Here is what Barack Obama and the Democrats need to do at next weeks convention. They need to explain the contrast between the Democratic parties platform and the platform revealed by the Republicans last week. While doing this, major falsehoods expressed by Republicans must be addressed.
Obama must debunk the fallacy that the country is worse off than it was four years ago. The events causing the collapse of housing and stock markets did not happen in the fall of 2008. The fall of 2008 was when the market, and thus the country, acknowledged the devastation of home values brought about by sub-prime lending throughout the first eight years of this century. It is like you opened a $50,000 savings account in the year 2000 and someone went online in 2004 and stole it; however, you did not discover it until 2008. When were you actually out the $50,000; in 2004 or 2008?
In the normal course of banking and finance, holders of financial assets are required to establish a reserve for losses against assets acquired. When a bank makes a car loan they immediately set up a loss reserve. No lender expects a specific loan to default on the day the loan is made. However, an experienced lender knows that a certain percentage of loans made will end up in default. He just does not know which specific loans will fail.
If proper loss reserves were established as sub prime loans were originated, the housing bubble would not have occurred. Wall Street pulled a bait and switch on the American economy and so far has paid no retribution for their greed. The bad news is the economy would have been in recession much earlier and unemployment would have been much higher during the middle of the last decade. The recession however, would never have gotten out of hand and turned into a near depression.
President Obama is being blamed for the depression-like recession that we are experiencing when in fact the seeds were sown long before he took office. Further, a downturn of this magnitude does not turn around quickly. When he took office we were losing 700,000 jobs each month. We are now adding approximately 200,000 jobs monthly. This is a big turnaround; however, there is still much pain and suffering occurring.
Obama then needs to state his objectives for the next four years which should include the following:
1. Continue the process of pulling out of Afghanistan.
2. Enforce anti-trust legislation in those industries controlled by oligopolies.
3. Invoke the Volcker Rule and break-up banks that are too big to fail.
4. Develop and implement a long term plan that will resolve our debt issue. This includes raising taxes on the wealthy and making cuts to expenditures, including entitlement programs, if necessary.
5. Further stimulate the economy, thus creating jobs, by making sound investments in our future including infrastructure, internet upgrades, education, transportation, energy exploration and rebuilding some inner cities that make sense.
6. Aggressively seek retribution, whether in criminal or civil courts, from entities causing the sub prime meltdown using the proceeds to assist homeowners damaged to get relief. This, in affect, will be a stimulus costing the taxpayers very little.
7. Commit to improving education for it is the surest road out of poverty and low wages.
8. Enforce anti-trust legislation in those industries controlled by oligopolies.
9. Fight to repeal the Supreme Courts decision on Citizens United by amending the constitution.
The Republicans spent their convention touting the wonderful job small business does to create jobs. They are correct and acknowledge it. However, make very clear that the republicans sold out small business to crony capitalists by accepting egregious contributions, bribes, from their chums that Paul Ryan spoke of in the Financial Times in July of this year.
“Both political parties have fallen victim to “partnership” with large and well-connected companies, especially in energy, housing, finance and healthcare. Republicans have been guilty of confusing our pro-market principles with pro-entrenched business policies…. A growing coalition of reformers … reject this pernicious crony capitalism. Our solutions promote an opportunity society, one that is rooted in the US commitment to free enterprise.”
The GOP is going to find it difficult to break-up the oligarchs that control wall street, banking, broadcasting, the internet and many other industries that are in the way of small businesses being able to compete. These oligarchs are also in position to hold down wages because they need to compete less for labor as they drive their competitors out of business.