A letter to Senator John McCain (edit/delete)

Wow! Joe Can't Spend Money? Only the Big Cats Can.

McCain bailout: New and workable, or desperate?

 McCain's proposal, which he calls the American Homeownership Resurgence Plan, would mandate it.

Consumers pay down debt for first time in 10 years  Outstanding debt falls by record $7.5 billion in August, Fed says.  (NOTE: To my surprise, this is the first sign to show us that U. S. economy may follow the so-called "Balance Sheet Recession" happen in Japan 18 years ago.  If it is the case, problem is no body wants to borrow money to expand his business or upgrade life style, not credit availability or financial freeze. )

My Honorable Senator McCain:

Let's do the American Insurgence (not Resurgence) Plan as what has happening in Iraq or Mao tse-tung did in battlefield, My dearest McCcain.  As a conservative capitalist as you are, the last thing I like to see is for you to lose the game. 

Please figure out a simple and workable plan as I put into my "AIP" above (Please take a note: It is not AIG who is just given additional fund of $37.8 billion after they got $86 billion and enjoyed a luxury weekend in California.)   

Go to the basic of business.  Do it simple, you will meet the minds of the root of our country.  American people will easily understand what you say and know you mean business:  to directly help the poor folks without complexity and bureaucracy.   Then, you can knock Obama off the balance and get the economic agenda back at your hands to the advantage of you.

Please I beg you do something real, efficient and effective to the cause of problems for the America.

God bless you! 

ps. The AIP makes sense if you consider:

       1. The $700 billion will equally distribute to every family in America.  No bureaucracy red tape involved.  No discrimination allowed to differentiate those CEOs or the invisible poor folks. 

       2. It is the basic and revolutionary theory of John M. Keynes that there was no self-correcting property in the market system to keep capitalism growing and that government spending might be an esssential economic policy for a depressed capitalism trying to recover its vitality.  

Now it is the time to stimulate our system which is clogged, freeze or "dead".   Yes, the most important economic sector is industrial factories or manufactures at the time Keynes imported the idea.  So, the "new deal" basically worked on manufacturing the major infrastructure.  But, our society evolved into a service industry for 52 years.  Time is changed. Situation is relatively total different since then.  We have to do something in service sectors, not just infrastructure.

      3. What is the most important sector in our service-oriented society.  Yes, I don't blame you to first think of the banking system since it is so important.  But, to deeply think, is it really the most important force for our market or economy?  

After WWII,  the world resurgence has been counted on the Bretton Woods system until 1970'.  In fact, the system and the world finance are largely based on American consumer's spending or consumption to create the wealth in Europe or other emerging countries.  It is safe for me to say it is the major engine for the world today.

Given the fact that 80% of U. S. economic production or activities comes from American consumer spending, it should rank the number 1 factor to  our economy or the world prosperity.  Let me put it this way, there is no place for the Wall Street financial machine to operate smoothly without American consumers.  Conversely, our ancestors still can do business without the Wall Street.

Recently, we read so many reports regarding the retail projection.   Almost everyone says bad holiday sales expected.  Where those consumers go?  Why they don't spend money?  Instead, they are trying to pay back their debts.  Saving is a good deed, but at this difficult time it is probably not so good.   It is an alternative to help the economy for GWB to ask his fellow citizens to spend "tax rebate" when he gave it out last Spring.   It works for a while, but the amount of rebate is too small to do the job.

Take a look at Japan where depression prolong for 20 years since everyone wants to keep his balance sheet look good and try to conserve cash.  No one wants paper, credit or expansion.  Even the Japanese government or banks charges no interest, they can't make lending. 

To bailout the main street first to revive our consumer spending is the key to save the financial system, not the opposite.  Paulson's folks believe to bailout the wall street first.  That is the reason why they keep doing something without results and still see negative reactions of stock market.  Their wishes to keep real estate price so high to be unaffordable to business or Mr. Joe is NOT the right medicine. It is a poison.

When we create and expand American consumer's ability to spend money overnight to improve business climate, at least have rosy holidays for our retailers, we certainly have to better our skills to fix, regulate and overhaul the financial system.