What I'm about to propose is simplistic, over the top and probably even ridiculous. However, when you consider that the supposed greatest financial minds of our day just about destroyed our country, how much crazier could anyone's idea to fix our ailing economy really be? We all remember the "Do Over." As children whenever a game went awry, someone would yell out, "Do Over!" We all knew what that meant. Everyone stopped what they were doing, regrouped, forgot what just happened and started the game all over again, free of any baggage.
What we need in this country is an economic "Do Over." It's no secret that the citizens of this country are financially at a collective breaking point. As much as liberals would love to dismiss the Tea Party movement as simply representing the loud minority, the scary truth is we are just one more mild economic downturn away from people in this country hitting the streets with pitchforks and lanterns. We will all wish for the days of the Tea Party and Sarah Palin if we see that kind of civil unrest in this country. Keep in mind this is coming from someone that is not an alarmist or a conspiracy theorist. It doesn't take a social psychologist to tell you that there is trouble brewing with the masses. So what would a "Do Over" look like?
For starters this "Do Over" must come at the expense of this country's financial institutions. After all, someone has to pay for it and we did our part by bailing them out, now it's their turn to bail us out. The first remedy is to forgive all consumer debt. That's right, credit card balances, gone, wiped out, finito. Secondly, for those Americans who haven't already lost their homes the rest of us are in homes that are underwater. In some parts of the country people are as much as 50% underwater and prices will not recover for another 20 years. How is anyone supposed to find their way out of that kind of a financial hole? Therefore my second proposed remedy is that for homeowners who are upside down on their mortgages, modify these loans so that the balances reflect the present day value of these homes and give the borrowers a historically low interest rate as an added benefit. Just by implementing those two remedies alone, could you imagine the collective euphoria that would sweep over this country? The morale of the American worker and consequently productivity, would shoot through the roof. Consumer spending would dramatically increase, and our economy would roar back to life faster than a 16 year old kid behind the wheel of a brand new Ferrari.
Now I can already here the financial institutions of this country howling at the top of their lungs at the ridiculousness of my suggestions but could these remedies be any more ridiculous than what we've already done for them? If financial institutions are going to hide behind the veil of "too big to fail" don't we collectively have even more claim to that line of reasoning? Is the notion that a bailed out AIG paid out 100% of the value of its credit default swaps to Wall Street firms, after these very same firms were greatly responsible for AIG's demise, any less ridiculous than my "Do Over?" What about the fact that these same institutions take 0% loans from us, turn around and loan that money back to the government in some cases, make the spread on the interest earned and then pay themselves millions for a job well done? As someone that is earning his MBA, I'm here to tell you it doesn't take an MBA to make money on a 0% loan. Any Tom, Dick, or Harry can do that.
But Jorge, we would absolutely cripple the financial institutions of this country if we did what you're suggesting. Sure, they'll take a huge hit but wouldn't all of these institutions have imploded anyway had we not come along and written them a big fat check to reward them for their past transgressions? Besides, even if we did cripple them with our "Do Over," we'd just bail them out again anyway and give them their own brand spanking new "Do Over."
So the next time you're behind on a credit card payment or a mortgage payment and don't have any money to send, don't shrink away like a wilting lily. Boldly take out a magic marker, defiantly write "Do Over" all over your credit card or mortgage bill, put a stamp on it and proudly walk your envelope to the nearest mail box.
OK, stepping off my soapbox now . . .