The Solution is Relatively Simple if The Will is Relatively Strong

Without extraneous noise from various American factions over the past thirty years, the logic for how America fell into this economic mess is relatively straight forward. The reasons why previously tried and currently proposed solutions will not work are equally as coherent. A solution for digging America quickly out of the circular predicament we are in is relatively straightforward. What is not straight forward is the gerrymandered path through Congress to do what is needed on behalf of the American People. What follows are general truths (although each has exceptions to the rule). See if you agree.

What do we know?

• The Western World’s banks lent to both businesses and consumers beyond historically safe levels for three decades. As a result:

oThe West is now bloated with excess private debt
o The economy is struggling to pay debt loads and default rates are high
o Debt repayment has absorbed discretionary revenues that would otherwise be invested into a growing economy

• America used excessive bank credit to spend beyond its means for the past three decades. As a result:

o Money was available to fund speculative bubbles. Higher bubble values in turn made more money available to spend on consumer needs during the bubble rises
o Investment and housing bubbles propped up 15 million jobs beyond what the underlying economy would have otherwise if America simply spent within our means
o As real economy jobs transferred to the East, America’s underlying weakening economy was hidden by our continued excess spending

• America’s Federal Government borrowed to pay for welfare and warfare for four decades. As a result:

o America’s public debt grew to 100% of GDP, a level that could absorb all public discretionary spending if interest rates rise, spending that would otherwise assist a growing economy
o Further increases in Federal debt could result in America’s credit rating being lowered which in turn could force higher interest rates

• The rubber band of excess spending could only stretch to finite limits. As a result:

o When the limit was finally reached, Banks knew first and moved quickly to protect themselves from what they knew would be a free fall by closing credit lines, charging exorbitant rates on outstanding credit debt, and stopping lending even to credit worthy consumers
o Without access to consumer credit to cover the shortfall between incomes and housing debt, consumer demand stalled
o Without access to credit, the housing bubble popped and housing prices freefell
o To make ends meet, consumers cannibalized financial investments and investment prices fell
o Within a very few years, much of America’s housing and commercial real estate debt far exceeded the value of underlying properties

• With the collapse of housing values and credit, the plug was pulled on the artificial engine of growth. As a result:

o Consumer demand contracted
o Demand for labor then contracted and jobs were lost
o Federal tax revenues contracted as unemployment rose
o Lower housing values reduced state and local tax revenues

• State governments that required balanced budgets and local governments, dependent on housing tax revenues were rescued initially by Federal stimulus dollars. As a result:

o State and local governments failed to react quickly and responsibly to a permanently lowered tax base.
o Many states and municipal governments came perilously close to default

• American multinational businesses were buoyed by Asian GDP growth but our domestic businesses were hammered by a weakened domestic economy. As a result:

o Multinational businesses secured substantial cash balances but withheld investing over concerns of the world’s teetering economy
o Domestic businesses shrank with the contracting economy, lost access to credit, and laid off employees to survive.

How does America wish to respond to the crisis?

Republicans want to:

• Protect military spending
• Recover through less government spending, lower taxes, and less regulations

Yet:

o Even without cutting taxes, balancing the federal budget will require cutting 43 cents of every dollar the federal government now spends
o Military spending and its hidden ancillary spending cost a third of the federal budget. Without drastic cuts to military expenditures as well as all other federal expenditures, the federal budget cannot be balanced.
o If we do not curb deficit spending to quickly achieve a balanced budget, America’s interest rates will rise and cut off federal discretionary priorities
o Lowering taxes without cuts in government spending that offset not only the tax cuts but the extreme deficits now in place would exacerbate an already dangerous interest rate precipice

Compromise issues:
o Government spending is steadily increasing. Government spending increases and not just rate reductions in increases must be reversed.
o While lower taxes are one way to provide the private sector additional revenue for growth, it is not the only way. The private sector can acquire investment capital by other means if credit can be accessed.

