The government has launched a number of bailouts and stimulus programs in recent years, sending trillions of dollars down the drain.
Like many, I am angry. Washington and Wall Street are tied at the hip and spend most of the time talking only to each other. They are connected socially and economically and have media outlets devoted to promoting their philosophies.
Wall Street and Washington are not having a positive impact on my world.
The public is outraged about out-of-control bonuses and out-of-control lobbyists, and I keep waiting for someone on Wall Street and Washington to get it. I am starting to think they never will. Politicians make gestures to keep us from rioting, but as soon as our backs are turned, Wall Street goes right back to its old ways.
Wall Street and Washington developed the saying "too big to fail." The idea is that big institutions must stay in business, no matter how badly they screw up.
The Soviet Union operated on the same premise.
Wall Street and Washington do not understand that entrepreneurs and small-business people have been the force behind economic growth the past few decades.
Advances in technology have made it possible for smart people who live in Kentucky, Oregon, India, and China to compete with any business Wall Street has to offer.
This trend toward small, entrepreneurial businesses that are located far from money centers isn't going away. Yet, Washington keeps throwing countless dollars at these "too big to fail" money losers.
After the Depression, we learned a lesson and put a variety of regulations in place. After the Depression, banks were relegated to banking and insurance companies were relegated to writing insurance policies.
That worked well for more than fifty years. Then deregulation became the hottest fad and gave us companies such as Enron and many others.
In the modern world of deregulation, Citibank, a bank, was allowed to merge with Travelers, an insurance company. The new company, Citigroup, had to suck down billions in bailout money to survive. This "too big to fail" business model is not bringing us any advantages.
One reason Main Street gets overlooked is we don't know anyone in Washington or on Wall Street, and we really don't want to. Main Street's customers are local, and a lot of them, including me, deal with local and regional banks that know them and their businesses.
If Wall Street understood their customers, they would not have spent billions on credit default swaps and mortgage-backed derivatives.
People who start their own businesses don't need bailouts. Businesses in a startup phase aren't in need of tax cuts. What small businesses need is cash flow, access to capital, mentors, and guidance.
But, above all, they need the proper mindset. People who work for large companies expect their employers to look out for their concerns. Entrepreneurs are willing to look out for their own concerns.
After years of massive layoffs and cuts in employee benefits, workers at many corporations realize that their companies don't care about them. The corporation's only concern is making Wall Street happy. With big companies continually cutting back and jobs at large corporations becoming scarce, many people are now looking at entrepreneurship.
As Bob Dylan said, "When you ain't got nothing, you got nothing to lose."
In order to help Main Street, the following has to happen:
1. No more bailouts for Wall Street. Some Wall Street firms like Bank of America have had a hard time recently. They need to absolutely know that they need to solve their problems on their own and not depend on any help from taxpayers or the federal reserve board.
2. Make it easy for Main Street to borrow money. Interest rates near zero are wonderful for Wall Street but if Main Street doesn't have access to that capital, it is useless in helping small businesses.
3. It's a long time until health care reform kicks in 2014. If we get a Republican president in 2012, we will probably never see it. Something needs to happen in the near term, liking making Cobra extend longer and become more affordable, to allow people to leave large corporations and hang on to the health insurance.
4. Wall Street needs to be regulated again, like it was before 1999. That will restore some confidence in the overall financial system.
Don McNay, CLU, ChFC, MSFS, CSSC of Richmond Kentucky is an award-winning financial columnist. He is the author of the book, Wealth Without Wall Street: A Main Street Guide to Making Money, which will be released on September 20.
McNay founded McNay Settlement Group, a structured settlement and financial consulting firm, in 1983, and Kentucky Guardianship Administrators LLC in 2000.
McNay has Master's Degrees from Vanderbilt and the American College and is in the Hall of Distinguished Alumni of Eastern Kentucky University. McNay is a Quarter Century member of the Million Dollar Round Table and has four professional designations in the financial services
Follow Don McNay on Twitter: www.twitter.com/Donmcnay
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class in this country! Now what you need to do is run for office.
A few comments on your 4 pillars ‘main street’ support:
1) I totally agree with you about bailouts! No more bailouts to Wall Street. But let’s be fair, the government should not be in the bailout business at all, so let’s expand it: No more bailouts for private unions, for car companies, for ‘main street banks’ for home owners, for retired people that did not save enough for their retirement, for people that did not graduate high school & now must live on minimum wage, & even for small main street businesses, etc. No more bailouts, Full Stop! Or are you one of those typical liberals that likes to live off other people’s money but does not want to fund big banks when it is their turn to ante up. You cannot & should not have it both ways.
