Joe Pags

I was recently directed to the website of a conservative radio talk show host named Joe Pags. The person directing me encouraged me to take up a challenge of explaining Senator Obama's proposals for steering us through the economic crisis. The following is my letter to Joe:

Hi Joe,

I was directed to your show by someone who knows you from an IRC debate room we both frequent. She indicated that you challenged Obama supporters to call/write in with an explanation as to how Senator Obama would go about fixing the economic crisis as President. I wish to do my best to explain that to you now.

First off, it's worth mentioning that this crisis is too far reaching and massive, at this stage, for there to exist some kind of quick or easy fix. This is true regardless of which Presidential candidate one might discuss. However, I the approaches Senator Obama has outlined, in conjunction with the bi-partisan efforts of the Congress both prior to the election and immediately following, as recently announced, to be more trustworthy and forward looking than any alternatives from the McCain campaign.

The immediate goal in addressing the crisis is to get money flowing again. If the money doesn't flow, things stop in all directions. Companies stop expanding, growth slows, and people at the bottom of the chain wind up with less liquidity. The massive debts accumulated by the financial markets are the reason for this and so they must find a way to absorb that debt or have it absorbed by something bigger and able to handle it.

This is the reason for the buy-in plan approved by the Congress, to be phased in gradually and with oversight each step of the way to ensure the money is being properly utilized. We have yet to see the actual numbers for how this is going to work, as the Treasury only announced today they would begin the cash flow, but I would imagine it will look very similar to the AIG buy-in. That deal encompasses a 24 month term on around $100 billion at around 11.5% interest. The collateral for this loan is the share-stake the government now owns in the company. With the dividends from that share-stake and the interest payments on the loan, the Treasury will net a cool $12 billion in returns on top of the loan amount.

I would point out that both Senators Obama and McCain supported that proposal, similar to what's being seen all over the world among other nations facing a similar crisis.

This had the intended effect today, with the Dow Jones seeing the highest single day gain of points in its history, following historical losses over the last several weeks. As this money actually starts to flow, I would predict some Dow stabilization in the mid-8000 range. Additionally, we should see inter-bank lending increase, which results in overall lending releases. Again, this is not a quick fix, as it's requiring a massive cash outlay by the government to prop up the economy until it revitalizes itself through growth.

Senator Obama's more specific proposals include middle class tax cuts in addition to an emergency measure allowing individuals to withdraw from the retirement accounts up to $10,000 penalty-free to prop up their own financial states. Drilling down to the root problems of the crisis, he proposes a 90 day moratorium on foreclosures on individuals making good-faith efforts to pay their loans. Additional measures call for tax credits on small businesses which add jobs, up to $3000 for each new job added.

These are short to mid-term efforts. The much longer-term effort will be to avoid the expected 60% spike in foreclosed on homes coming next year, following the jump from 129,000 homes 2 years to the present 811,000. The bleeding has to be stopped first.

Working longer term will require coordinated efforts among world leaders and lenders to enact similar measures to keep the global economy functioning. Senator Obama has repeatedly expressed his willingness to work with other leaders even as he has maintained support for the Treasury to make use of its existing and newly granted powers to carefully absorb and prop up ailing but critical financial institutions, using the power of the the US government's backed dollars.

At the end of the page, the US dollar is backed not by metals but by confidence that the US will survive and will continue to grow and prosper. Leveraging this confidence is a tremendous power of the government and will require a careful and thoughtful president working with a united Congress to ensure monies are monitored closely and regulations are put back in place to ensure this never happens again. Though I have not yet heard it mentioned, I would imagine the Gramm Act will be up for repeal in the next Congressional term.

I would be happy to enter into a dialogue with you on any of these points or others with regard to Senator Obama's proposal. I place myself at your convenience to speak in any manner you wish, via any of the methods listed below. Thank you for taking the time to read this admittedly lengthy message and I hope to hear from you soon.


Brian Ragle

bragle@gmail.com

www.brianragle.com

on IRC at irc.dal.net : #christiandebate, #obama2008, #obama2012, #politics&religion, #democrats