Democrats want to:

• Increase social programs, secure social agencies, and protect entitlements
• Recover through stimulus spending and supporting state and local budgets
• Increase taxes on the wealthy to pay for social programs

Yet:

o Even without reducing government spending, federal taxes would have to increase 75 percent across the board to balance the budget
o The United States could not spend enough to stimulate the entire world’s demand in order to recover from a worldwide monetary implosion. Thus far, $2 trillion in stimulus spending and $15 trillion in loans has budged the world’s economy little and has had no multiplicative effect.
o It is evident that the economy will not recover enough to offset stimulus spending with increased tax revenues. Therefore, stimulus will further exacerbate the federal debt and invites a faster debt rating reduction and higher interest rates

Compromise issues:
o To balance the budget, social welfare spending must be reduced, along with all other budget line items, to much less than America spends today
o To at least maintain America’s middle class standard of living, GDP growth must keep up with population growth. GDP growth must be supported by investment capital. Congress must either redistribute Federal spending to support higher private sector productivity, lower taxes to free up private sector investment capital, or entice business to invest domestically by creating a better business environment

America’s unemployed and underemployed want to:

• Find productive employment
• Gain access to credit
• Reduce their debt payments
• Eliminate their housing bubble debt overhang
• Regain savings for retirement

Yet:

o Jobs will not become available until businesses begin to rehire
o Businesses will not begin to rehire until the economy improves
o The economy will not improve until consumers increase purchases
o Consumers will not increase purchases unless they can pay existing debts and have enough left to increase discretionary purchases
o Consumers will not have additional funds without increasing incomes, repairing credit ratings, and gaining access to more credit
o Consumers cannot increase incomes unless the 25 million un-or-under employed gain employment, cannot repair credit ratings without increasing income, and cannot gain access to more credit without repairing credit ratings
o Consumers cannot gain employment until businesses begin to rehire
o And thus the circular argument of an imploded monetary economy………….

Compromise issues:

o In an imploded economy, consumer demand and business supply cannot be corrected in isolation, but must be repaired simultaneously.
o Democrats tried to fix both consumer demand and business supply through artificial government stimulus, but it was not large enough or economically diverse enough to reignite the economy, and it did not attempt to simultaneously correct the underlying debt and credit issues that also must be repaired in tandem for an imploded economy correction to adhere and affect a turnaround.
o To create enough turnaround friction, stimulus must bubble up from the economy wide full employment, improved credit ratings, and access to both consumer and business credit. Government cannot possibly spread stimulus broad enough or create a large enough stimulus through spending programs alone
o Republicans have offered to correct the economy by creating a better business environment through lower taxes, fewer regulations, and multinational businesses incentives. However, the Republican plan for reigniting the economy only addresses methods for attracting capital back to the United States, hoping to make the U.S. a better alternative for multinational corporations to spend capital than elsewhere. Yet multinational businesses are not spending their capital anywhere and will not until the global consumer demand improves. And at this time, Republicans are not offering any solutions to improve the global business environment.

A viable turnaround solution requires that:

• All able Americans immediately return to work
• U.S. consumers are freed from the weight of housing debt overhang and credit ratings that were damaged by the worldwide monetary implosion
• The dollar is uncoupled from attempting to stimulate the entire Western world.
• Multinational Corporations be enticed to bring investment capital into an economy that has already begun its turnaround
• Federal, state, and local governments not be allowed to skim needed growth capital out of a delicately growing economy

One viable solution includes:

• Job voucher plan to employ all able Americans immediately

http://jobvoucherplan.com/must-reads/

• Equity for debt swap to remove excess housing debt

http://jobvoucherplan.com/2011/08/04/hawaiians-have-the-hale-housing-solution-to-right-america-housing-bubble/

• Credit amnesty program to quickly repair business and consumer credit

http://jobvoucherplan.com/2011/09/08/yes-america-can-quickly-turnaround-heres-how/

• Modified Republican multinational incentives that entice domestic investment without giving carte blanche tax holiday and that does not entice further foreign domestic investment

https://jobvoucherplan.wordpress.com/2011/10/26/our-economy-can-be-re-ignited-like-a-boy-scout-fire/
http://jobvoucherplan.com/2011/06/18/can-the-coming-world-depression-learn-anything-from-the-great-blackout-of-1965/

• Republicans and Democrats do the heavy lifting of deciding together which programs will be cut, how to best run the military with a much reduced budget, how to extend the life of entitlements with a much reduced budget, and how to reduce Congress’s incentive to hold to a balanced budget.

