Bob Phillipson: A modest proposal | SummitDaily.com
YOUR AD HERE »

Bob Phillipson: A modest proposal

I enjoyed reading David Yost’s guest commentary “The perils of a free market economy” (Feb. 12) which took the “progressive” liberal position on our current economic crisis. Rather than get involved in throwing political stones at one another and using scare tactics by raising the likes of Rupert Murdoch, let’s have a serious debate. The situation is sufficiently frightening and needs an unemotional public pragmatic debate – if that is possible. I believe that if one has only the pundits and MSNBC talking heads for sources of information, the ability to debate is very limited. We need the input of futurists, economic thinkers and patriots who can check their egos at the door.

Permit me to raise a few ideas floated by Tea Party, libertarians and economic conservatives that should be seriously considered. The list is not inclusive and does not address everything needed. This crisis requires a solution consisting of intelligent decisions in a multitude of areas.

In the economic realm, Tyler Durden interviewed Eric Sprott Feb. 11 and asked him “What three policies would you enact that you believe would put the U.S. on a path towards sustainable growth?” (Sprott runs a major investment fund based in Canada.) Mr. Sprott said: “I try to focus more on what they’re doing, rather than worrying about what they should do. Realistically, there is only so much austerity a country can take – look at the impact it’s already having in the UK. I just don’t see the U.S. making the sacrifices required to put them back on the right path long-term. When you see the CBO forecasting budget deficits into 2021, one can only assume that the U.S. plans to borrow in perpetuity. That only works as long as you can borrow. But we all know the game changes when the U.S. can’t borrow through traditional means. We may already be there.



“If I were to make recommendations, I’d focus on addressing leverage in the banking system. I firmly believe 20:1 is far too high a leverage multiple to maintain in this environment. I don’t even know what the right number is – maybe it’s no more than 5:1. But we can’t keep this situation going where a mere 5 percent shift in asset prices can completely wipe out your tangible equity. I would also try removing the ‘too big to fail’ safeguards that allow the financials to reach such insane levels of leverage. And then of course there’s the derivatives issue, which almost nobody even wants to talk about anymore … but it never went away. It’s probably an even bigger problem today.”

For my part, the institutions that brought us the derivatives need to take responsibility for this disaster and take the hit for these losses. Many of them will fail, but our financial systems need a purgative at this point. To continue without that change only insures our eventual monetary collapse with the price being paid by the public at large.



On the political side we need term limits for all elected officials. We will lose some of the expertise our long-term representatives claim to have but we will move from a perpetual campaign mode with its empty promises, to a given period in which these representatives must perform. I believe this is a needed political first step.

We need to have a balance budget which would probably result in pulling back our military immediately from Iraq, from the hundreds of world-wide stations and soon after from Afghanistan. With our politicians working under term limits, we might have a chance at tax reform, redesign of entitlements, and a realistic energy policy. Public debate and a balanced budget will permit us to see what is really possible in health care.

Any political and economic solutions raised should follow guidelines from an American “Marshall Plan” which should pragmatically look at future manufacturing needs and incorporate changes to promote the reestablishment of American manufacturing and with it job creation.

This would require visionary leadership and rapid and non-partisan action on the part of our representatives. Like the early days of World War II and other times of crisis for America, my hope is that a real leader will rise to the occasion and help show us the way out of this most dangerous crisis. Unfortunately, thus far none of the current leadership of either party appears capable of taking us through this process.


Support Local Journalism

Support Local Journalism

As a Summit Daily News reader, you make our work possible.

Now more than ever, your financial support is critical to help us keep our communities informed about the evolving coronavirus pandemic and the impact it is having on our residents and businesses. Every contribution, no matter the size, will make a difference.

Your donation will be used exclusively to support quality, local journalism.

 

Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.

User Legend: iconModerator iconTrusted User