Countdown to Coronation....

With less than a week remaining in the Bush Administration, I look forward to the impending change of leadership with a sense of anticipation and joy, but reserved expectations. At no point in recent history has a President sworn the oath of office amidst such a torrid of domestic and global crisis. It is often said that the first 100 days of a presidency set the tone for the entire term and I have no doubt that will be true for President Obama. Sorting out and prioritizing the many bogie's on his presidential radar will certainly be a task. Where to start? An economy near collapse, rising unemployment, record foreclosures, a collapsing auto industry, war on two fronts, and just for good measure throw in the Israeli-Palestinian conflict. No doubt the first few months on the job will test the mettle of our new leader, so where to start? Over the next few days I will lay out my top five priorities:

1. Get Banks to Lend:

As pressing as the issues of foreign policy and global war are, we need first to look inward and clean up our own backyard. In case you haven't noticed the banking sector is still not giving loans despite taking $350+ BILLION of OUR money through what is now being called TARP (Troubled Assets Relief Program). Like a fifth-grader on the playground, it seems that most banks have stomped off the court, saying "This is my ball, and I'm going home". They are holding up the game, which in turn has consequences that reach nearly every corner of the economy. The main problem here is with the way the money was distributed in the first place. The idea behind a major government bailout is to place a large amount of liquidity back in the market in a very short period of time. The belief then follows that because of this influx of liquidity there will in turn be a corresponding rise in spending thus production will increase, unemployment will decrease, and we will all live happily ever after.

It is a good theory, only one problem here; the funds were not distributed to consumers or even to businesses looking to make capital expenditures. Instead the funds were distributed to banks both large and small. Once again this illustrates one of the most popular plays from the Republican handbook: give our rich friends more money and hope that the effects "trickle-down" to the rest of you. Now setting aside the fact that so called "supply-side" economics have no history of success, lets instead key in on this specific example. What has happened over the past few months is that all kinds of banks large and small have applied and been granted Federal monies (our monies). However, instead of loosing lending requirements as there is now more cash available, they have taken the money and used it for everything from building upgrades to acquisitions of smaller banks. All the while the American consumer and small business owner are left holding the bag. We are giving banks money who then refuse to lend it to us! That is crazy!

So you ask, how do we fix it? Well I believe there are two important steps that President Obama must take when (obviously not if) he distributes the rest of the TARP funds. First, more of the money must be targeted for mortgage relief. This is the number one problem in the consumer economy. People are loosing their homes. I know, many of you who are not loosing your houses will ask why should I bail out my neighbor? I'll tell you why. Foreclosures effect everyone, not just the people loosing their homes. With more foreclosures you have more homes on the market for sale which drives the prices of all the homes in the neighborhood down. It also means that banks have less money to lend as they have to keep cash reserves to cover these assets and therefore are less willing to lend. Getting the foreclosure situation under control has to be a top priority. This means not giving more funds to banks, but instead direct government intervention in purchasing delinquent home loans and working with the homeowners on new repayment plans. It means purchasing already vacant bank owned property and making it available to affordable prices to those in need. In short it means insuring that millions of Americans don't loose the cornerstone of their American dream.

Second, there has to be transparency. I'm sorry AIG and General Motors, but if you are going to take my money then I want to see a ledger sheet on how you are spending it. Beyond that, there needs to be clear guidelines for what the funds can and cannot be spent on. I know, I know, at this point many of you may be screaming that you don't want the Federal government making decisions for private companies. I completely agree! However, when you put your hand out and take my tax dollars, then you are no longer a private business. You can't just play capitalism when it suits your cause and then decide you want a socialist bailout. If you are in business it involves risk, you must take on the risk in order to reap rewards. When it doesn't turn out the way you like you simply cannot say, "well I lost money, so the government should give it back". You are not playing with house money here! However, because we have recognized that there is the potential that the greater good will be served by helping you out (this time anyway), we are going to give you some money, but yes we reserve the right to tell you how to spend it. If you don't like the rules of the game feel free to leave the court, but please leave our ball here as the game must go on.