sleeping on the streets to protest economic inequality. Unemployed college grads unable to pay their student loans would much rather have a good job than stay unemployed but see the rich lose a portion of their wealth. But the movement can get lost, or hijacked, if consensus on a common set of demands doesn’t emerge. For one thing, the movement needs to be about how to lift up the 99% rather than how to bring down the fortunate few. Therefore, items under consideration need to be about how to create the 25 million good paying full-time jobs needed that are missing from our economy. Here are seven actionable ideas that could turn the economy around in weeks and months, not years:
1. Demand the Federal Reserve fulfill its dual mandate of price stability and full employment. The Federal Reserve is refusing to take aggressive action on unemployment. The Federal Reserve should start quantitative easing III, which is buying back Treasury bonds, with an aim to repurchase $7 trillion dollars worth of U.S. debt. Then, along with the Treasuries it already holds, it should simply donate the Treasury bonds to the U.S. Treasury, thereby retiring half of the U.S. debt. This action would end the concept that the federal government cannot afford to combat the crisis. It would also take away a very low risk yet very lucrative trade from the banks, forcing them to start making reasonable loans on reasonable terms again.
2. Demand the federal government Federalize Medicaid by taking over 100% of the responsibility for funding the program, which is now jointly funded with the states. This would assure no more cutbacks in medical services for the poor. Importantly, it would also free up state budgets to put teachers back in the classroom. This idea was originally floated by Ronald Reagan, and there is no reason it cannot garner bi-partisan support.
3. Demand every mortgage in America be refinanced at 4% without a credit check or an appraisal. The federal government already guarantees over 90% of all existing mortgages, and the taxpayers are already at risk for losses on these mortgages. Half of all of the people with a mortgage cannot currently qualify to refinance at current market rates because either their home is worth less than the mortgage or they have too low of a credit score. Also, let those with under-water mortgages let a portion of their interest payments go towards principal reduction depending on how far their home has fallen in price. Everyone will still pay all that they owe. Large borrowers get terms like these all the time in debt restructurings. So why not the 99%? This would cost the federal government nothing.
4. Demand that the eligibility age for full Social Security and Medicare be reduced to age 62. This would create millions of new retirees, freeing up jobs for younger workers. Large companies have early retirement buy-outs all the time to reduce the size of their labor force. So why shouldn’t the federal government offer an incentive to people to retire early? The cost of this would be paid for by a combination of a reduction in unemployment claims and the interest savings on the federal debt donated back the Treasury by the Federal Reserve.
5. Demand the federal government fund a 21st century infrastructure program for America. We have millions of people who need jobs, and we have trillions of dollars worth of worthy projects from highways to water. At one time America had the best infrastructure in the world. It’s time to return to the best infrastructure in the world. This benefits 100% of the people, not just the 99%. It can be paid for by stimulating a growing economy and not by some pay-as-you-go offset that Congress has shackled itself to.
6. Demand that the U.S. strive to reach North American energy independence. The U.S. has an abundance of natural gas, and the technology already exists to run our entire transportation fleet on this fuel. The federal government could put forward the seed money to build out the fueling infrastructure required for a mass conversion to natural gas as the primary transportation fuel. Natural gas burns cleaner than oil and is less polluting. The federal government could also push for more wind, solar, and wave energy production. This would create millions of jobs and end our dependence on Mideast oil.
7. Demand an end to free trade and replace it with fair trade. We cannot expect U.S. workers to compete with people in China and elsewhere who work for $4,000 a year with no benefits and no workers’ rights. Our global companies are inventing things here that they then make there to be shipped back and sold here. These corporations supply the same tools and training to the workers there that they do here. How many American jobs have been lost because Apple makes all of its ipads, ipods, and iphones in China?
To have a movement with no demands is to leave the solutions in the hands of Washington. We have all seen how that has not worked out, and that is why Occupy Wall Street is spreading like wildfire. Our politicians come up with plans to create one million jobs. We need to demand they come up with plans to create 25 million good new jobs. The seven actionable ideas above are a starting point for demands for an economic revival. Everyone with an actionable idea should put it forward now.
Posted by Michael A. Kamperman on October 6, 2011
Occupy Wall Street is now a wildfire spreading all over the country. The economy is not working for young college graduates with huge student loans and no jobs, it’s not working for the less educated, it’s not working for those trapped in underwater mortgages, it’s not working for seniors afraid of the stock market and trying to live off of interest payments, and it’s not working for small entrepreneurs who cannot find start-up capital. Those at the protests are right about one thing, it was Wall Street that got us into this mess and for the most part many of the ones involved in creating the crisis got off scot-free. How is it that the same person who ran Goldman Sachs when the AAA fraud was at its height is still running Goldman Sachs? How is it that the head of the New York Fed who failed to oversee Wall Street was rewarded with the job of Treasury Secretary? And how is it that no one has been indicted for the biggest fraud in the history of the planet? Those out on the streets are mad as hell and they are not going to take it anymore! The banks deserve the scorn they are receiving. But if these people had jobs and opportunities they wouldn’t be out on the streets. And those out on the streets don’t have a clue as to what we should be doing, hence they don’t have concrete demands.
Today President Obama said the people were frustrated with the banks and that is why they are out on the streets. If those out on the streets understood why the economy is not turning around they would also be occupying Washington, which shares the blame with the banks for the mess we are in. The President oversold a too small stimulus plan, then spent months insisting it was just right, then spent more months arguing it saved jobs, then dropped altogether the concept of more stimulus and turned to deficit reduction. He never has put forward a serious effort to fix housing. Now he is wanting to put forward another too small Keynesian plan designed to create one million jobs when 25 million people cannot find full time work.
The President is not going to get re-elected if he doesn’t get those people off of the streets. And he is not going to get them off of the streets unless he goes for much bigger and much bolder plans to turn around the economy. And he cannot put forward plans that are truly bold as long as he accepts the current mantra that any new spending has to be paid for with offsetting spending cuts or tax increases. He needs to come out and say his plans will be paid for by creating economic growth and putting people back to work. Otherwise he is left with nothing but playing small-ball. And while there are plenty of good small-ball ideas, those ideas collectively are not going to create 25 million good paying new jobs with benefits. If the President doesn’t go big it won’t take that long for those occupying Wall Street to look to occupy Washington. At least the Bank of England announced a new round of quantitative easing today easing the way for our Federal Reserve to follow suit.
