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How we got into the economic mess, and how we can get ourselves out

November 16, 2011
The Intelligencer / Wheeling News-Register

Here is how we got into this economic mess, and how to get us out.

Go back to October 2008, the day the credit system choked. At that moment, everybody had bad credit. When it got moving again, only the highest rated people and companies had good credit. Border line companies were having their notes and loans called in. Many companies could not meet payroll going from day to day. Thousands were headed fro bankruptcy. Not even big companies escaped - GM, AIG, etc ...

Individuals woke up to find their credit card bill quadruple overnight. Millions were forced into bankruptcy. Credit went from wild west to tight as a slipknot overnight. Consumer credit is history!

Consumer goods purchases, highly dependent upon credit card purchases, dried up like a Texas drought.

Speculated housing sales and ARM red line housing loans caused a collapse of the housing market.

Suddenly we went from a loose credit boom economy to a hangman's slipknot credit policy. If you did not have the cash to back up your purchases, no credit available. The result was 10 percent-plus employment. We are still there.

The risk takers were all ruined in October 2008. Without them, there is no growth on the margins of the economy. These leaders are now out of the economy on unemployment. Any new ideas for new business will not get a loan in a hangman's slipknot credit world.

The economy languishes as big money continues to invest in China and emerging markets. Warren Buffet invests in China.

To start the ball rolling again, we must have a re-assessment of our credit rating system now. A business loan must have included in the assessment how many unemployed people will be taken off unemployed rolls and put back to work.

The more hired, the higher the credit rating for the loan.

This policy must be held in place until the unemployment level falls to under 5 percent. Individual credit rates must grow at much faster healing rate for good, learn-their-lessons consumers. We must loosen up the credit knot!

In 1929, millions were reduced to poverty, and wiped out. It took wartime production to put many back to work, while 7 million ended up in uniform employed by Uncle Sam. The risk takers were on the battlefield then. You either worked at war production or the battlefield.

We do not have that option. We must have a buy American, build American, hire American campaign until millions of the American unemployed get to work.

Rates of American savings have increased, but with cheap imports flooding over our borders the American worker will stay unemployed.

Somehow we must find the way for American labor costs to be competitive against foreign good.

If necessary, we must tax imports to finance American business with American labor. This is only temporary until the USA unemployment falls to 5 percent or less.

Throwing money at the problem has not worked. Stimulus after stimulus has produced stagnation, not growth. We need a new credit and banking system. We need protection from cheap imports without producing American jobs. we need credit for jobs now.

Michelle Petri


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