Where do I start?

Let’s start with something everyone can relate to. We need fewer people losing their homes, we need more people working and we need small businesses to have easier access to funds to jump start the economy. I promise you, if we can make substantial progress with these three specific topics, we will be on our way to a better, stronger America. Oil is a problem as well, but let’s save that for another day.

Yes, we’ve got a deficit that is out of this world, but we’re not alone, and as crappy as things are in the US right now, we’re still the “go to” nation. So, let’s get it on the table right now; we need to lead the world out of its economic funk, because that will re-establish us as the power that we became and that we can become again.

The Fed has done everything necessary to keep interest rates low; they get high marks for that one. But, as my good friend and on-air partner Ed Handley from Fulcrum Securities pointed out during our show today, the Fed (actually, the White House, Congress, basically all elected officials) gets an F for doing its part (or lack thereof) to help stimulate jobs.

In addition, I don’t care what anyone says; the housing condition today is a national embarrassment; it’s beyond appalling. Yes, there are plenty of people out there who have figured out a way to scam the system and live rent free for years, but they are still in the minority, and for some of them, they might not even have a choice. Fine. It’s the other millions of homeowners who got lured by mortgage banks and didn’t have to show one iota of proof to back up their income and assets. And, this was all done SPECIFICALLY so the investment bankers could put together collateralized mortgage pools to sell to unsuspecting (some might say greedy) investors who were promised great returns.

So, make no mistake about it; the investment bankers and the mortgage bankers who went along with this scheme did just fine (Lehman accepted) while the vast majority of homeowners who took the banks up on their offers have completely gotten the shaft.

Next. Give me one really good reason why General Motors or any other corporation would go out of its way to create new jobs knowing that we could fall flat on our faces again? Do you honestly think GM wants to go through what it did to survive again when as a lean and mean company they can actually make money? Or, give me one good reason a bank would lend to anyone, other than someone who doesn’t need the money, knowing they can print profits simply from borrowing from the Fed for next to nothing and invest it into treasury bonds at no risk?

What’s the solution?

First, the banks must be forced to write down bad mortgages and work with homeowners to keep them in their homes. No more holding on to these bad loans that are underwater, “hoping” the market recovers. No more optional modification programs; ram it down their throats. A recovery isn’t going to happen even if you take mortgage interest rates to 0 (though it would help the cash flow, and thus the economy, of those lucky individuals who are actually able to refinance) because the vast majority of the individuals in the US don’t qualify for a mortgage loan. Yes, I know it doesn’t seem fair to those who aren’t under water, but we need a total “reset” of the housing market, because that will help everyone’s market value, and dramatically speed up a housing recovery. The banks will get spanked but the stock market would likely rally hard knowing a solution was at hand.

Next, IMMEDIATELY put a moratorium on FICA for the next year or two which would put substantial dollars in the pockets of both individuals and companies. All working individuals would get an immediate 5.65% raise (FICA was already lowered some in 2011, but it wasn’t enough). I would let individuals use those funds the best way they saw fit -savings, paying down debt, spending – while restricting corporate use unless the funds were used to create new jobs. Would it cause a problem within the social security fund? Maybe for a bit, but what about the $700 billion the banks got in their time of need? That seemed to work out just fine, and the impact from everyone getting a nice raise would become apparent quickly in the economy, quickly leading to more disposable income a big spike in demand for new jobs.

Next, I would have the government put aside a LARGE chunk of money to be loaned to small businesses at the same rate banks pay for use of funds and by that I mean businesses who have somehow survived the past several years and need some additional capital to move to the next level. I’m not talking about those businesses who have pristine credit; they can already get loans. I’m talking about those small businesses who had the tenacity through blood, sweat, tears and shear perseverance to make it through the most difficult time since the great depression. They’ve likely seen their own credit suffer, but they’ve demonstrated they’ve got what it takes to help lead the economy out of the muck. Let’s give them the resources they need so they can get innovative, add employees, lead the way in jump starting the economy. I certainly can’t say the same thing for those banks that got billions in stimulus dollars that you and I as taxpayers backed. They are more concerned with increasing dividends rather than putting people back to work, so don’t count on them to lead the charge here.

I realize all of this is easier said than done, but we need some more “out of the box” thinking to get us out of the current economic muck, as nothing else right now is working. These are my thoughts; attack three specific, important components of our system. Anyone got a better idea?