For about a week now I have been hearing the Wall Street supporters saying “leave executive pay out of this package, deal with it later” while Wall Street engages in a massive sell-off to force Congress into a bail out. Yeah right. If there is a ruling on executive pay in this bail out package that will be the ONLY thing which benefits the ordinary taxpayer.
Some of you have been long time readers of this blog, no matter where it was located. You will remember that quite some time back I posted a blog here about the Ethics in Income Act which was also known as The 100 Fold Rule. Total executive compensation could not exceed 100 times that of the lowest paid employee or subcontracted worker. The only limit it imposed on executive income was a limit they imposed upon themselves by underpaying the bottom of the work force.
Flip this house
As to our current situation, there is only one correct solution, so naturally Congress and the White House will not take that approach. The mortgage backed assets are toxic because nobody knows just how much they will lose. Bailing out Wall Street is not the solution. The only correct solution is to force the issuing banks into re-financing notes on homes where people are actually living for 3%. Do not re-finance the mortgages of those who were investing or playing the “flip this house” game as both they and the banks deserve to twist in the breeze. A lot of people got conned into buying homes that simply couldn’t afford them. They could afford the initial payments, so refinancing at 3% will help the vast majority out of this debacle.
Fixing the problem
The government needs to first target the homes which have been foreclosed on and are still sitting on the open market or are in the process of being foreclosed on. Force the banks to refinance the note to the previous home owners at 3% and let them move back in. I estimate it will take less than 3 months to sweep all of those notes up which can be swept up. Some of the foreclosed properties were bought by speculators so will still be on the market, but a lot of them will be off of the market once that is done.
Phase two requires the government to force the mortgage issuing banks to refinance all mortgages at 3% which are currently on the foreclosure watch list and occupied by the mortgage holding family. By now, most of the people who were going to be in trouble are in trouble. True, some may yet lose their jobs in the downturn requiring a continuation of this program for about a year, but the bulk of the problem will be solved. Those who can afford their homes will begin buying other products which will help pull the economy out of a nose dive.
Never IT worker shortage
Phase three requires the government to ban the off-shoring of IT jobs. The best way to help this economy is to keep the highest paying jobs in this economy. The way they will force this is by imposing a $70,000 per head tax on any position sent off shore along with a $50,000 per head tax on any H1-B worker which lands in this country. There was never a shortage of IT workers, there was only a shortage of upper management types willing to pay what IT workers really cost. They also need to cap executive pay to $180K at any company that off-shores IT jobs or hires H1-B IT workers.
