In his recent article, “How To Get The Economy Back On Track”, Brandon Turbeville just gave us something to chew on. He’s on the right track, alright, but he’s missing just one important point. See if you can guess what it is as you digest Brandon’s thoughtful solutions

“The causes of the economic malaise of the American people (as a result of the banker bailout) are not as complex as one might imagine”, he begins. “The ability to completely reverse the situation is actually right at out fingertips, whenever we choose to act. Here are some very basic solutions.

– “The TARP legislation must be repealed by Congress. No remnant of the authority to shift the burden of bad business decisions or financial gambles by financiers to the backs of the taxpayer should remain on the books. All backdoors to the US Treasury must be closed immediately, and they must be closed by force of law and by the repeal of the TARP.

– “We must seize failed banks and financial institutions using the mechanisms of the FDIC and other relevant regulatory agencies. These insolvent forms are zombie institutions and must be treated as such. The only reason they exist is because the American taxpayer was forced to bail them out. Their insolvency must not be allowed to bring down the US economy or destroy the pension funds of American workers. Therefore, not only must they be seized as the zombie banks and institutions that they are, their assets must be liquidated. All money loaned or granted to these institutions by the Treasury/Federal Reserve must be returned to the US Treasury.

– “Those individuals who have lost their pensions or investments as a result of the housing market/derivatives crisis must have their investments and pensions insured to the full extent guaranteed by the FDIC. These payments must be made directly to the investor and not to the bank, so as to avoid shoring up the institution and continuing the moral hazard the FDIC has become.

– “Any remaining money after this process must be applied and paid out to pension funds first. If there is any residual money left over after assets have been liquidated and pension funds returned to the pensioner etc., the money must be transferred to the US Treasury.

“This must be the process in the face of any further bank insolvency or shutdowns:

– “Pass a law that bans derivatives. The reasoning behind this is simple: derivatives are not real money, nor are they real assets – they are toxic crap that must be removed from the system so they do not jeopardize the economy ever again. Derivatives were a major factor in the economic collapse and they were a trigger for the current crisis. They are inherently an economic risk. Therefore, in order to prevent such an event from occurring again, we must pass a law that bans derivatives.

– “Levy a 1% trading tax on financial transactions such as stocks, bonds, foreign exchanges, or commodities. This tax must not be applied to small transactions conducted between individuals and their banks (such as check cashing, deposits, or payment by check or debit card, etc.) This tax should be applied especially to: program trading, high-frequency trading, and flash trading. It should apply to transactions made between financial and banking institutions. This move alone would generate an enormous amount of revenue for the social safety net, infrastructure programs, etc. as well as functioning as a discouragement to further financial speculation.

– “Ban credit default swaps. This will not only remove unnecessary risk from the economy, but it will remove the vast moral hazard to sabotage these financial instruments to accrue profit.

– “Reinstate a form of the Glass-Steagall Act to separate banks, brokerage firms, and insurance firms from each other. These institutions should no longer be allowed to combine and act as one entity. This will create a firewall of protection not only for the institutions themselves, but for their clients, consumers, and the economy as a whole. The removal of Glass-Steagall was a precipitating factor in the economic crisis. We must not allow such a crisis to happen again.

– “Reinstate Chapter 11 bankruptcy options for individuals. There are times when one’s personal finances become insolvent. Reinstating these provisions is only fair considering the fact that they still exist for large corporate firms.

– “Ban adjustable rate mortgages. This brand of mortgages, along with the widespread corruption of lenders, was a major factor in the housing crash. Adjustable rate mortgages serve no purpose except, at best, to provide the borrower with temporarily low rates and the guarantee of massive profits for the lender regardless of the outcome of the mortgage. They are particularly hard to regulate and almost always lead to foreclosure.

– “Immediately halt ALL foreclosures on primary residences, businesses, and farms for at least five years, or until the end of the depression/economic crisis. This will allow Americans to stay in their homes, businesses to continue operating, and farms to continue producing food. This delay in the process of foreclosures will allow businesses and individuals to survive the crisis until they are able to resume paying their mortgages and repaying their loans.” –

If and when all these steps were taken, the financial set up would be in pretty good shape. It’s not likely that the US taxpayer could ever again be victimized by charlatans and shenanigans. But – you guessed it – what about jobs? Brandon – like everyone else – can cite all the effects of our economic travail but fails to finger the cause. Every financial hardship thrust upon the average American could have been handled if only a weekly paycheck had been available. The millions of pink slips handed out over the past decade brought about (i.e. caused) the housing crash, the foreclosures, the homeless, the unemployment lines, food stamps – and the whole illegal bailout mess.

We need millions of jobs. Millions of ’em. Revitalize our shipyards – again!