The Economic Mess and what will help to get us out of it!

1. Eliminate taxable income from Passbook and Certificate of deposits held in banks and credit unions and other federal and state chartered banks up to the $100,000 in tax free income per year. Make it mandatory that banks raise the minimum interest earned to at least 2% for regular passbook savings accounts. Banks can then increase the Certificate of Deposits interest rates according to the their profit margins. The free market then would allow cash flow, that provides for mortgages, consumer loans.

2. Increase the FDIC Max Guaranty currently at $100,000. obviously raise fees for the cost of FDIC coverage.

3. Reduce the Federal Capital Gains Tax to .05%, this would generate cash flow into the treasury by encouraging those who have long term capital gains to cash in their gain and turn over money. This would have an enormous effect in raising revenue to the federal government. This would also encourage States that have capital gains taxes in line with the federal government to raise state revenue. More revenue, helps not only the federal government, but also the state and local governments operate much more efficiently without the additional burden of raising taxes that can be counter productive.

4. Encourage American Consumers to buy American. A tax credit goes along way to drive the dollars spent goods and services produced by the American public. It creates jobs, and that's good for the economy. Goods that are made by foreign companies that have at least 40% made in the U.S. should fall in that category and taxpaying consumers should be able to deduct interest or get a tax credit to buy American.

5. Raise the FICA to a maximum ceiling from $102,000 to $500,000 on personal incomes. It makes no sense to allow the social security system to go bankrupt on the seniors and the future generation of seniors who help build this country. It makes no sense to allow the social security system to go bankrupt, which will affect every senior and future generations of seniors.

6. Mandate Automakers to build an energy efficient automobile with strict deadlines and incentive that make sense by allowing them special tax credits for doing it. This will help us in the long run to reduce our dependency from foreign oil. If were going to bail out the economy, we can use real incentives that are productive and not a false give away, that put us into debt without producing any real stimulus.

Stated income Programs was not the reasons why mortgages went bad, they been out since the mid 90's. Most people don't understand how the entire money system works. The real problem began with the Federal Reserve, as the housing market flourished, so did the economy. as 2002,2003. when the market continued to heat up, the Federal Reserve did the correct action by raising short term interest. However, they went over board, by raising short term interest rates for 17 months consecutive months without thinking of the consequences, and took a wait and see attitude for almost a year and a half. The economy started on a downward trend as the real estate was slowing to a crawl, so did the economy. What the federal reserve did, was inaction. This Wait and See attitude let the United States and the World economy go bust, and it got out of control.

What the Federal Reserve should have done is a little to late , but needs to be said anyway.

1. The Federal Reserves should have stopped raising the fed funds rate by the last quarter of 2005. By continuing to raise short term interest rates, this help fuel the fire that Wall Street was not prepared for. The two tiered type mortgage loans provided by Wall Street, also known as 80/20 mortgage's or 100% financing, was directly tied to the Home Equity Lines of credit, that was directly effected by the raising the fed funds rate. This was the avalanche that ultimately help put us in this mess.

2. The Federal Reserve had an obligation to inform the money markets that provided capital for mortgages, that they may want to curtail or cut back on riskier type mortgages.

3. The Federal Reserve should have warned the GSE that it may become necessary to raise the Conforming Loan Limits, that was at the time set at $417,000. Fannie Mae, and Freddie Mac, as well as FHA had provided cash flow to the primary mortgage market by way of selling mortgage back securities to fannie and freddie.

Our Economy has been based on credit, ever since Pres. Nixon, took us off the gold standard back in 1971, without the secondary market providing needed capital back to mortgage industry, those banks, savings and loans mortgage holders that help provide financing for many first time buyers, as well as move up buyers, and helping existing homeowners to refinance to lower their mortgage payments, remodel their homes, etc., This Secondery Market helps recycle mortgage money to keep it solvent and flurhing, without it, homeowners, mortgage holders would be doomed for calamity, and that exactly what's been part of the problem.

This Financial snowball got out of hand, when the Federal Reserve, Politician's and the newsmedia got involved, so did panic. We normally have a 1% to 2% Delinquency rate that forces people into the Foreclosure process due to death, illness, divorce, unemployment and other calamities as well as those ill-responsible people who don't take paying their bills seriously. Looking at the problems we face today, could have been avoided in many ways.

4. One of the actions that the Fed. Chairmen was to act hastily in the decession to eliminate stated income programs. Many professionals, and Business Owners used these programs without problems for at lease 12 to 15 years when they appeared. The Federal Reserve needs realize that it hurt middle America. They need to ease up on the restriction as far as stated income for professionals, and business owners with sufficient assets to match the flow of income. Most business and professionals carry losses that may be difficult for most underwriters to understand because of complicated tax laws that provide various treatment, yet the flow of income is present. The big part of the equation, is at least 20% to 25% of all the mortgages that are originated each year, were from the business and professional community, and the majority experience very little in defaults. Entry level home buyers, allowed by Wall Street, to use this program, in conjunction with 100% financing, that was created by wall street, along with unscrupulous mortgage lending practitioner that helped defecate this program to many good hard working professionals.

If we are to get out of this mess, we need to think with our logic, not panic. At this point, were to deep in the hole, and the rest of the world. I don't often agree with the President, but we laid our cards on the table, and too late to turn back now. Let's fix the problem. Thank's Rush. Please pass this along to your readers and John McCain.

Carlos R. Arvizu Sr.
Downey, California
TheDon1950@aol.com