OPTIONS ARE FEW, NO WHINING ZONE

One of the problems that the U.S. has been facing is the wide disparity between interest rate policies globally. There has been a strong disincentive, based on interest rates alone, for foreigners to invest "safe money" or fixed income money in the United States.

Interest rates, in general, are much higher overseas. Money generally flows to where the returns are.

So now the Fed is more than likely contemplating lowering interest rates here once again in an attempt to increase margins for banks and thereby encourage them to lend money. The concern is that lowering rates here, in a vacuum, will only serve to weaken the dollar and further increase the disparity to foreign rates.

European, Asian, and Latin American nations have been enforcing interest rate policies that are aimed at fighting inflation. Our policies have been aimed at the opposite - inflating our economy and providing much needed liquidity to the banking system.

Until our major foreign trading partners begin to react to the coming - if not already here - recession by reducing interest rates, and reducing them significantly, we will remain in the same fix. But foreigners need confidence to invest here.

And with the inaction by Congress, indifference if you will, confidence remains lacking. Can that change, and change suddenly? Sure. Everyone has self-interest at heart. And a steep recession in the United States affects everyone. It is already taking China down, at least for the short-term. And Europe is now seeing major bank failures. We are interconnected, like it or not. We are one global community.

We can complain about American jobs being shipped overseas, decimating the middle-class here. I'm aboard with that! We can buy into Thomas Freidman's Flat World Society or not. Yes, U.S. corporations have made terrible decisions that go against the economic interests of Main Street America as well as the strategic interests of the United States.

Chrysler is threatening to stop building vehicles altogether here. Our basic steel industry, not to mention the industries that manufacture basic pharmaceutical ingredients and "everything" electronics have all largely moved overseas. The industrial capacity of the United States has been farmed out.

Misguided Republicans complain that it's all about taxes, that we have the second highest corporate tax rates in the world. But that is just a myth; OK, call it a lie. Just as the same people like to complain about how heavily the wealthy are taxed, they never take into account the plethora of tax avoidance schemes in our tax code that very effectively reduce those actual marginal tax rates.

It's not about tax policy. It's about strategic, long-term policy. It's about jobs over maximizing profits.

We are in a mess and we are digging the hole deeper and deeper. John McCain and his economic team would have us simply "dig the hole to China." Let's do what we've been doing and just get rid of all those nasty American jobs. Let's hand out electronic cards to every American. We can use them instead of real money. You know, just like in Star Trek. Everyone is assigned - somehow - an amount of credits that they can use to buy food, pay their mortgages and healthcare, go to the movies, make car payments, buy gas, etc. Let's not worry about how it all adds up at the end of the day (or "End of Days" as fundamentalist Christians would have it) because no one would be around to care. Well except for those caught up in The Rapture. Their debts would no doubt be excused.

We must stop the flood of home foreclosures, at least among people that can actually afford reasonable payments. THAT was one of the intentions of EESA. It was in the bill! If you took the time to read it. For a 110-page bill, it was actually a fast read.

If we put a halt to foreclosures, home prices will stabilize. The authorities acting under EESA would then be able to more effectively value the mortgage instruments that they would be investing in.

Some fools are calling for a change in "mark to market" accounting regulations, suggesting that banks are all to blame for the mess because they were feeling the need to actually try to value their assets, their loans and securities, at what they might be worth in the real world. Misguided Republicans AND Democrats would have us all live in a fantasy land where banks maintain mythical values in their accounting systems. Sorry, but the world does not work that way. And there have been plenty of prosecutions over the years for companies that engaged in phony accounting practices.

Let's just look the other way and surely the problems will diaappear, right? Sorry. The world is watching.

The options are few. Some have suggested simply increasing FDIC insurance limits to, say $1 million. I'm not sure what that accomplishes other than keeps folks' money in banks. But as good as that sounds - $100,000 is way too low - it does not reliquify the banking system.

Yes, we could invest $700 billion or so directly in banks and insurance companies - yes, your own insurance company likely owns gobs and gobs of those highly rated mortgage-backed securities, folks. But given the fact that the government is already guaranteeing tens of billions of dollars of debt of failing banks, etc., how far do you really think $700 billion would go? Not nearly as far as investing on the securities in question with the objective of establishing a market for them and placing real values on them.

And if you are opposed to EESA for any or all of the circulating reasons - Wall Street bailout (not true), no taxpayer protections (not true), no CEO compensation restrictions (not true), no oversight (not true), an expenditure and not an investment (not true), and oh yes, no assistance for homeowners (not true), and finally no equity interests for taxpayers (not true), you are opposed to EESA for all the wrong reasons.

Many Republicans would like to take the $700 billion, or some sum, and just invest it in the troubled banks. Talk about government interfering in free market capitalism! They can't have it both ways. But doesn't that say all that needs to be said about conservative Republicans and their inability to actually govern?

Time's Up. Options are few, no whining.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future