STAGNANT ECONOMY? HERE IS WHY, HOW TO CORRECT IT, AND WHY THROWING MONEY AT THE PROBLEM WILL CONTINUE TO FAIL

The economy is tanking faster than a rock. The government has taken measures to correct the problem but has failed in alleviating the continued fall. As I discussed earlier, liquidity is NOT the problem. The interest rate is NOT the problem because the rate the banks offer is already extremely low. The poor credit ratings for prior loans is not the problem. What is holding up the consumer spending and the release of funds for large purchase items?
The problems are all of these to some degree. And some reasons are not mentioned here for lack of my time to review them. I am just happy to get my damn computer back to blog!!
The SOLUTION may be easier to come by. The solution must address everything or we will never recuperate long term. The solution must be fair to everyone including those who never got mixed up in the first place.
First, the government loaned money to the banks which prevented them from failing. Their failure would have caused total collapse of the financial structure whose implications would have cause 1929 again. Second, the banks need to immediately cut the interest rate on ALL loans already done to half their rate and lock in the rate for the borrower. With everyone in a fixed rate, everyone knows where they stand on payments and the change in the rate will no longer create anxiety. The banks will continue to receive some interest, therefore they will be making a small amount of profit. Since the citizens bailed them out, it's only fair. The lower payments will free up money for the consumer to spend, ending the consumer confidence crisis. Foreclosures will disappear because payments will be affordable to the borrower. The banks will not have to lower the principal borrowed, stopping the fear of loaning more money. Fairness is given to the consumer who didn't get involved by this measure, also. All these things will stabilize the housing price market. States, cities, townships, etc. have lowered taxes on property. This will make higher priced house more attractive to new buyers.
Finally, none of the measures I discussed cause the deficit to grow larger! The positive aspects connected to this are too numerous to list. Tell Obama to stop increasing the debt, start finding ideas that address America's problems without throwing money out the window. A larger nation debt is rucking fidiculous!!

IT'S A DEPRESSION, STUPID!!! LIQUIDITY IS NOT THE SOLUTION!!

Why are all the "leaders" insisting the solution begins with MORE credit? Businesses do rely on availability of credit in order to operate. When this is not a viable option, the business strategy must be altered to the current situation. Increasing debt is the reason citizens are feeling strangled now. Therefore, having access to more is only going to exacerbate the problem in the long term. I own a business and my day-to-day operation is based on what money I have in the bank. I purchase supplies according to need and cost control. If I put my business in debt by borrowing money, it would leverage my competition in a downturn. Private funding for new businesses thru investors leaves government out of business.
The bank bailout provided funds to prevent a collapse of the financial industry. In fact, the Congress proudly passed the Bill singing their own praise about preventing a Depression. Well, with no stipulations given to the banks, they gladly spent the money on frivolous shenanigans and umbrellas while simultaneously hording the monies to solidify their positions. The government is failing to pursuit the bailout money because no legislation has been passed to add stipulations now. Improper conduct is rewarded by the banks with taxpayer money? It's never too late when taxpayer money is involved. The Democrats have been involved in the deceit which strikes me as perplexing given the election results.
The Bush administration has done nothing to address the issues responsible. He could have brought investigations into the fiasco which would have squarely placed the cause on high ranking Democrats. Instead, he remained silent which now puts his inaction as a supplement to the problem.
One solution the Congress should implement is every bank which received taxpayer funds must immediately provide every person with a mortgage an interest rate half of what the current rate is or that is in contract currently. This would allow everyone to free up sums of money to use on necessities they currently have. Also, this would allow people to pay down their mortgage faster if they choose.
I would like readers to make suggestions in order to write their Congressman here on this page. Any feedback would be appreciated, good or bad.

Grappledoctor