Why Can’t America Sue the Federal Reserve and Banks for Violating Their Fiduciary Responsibilities?

The United States of America is claimed to be the wealthiest nation on Earth. Certainly, our GDP is the highest by some measures, our accumulation of long lived assets and infrastructure is historic, and our country is abundant in natural assets and commodities. Yet do the lives of our citizens in terms of material well being and quality of life reflect this great wealth? If a nation’s health is proportional to its material wealth, are our financial liabilities that are four times the size of our GDP degrading our nation’s health? Many are concerned that no matter how America’s wealth is measured, that we have reached our pinnacle and are now in decline. Some suggest that globalization is the cause.

When Adam Smith first penned “The Wealth of Nations” in 1776, the concept of wealth existing within the organism of a nation was not questioned. Nations had grown from their feudal beginnings into mercantilist empires and had begun to develop industrial capitalism within their mostly agrarian societies. However, the concept of businesses being melded to the future prosperity of their growing nations was the accepted paradigm.

Now that globalization is upon us, this marriage of business and nations is no longer a given. The traditional measurement of a nation’s wealth as that of the output of its businesses no longer fits now that cross border transfer of financial, physical, people, and intellectual assets are fluidly afforded multinational corporations. If we can no longer measure a nation’s wealth as that of its corporations, what is the paradigm shift that replaces this measurement?

If we divorce a nation’s wealth from that of its businesses, then a new picture of its material wealth emerges. The sum of a nation’s true material wealth is its natural resources and commodities, its capacity to maximize the value of these resources, and its ability to protect them from plunder. A nation’s wealth depends on its distribution infrastructure, its fixed assets that are capable of production, and the strengths of its people; their legal infrastructure, learning institutions, accumulation of national core strengths enhanced by interconnectiveness of innovation and production, and their accumulated learnedness and capabilities.

In addition, a nation’s material wealth depends on financial liquidity to transfer these assets to their highest and best use. Currency is the oil that lubricates a nation’s wealth producing assets. It provides for the efficient and fluid transfer of commodities, people and productive assets to create a maximum efficient output that will both meet the demands of consumers and that will simultaneously produce profits to feed current consumption and future growth capacity.

A nation’s ability to grow wealth depends not only on maintaining its output at maximum efficient levels but on investing a portion of its output into extending its future capacity. Once again, currency provides liquidity as the medium of capacity extension. Currency is created through debt contracts. A nation’s businesses and individuals enter into contracts to accept debt and, through this process, its banks create currency to supply transactions. Therefore, a nation’s ability to grow depends upon its ability to add debt and to create adequate currency.

A nation’s ability to add debt depends both on its current debt level and on its maximum debt capacity. It can add debt up to its ability to repay it while maintaining current consumption and while providing for future growth at a level that will allow future consumption to be maintained. Adding debt beyond this level will result in excess currency and consumption that lessens its future growth and future consumption, and that heightens its probability of repayment default.

The difference between a nation’s current debt and its maximum debt capacity is its available credit. If a nation adds more debt than its available credit, it adds more currency than its productive output and therefore dilutes its currency, increasing its probability of inflation. Therefore, it is critical for a nation to manage its debt below its maximum effective credit level while growing its available credit through reinvestment in infrastructure and education and through development of concentrated hubs of innovation and productive core strengths.

A nation’s credit capacity is the cumulative capacity of its citizens. Each individual, by his or her own development of education, skills, aptitude, and desire develops an individual maximum credit capacity that grows as these attributes build. An individual’s income reflects his maximum credit and his ability to obtain currency in advance of earning it through loans that add debt. Cumulatively then, a nation’s liquidity is the additive ability of each of its citizens to accept more debt.

Liquidity is provided to a nation through currency distributed by its banking system. Once again, the “Wealth of Nations” paradigm of a commercial bank’s primary mission is to match a nation’s currency to its wealth creating activities in adequate measure. In this paradigm, banks are tasked with the responsibility to evaluate a nation’s entities’ and individuals’ capacity to accept debt, and to enter into contracts that ensure that a nation’s and its citizens’ maximum debt capacity is not exceeded.

