I don’t claim to be the smartest person in the world but it seems that the solution to this is to get cash flowing. Right now, the people who need cash don’t have it and the people who have cash are hanging on to it. Regardless of how we got here, something has to be done. Here is my suggestion:
- Suspend capital gains taxes for at least 2 years – retroactive to the first of the year – this would encourage more investment (i.e. cash)
- Reduce corporate taxes – right now corporations are paying a very high tax. I know – I used to own a private corporation! Lower the rate to 10% or even 15% for a couple of years. That would free up some cash and spur growth.
- There has been some talk of insuring the bad debts instead of just giving them the $700 billion. That, to me, would be a much smarter course of action. How does that work? When I got my first VA loan, the loan was backed by the federal govt. The bank still held the loan but in case something happened, the fed govt insured the loan. This could happen to the current mess.
I’m sure there are other ideas out there that make sense also – I can only speak to what I have experience with. I know the effect the above steps will have on the economy would be positive.
The second part is that we need to “Enron” all those involved in Fannie Mae, Freddie Mac and any other company involved in this fraud. I am discouraged that I don’t see any hint of an uproar over the failure of either one. From everything I have heard, they did the same thing to their balance sheets as Enron did.
Now – would a certain Maverick please step up! Someone has to lead!