2) Making it easy for main street to borrow money is a…wait for it…bal out. See my comment above to get my view on this.
3) Healthcare is a bail out to those that cannot afford healthcare. See my comment above to get my view on this.
4) Commonly agreed, fair, & impartial regulations that apply to all in the economy the same are the backbone of capitalism & free markets. I have nothing against regulations but what specific regulations in 1999 would have stopped the Housing & follow-on Financial Crisis. Before anyone mentions Glass-Steagall, let me preempt: there was nothing in G-S that would have stopped wither of
What exactly is your solution for the working class, who works their entire life and earns so little, there is nothing left to save for retirement?
Good paying jobs would solve many of our problems.
It is important to note that consumption inequality has been dropping in the United States, especially in those industries that are most exposed to domestic & international competition, autos, computers, food, etc. Those industries that have become problematic in terms of standard of living impact have been those industries which are cartelized & protected, Education, Health Care, Public Services, all of these have increased the burden on your average citizen not in those industries. I would open these goods & services to market forces, allowing more entrants in the market & in the case of public services, privatizing as much as possible
At the same time, I would recommend that once the government is taken out of the bailout & redistribution role, that it simply be relegated to the role as an unbiased regulator of fair process based on commonly agreed regulations that affect everyone equally.
These actions will have a two-fold impact, new entrants (doctors, clinics, pharmacists, etc from overseas for example) will find it easier to come to America & will bring down prices, at the same time the cost of government & the intergenerational payments to the elderly will be reduced & people will have more money to buy insurance.
An example of a commonly applied rule is that people & companies provide a retirement account that is independently managed. What you put in is what you take
You are so far off base you're on your own planet in your own universe, not on planet Earth.
If everyone paid into Medicare for ALL, there would be no problems and no handouts, we the people, would be the biggest GROUP POLICY of them all with everyone sharing and getting care!
It seems most of your comment is based in fantasy and NOT reality.
I am inferring that SocSec and MediCare is a bailout, and that the payments you get back both in terms of payments in and taxes to pay for them do not exceed the cost, hence a bailout.
No fantasy, just facts.
Kai
Perhaps I am being overly cynical, but in my view even though his proposals may very well be practical solutions to the problems we are facing, Wall Street will never allow them to be implemented. In the absence of a strategy that will engender support from the President and/or a majority of either the House or the Senate, his proposals are mere fantasies.
Look across New England places like Fall River and all the closed textile plants. Look at countless towns across the south that use to have thriving businesses supported by the local manufacturing plant. Now virtually wiped out. Small towns Main Street are being destroyed by unrestricted free trade.
You want to help America? Do what is right for Main Street! Wall Street will still do OK. It just want have the swings we currently experience.
And: that the list of high crimes specifically names ... Bribery, and Treason.
If you surf to the well-respected http://www.opensecrets.org, you'll see that over 12,000 people last year made it their full-time occupation to disburbse more than $3.5 Billion dollars to ... less than 750 people in all.
You do the math. Then, re-read those thirty one words of Supreme Law.
Mark my words: the pervasiveness of High Crime in the Government of the United States is escaping no one's attention, anywhere on this orbiting rock. People who had been taught by their grandparents to trust "the full faith and credit" of the United States now realize, not only that there is no "credit," but there is no "faith." They realize, as we all do now, that they have been ... and that they continue to be willfully swindled and defrauded by this Government.
... a government filled with Civil Officers who intend to do absolutely nothing about it, to maintain the continuity of their own Bribes.
They broke up AT&T.
Dodd Frank on the other hand has addressed some of this but has introduced many harmful regulations for small banks (who also happen to live in the real world). Two things need to happen to fix our financial services industry. First, the liability protection for all executives, VPs and directors must be suspended in the event of a failure. This means that if their entities require a bailout the first monies come from their personal wealth. It should be grandfathered and previous bailouts should be addressed. This 1 thing would fix TBTF. Second, there needs to be structural changes made to separate mainstreet and wallstreet. Glass steagell would do this as would a hand full other regulations.
As a small business owner there is nothing more disheartening than having years of hard/smart work put in jeopardy by a bunch of Wallstreet vermin.
It's that they are too well connected to fail.
To better understand the problem we face dig in just a few more layers.
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