The “Wealth of Nations” central bank then ensures that the sum total of a nation’s currency supports maximum efficient output at full employment. Through the central bank’s manipulation of interest rates, it controls a nation’s credit capacity. When interest rates are lowered below historical averages, credit capacity is increased and consumers are enticed to add debt to their ongoing purchases by bringing would be future purchases into the present. In this manner, the central bank attempts to offset peaks and troughs of the business cycle.

However, throughout America’s history, and exponentially more so with the advent of globalization, America’s banks have not accepted nor fulfilled the “Wealth of Nations” mission expected of them by the majority of our citizens. America’s banks and the Federal Reserve in fact manipulated debt instruments to support globalization at America’s grave detriment. Doing so precipitated America’s greatest Ponzi ever, our housing bubble, violating their fiduciary responsibility to our nation. They obliterated their “Wealth of Nations” responsibility, enticing America to accumulate debt well in excess of its credit capacity, feeding a bubble frenzy that manipulated Americans into perceiving debt accumulation as investment.

The housing bubble enticed borrowers to think of their increasing debt not as early consumption but as a down payment on rising equity. Individuals were enticed through low introductory rates to take on long term debt well above their asset debt capacity. This became a logical choice because housing prices rose at 20 percent per year, making the housing bubble a logical “short term investment”. Lower introductory interest rates suckered borrowers to reach for higher debt levels than they could endure long term because of the potential to flip their “investment” for profit during the introductory rate period in what amounted to a dangerous Ponzi scheme.

For the two to three year period of watching their “investment” grow, individuals dipped into their savings and covered their short fall with short term consumer credit that was also made plentiful by the banks. To feed the Ponzi, banks enticed consumers to use short term credit in amounts well in excess of their ability to repay by offering introductory consumer credit interest rates as well. This unsecured consumer credit, well in excess of individuals’ total credit capacity, could be used to finance short term short falls in consumption capacity while their housing investment grew. With available savings and additional unsecured credit through credit cards, the “logical” investment choice was to let it ride on the housing bubble.

When the music stopped, many people who were in the game for quick profit lost their savings, destroyed their credit ratings, and maxed out their debt capacity using all of their available credit. Of course most home and commercial property owners that were not playing the game also lost massive value in their long term real estate investments. In addition, as the bubble popped, many credit card issuers increased their interest rates from low introductory rates to as much as 32 percent per annum, further pegging debt at or above sustainable levels.

This housing Ponzi was a manufactured raising of credit capacity well in excess of America’s ability to repay and an enticement to use that capacity to feed the housing bubble frenzy knowing that the bubble would reach an unsustainable height and that greater fools would be stuck in the end with excessive debt that would stagnate not only individuals’ future growth, but that cumulatively would stagnate America’s growth as well.

If China had not enticed American bankers and businessmen to use America’s credit capacity, if they in turn had not manipulated Congress to eliminate regulations that had earlier been put in place to mitigate excessive credit speculation, if social engineering for the poor had not provided initial cover for the banks to create manipulative debt instruments, if the Fed had not manipulated interest rates to historic lows, if banks had not thrown out historical debt-to-income loan criteria in favor of feeding the speculation with reckless housing loan products and hysterical credit card offers, and if Americans had not allowed excessive greed to cloud their thinking into believing that a new economy had arisen, the debt bubble would never have occurred. Yet it did, and America’s debt, and that of its citizens, has far exceeded its maximum debt capacity. As a result, we now are faced with lower future consumption, lower future growth, and a very high probability of default.

Given that the “Wealth of Nations” paradigm America has been operating under has in fact been inextricably altered and that our nation’s material wealth can no longer depend on multinational corporations or international banks to align with America’s interests, is it now time to develop a plan going forward that puts America’s interests ahead of our multinational corporations and banks? A plan to turn around America must include restructuring our debt load, immediately bringing it down to a level below our maximum debt capacity. It must include quickly forcing the repair of America’s business and consumer credit ratings. And it must include the simultaneous and immediate addition of 15 million jobs, not the paltry 1 to 2 million offered by our meek politicians. This turn around, as further outlined in the links below, should be and can be the initial step in shifting America’s paradigm to a “21st century Wealth of Nations.”

http://jobvoucherplan.com/must-reads/

http://jobvoucherplan.com/2011/09/08/yes-america-can-quickly-turnaround-heres-how/

http://jobvoucherplan.com/2011/10/26/our-economy-can-be-re-ignited-like-a-boy-scout-fire/

http://jobvoucherplan.com/2011/09/13/america%e2%80%99s-new-consumption-paradigm-must-divorce-multinational-corporations-and-marry-new-business-partners/

America’s Economy Can be Re-ignited Like a Boy Scout Fire

They say militaries inevitably prepare to fight their previous epic battles, sometimes lacking an understanding of how geopolitics and progressing cultures change the dynamics of the next war. If sophisticated, strategically centralized military planners continue to find themselves flat footed entering new wars, it should come as no surprise to find that Washington, as designed by our Constitution to be at battle with itself and the states, is utterly unprepared to execute war on our unprecedented flailing economy. By continuing to battle this historic monetary implosion as if it were a really big version of previous recessions, Washington has not only failed to aid the job recovery of our economy, it has actually dug an even deeper economic hole and has obtusely bludgeoned the American people for failing to crawl out from it.

This economy is neither a periodic mismatch between demand and supply as in previous recessions or a simple absence of demand that can be fixed by additional stimulus, low interest rates, or even lower taxes and regulations. Therefore, both the antiquated prescriptions being followed by this administration and the prescriptions of a bygone era being proposed by the Republican Party to win the confidence of the American people in 2012 will not fix our economy but will instead mire us in additional debt and will continue to sputter the economy to false starts and dismal failures.

If only those that would lead our country had been Boy Scouts! Boy Scouts practice their motto of “Be Prepared”, learning important skills of survival such as how to start a fire. As a lad, I was sent by my troop to endure a three day ordeal of survival before induction into the Order of the Arrow. The first night, I was given a match, a raw egg, a canteen of water, and a sleeping bag and sent into the wilderness. Because the night had turned frigid, my first order of business was to build a lean-to and to create the life saving warmth of a fire.

Now with only one match, it is critical to be prepared. Scouts first learn the basics that fire requires more than one match to burn. It needs additional heat, fuel and oxygen. After being taught the simple basics, Scouts delve into the intricacies of one match flame ignition. First, the Scout must find a sturdy, dry and protected environment that will be the base of the fire. The heat from the match must be ready to then ignite delicate kindling such as the under bark of a dead, dry tree. This delicate kindling must be given additional small twigs that snap at the touch. The gently resulting flames must have ample air yet be protected from erratic winds.

The Scout must be prepared to feed the fire with larger twigs at a rate that expands the reach of the flames without burning out rapidly and without smothering passageways of air that will support the nascent combustion. Afterword comes the traditional stacking of small limbs that keep the heat of the flame close yet that forces the aspiration of fuel and air into the mixture. Finally, the logs that will sustain the flame are placed strategically so that a majority of the logs will sense the flames flickering around them and will support air rushing in underneath to stoke the fire’s growth.

If the Scout is to be successful with just one match, he must be prepared to simultaneously manage all aspects of the fire’s preparation, lighting and combustion, and he must be ready to feed the fire once it bellows its life giving heat. The lighting of our nation’s economy is something akin to a Boy Scout’s preparation, lighting, and combustion of a Scout fire. If the manager’s of our economy’s restructuring do not ensure that all required aspects of an economic re-start are present and well dispersed to intricately interact with all its elements, the economy’s new flame will surely sputter like that of an unprepared campfire starter.

Just like the fire must have the proper balance of all three elements of combustion, heat, fuel and air to burn brightly, the re-lighting of the economy must have all three of its critical elements; sustainable debt, sufficient credit, and decentralized demand in simultaneous and sufficient quantities. When the match of economic stimulus is applied to the economy to light new jobs, if new workers are drowning in debt, their new incomes will simply support existing debts and will not spur economic growth.

Even if new workers’ incomes are sufficient to both pay their debt load and to increase additional demand, the impact of stimulus will be muted if their existing credit ratings will not allow them to take on additional debt, thereby increasing America’s money supply and expanding the economy. For any economic plan to be successful at re-flaming the economy, not only must stimulus be applied but our nation’s overhanging housing debt must be immediately reduced and our business and consumer credit must be immediately repaired.

However essential these basic elements of economic recovery are to restarting the economy, just like the Boy Scout fire, their application must be intricately and simultaneously intertwined to affect a delicate combustion from just one match of stimulus. America’s stimulus must flow through the dry, ignitable kindling of the domestic economy and be carefully protected from the erratic winds of globalization. The nation’s housing debt load must be swapped with bank equity to stack small limbs of economic growth near the economy’s fire base. Damaged credit ratings must be given amnesty to expose the limbs to economic oxygen. And our nation’s unemployed must be dispersed throughout the domestic small business economy through job vouchers to intricately mix the decentralized combustible fuel of demand with the oxygen of new credit and the heat of new debt capacity.

Just like the fire must be ready to accept additional limbs to grow its flames, the economy must be ready to respond to the initial turnaround with a growth oriented, business friendly, economic environment. Re-investment of offshore and captive capital into the domestic economy must be incentivized. A fair and consistent internationally competitive footing must be created so that businesses that combust in the early stages of economic recovery will be fed the competitive fuel to thrive in America through measures such as tax and regulatory reform, resizing of government debt load, investment in business infrastructure and modernized education.

Finally, a Boy Scout learns that a fire must be continuously attended, stoked, fueled and protected from the elements if it is to continue to provide life sustaining heat. Our nation has left its economic fire unattended for too long and must resolve to carry on the tradition of Scouting if we are to thrive once again. America should adopt the Boy Scouts’ motto and “Be prepared”.

Hey Third Party, Rise Up and Meet the Challenge!

Is this the political message Bob the electrician hears?

Republican Plan for America:
• Get rid of Obama
• Make a “simpler” tax code that lowers taxes for the Rich and increases taxes on the poor
• Let the housing debacle take its course, foreclose on millions of Americans and put millions more through bankruptcies to stabilize the banks
• Make a million jobs through drilling
• Reduce business costs by eliminating regulations and unions
• Cut government spending and start America on austerity
• Pass trade bills that loses millions more jobs

Democrat Plan for America:
• Tax the rich
• Tax the middle class
• Spend billions more stimulus to keep union jobs intact
• Keep government big and federal budgets big
• Propose jobs plan that won’t pass Congress, and that will create far fewer jobs than needed.
• Offer housing solutions that won’t stop foreclosures and bankruptcy
• Start a trade war with China that could cost millions of jobs

Bob now must decide which of these two political bags of trash needs to be put to the curb. With such a rotting smell coming from both camps, it will be hard for poor Bob to choose. Can’t he throw out both in favor of another? Will an independent rise up to either force at least one party to turn populist, or to take the White House on behalf of the Great Middle America? 2012 would be easier for a third party candidate to win outright than any post WWII.

Both parties seem intent on not angering the election gods who fund their re-elections, those one percent of Americans whose capital is at risk from any real solution to turn around America. The Republicans are casting their nets toward the one percent by bold, almost irreversible statements like those made by Challenger Mitt Romney who said, “Don’t try and stop the foreclosure process. Let it run its course and hit the bottom.” In so doing, the Republicans aren’t even hiding their intent from the 99 percent, almost blatantly admitting to the rest of America that elections are won by those that favor the gods.

The Democrats, however, recognize they need the one percent just as much as the Republicans. They know that programs that could turn around America could also put the wealth of the one percent more at risk. Therefore, President Obama’s plan seems to merely demagogue against the Republicans while offering meager fringe plans that sound like the right direction but that go only as far as the one percent will allow. Both parties have set their course for 2012 and it is a rough one for the 99 percent.

Tell me Bob the Electrician, which one of these plans is going to help you stay in your house, fix your credit, get a decent paying job, put your kids in college, and help you prepare for retirement? If you guessed neither, you are more right than wrong, so trust your instinct. If you are leaning toward, President Obama, you will probably be in the winning majority because a vote for words that sound like they are at least in the right direction will beat blatant, irreversible words that shout to the one percent “I am your Republican Guard” any day of the week.

Yet, America should not have to choose between meekness and arrogance. We can turn around our country without an all out class war. Housing debt can be fixed with an equity for debt swap that keeps banks intact, that doesn’t trigger credit default swaps, and that keeps America’s families in their homes. Business and consumer credit ratings can be salvaged with credit amnesty. All able Americans can be placed in jobs through a job voucher plan that immediately sets America back on course. We can begin to dig our way out through increased competitiveness, government can be right sized, and America’s business environment can be made more attractive. Hey, Republicans and Democrats, any takers? How about you Mr. Trump or Mr. Bloomberg?

President Obama Must Immediately and Boldly Use His Presidential Powers to Train the Will of an Unruly Congress on Critical Yet Unrealized American Economy Needs

Any hoped for American economic turnaround must include the two critical components of removal of debt overhang from the American public and removal of devastating credit ratings from our businesses and citizens going forward. Without these two vital changes, neither of which are being widely discussed within the realms of national politics or proposed by our national leaders or perspective leaders, our nation will languish in recession for the next decade no matter what political options are ineffectively tried by the political party in control.

I have proposed that the federal government require banks to accept partial ownership of the U.S. housing stock in ways that will prevent the marking down of books and acceptance of losses from housing that would trigger catastrophic credit default swap contract provisions. This would cleanly eliminate America’s debt bubble that should not exist and should not be burdening our citizens or economy. It can eliminate the bubble without financial crisis and without causing the massive disruption of foreclosures and bankruptcies that may inevitably occur as we continue to unwind the bubble in slow motion.

I have also proposed the federal government require the three major credit rating agencies to implement a plan that would dramatically accelerate an improvement of credit for those companies and citizens that from this point forward practice good faith in repaying their debts. By removing in two years those credit flaws that would normally require seven years, America can return its citizens to their original positions of responsible debt management prior to this worldwide credit implosion.

Some have correctly responded to my proposals that Congress is nowhere close to collectively understanding or recognizing these critical components as necessary for recovery and that therefore, America is doomed to suffer through linear unsuccessful attempts at partial solutions, none of which will succeed in the absence of these two crucial components. They are right. A three legged stool will not stand when one of its legs is substantially shorter than the others. Therefore, if President Obama wishes his posterity to be remembered for boldly defending Americans from this economic crisis, he will need to muster the courage to use his powers of executive order and proclamation.

President Obama has the power to issue both executive orders to officers and agencies within the U.S. government and to issue presidential proclamations to those outside the government to affect the efficient implementation of American law. His written words will have the full force of law from a power granted directly to him by the Constitution.

Certainly, his actions are challengeable by the Supreme Court if they attempt to make law, rather than clarify or act to further a law put forth by the Congress or the Constitution but make no mistake, he has wide ranging powers that can be enacted to ease the way through an embattled Congress. Remember, FDR’s removal of Japanese and German Americans to internment camps, Truman’s integration of the armed forces, or Eisenhower’s desegregation of the schools?

US Presidents have throughout America’s history issued executive orders to instruct federal agencies to promulgate administrative regulations to circumvent the US Congress. US Presidents have issued executive orders calling upon federal agencies, such as the US Environmental Protection Agency (EPA) and the US Department of Energy (DOE), to amend administrative regulations. If this stonewalling appears to be 14 months of harm to America as our economy nosedives toward the 2012 elections, should this year be a year to test the power of the executive order in amending the Fed’s authority over our banking system?

President Obama also has the power of the presidential proclamation. He can declare the requirement of private industry to obey laws and regulations. He can define conditions that become legal or economic truth and his orders to those outside government will carry the same force of law as executive orders.

Remember George Washington’s Proclamation of Neutrality in 1793 or Lincoln’s Emancipation Proclamation in 1863? Recall Bill Clinton’s declaration of federal lands for national monuments or George W. Bush’s declaration of the areas affected by Hurricane Katrina as disaster areas. In this critical time of economic travail should President Obama not direct the rating agencies to prepare a plan for credit amnesty for our businesses and citizens that practice good faith repayment of debts from this point forwarded?

Be bold Mr. President and join FDR in protecting the next century of America’s prosperity. Use the powers vested in you by the Constitution of the United States to train the will of an unruly Congress on two critical needs of a suffering American economy.