The average working person saw wages stagnate, go down or jobs disappear. Goldman Sachs knows better than to plead ignorance about the causes of the continuing recession and slowdown in the economy. We can only hope that Goldman Sachs will soon know what it is to share the pain they themselves caused!
Charles Hugh Smith (of two minds.com) has a plan to restore the banking and real estate sectors of the economy that should make Goldman Sachs wince. (Thanks to a reader's post).
You Want to Fix the U.S. Economy? Here's a Start
By Charles Hugh Smith - of two minds
A simple 8-point plan would restore both the banking and the real estate sectors, and end the political dominance of the parasitic "too big to fail" banks.
Craven politicos and clueless Federal Reserve economists are always bleating about how they want to fix the U.S. economy and restore "aggregate demand." OK, here's how to start:
1. Force all banks to mark all their assets to market at the end of each trading day, including all derivatives of all types, including over-the-counter instruments.
2. Allow citizens to discharge all mortgage and student loan debt in bankruptcy court, just like any other debt.
3. Banks must mark all their real estate to market weekly as defined by "last sales of nearby properties" adjusted for square footage and other quantifiable measures (i.e. like Zillow.com).
4. Require mortgage servicers and all owners of mortgage-backed securities to mark every asset within each pool to market weekly.
5. Any mortgage, loan or note which was fraudulently originated, packaged and sold, including the misrepresentation of risk, the manipulation of risk ratings, fraudulent documentation by any party, etc., will be discharged as uncollectable and the full value wiped off the books and title records without recourse by any of the parties.
If a bank fraudulently originated a mortgage and the buyer misrepresented material facts on the mortgage documents, then both parties lose all claim to the note and the underlying asset, the house, which reverts to the FDIC for liquidation, with the proceeds going towards creditors' claims against the bank.
6. Any bank which misrepresents marked-to-market asset values will be fined $10 million per incident.
7. Any bank which is insolvent at the end of a trading day will be closed and taken over by the FDIC the following day, and liquidated in an orderly manner via open-market auctions of all assets, including REO (real estate owned).
8. All derivative positions held by the insolvent bank will be unwound immediately, and counterparties who fail to make good on their claims will also be closed, given to the FDIC and liquidated.
You know what this is, of course: a return to trustworthy, transparent accounting. And you know what the consequences would be, too: all five "too big to fail" banks would instantly be declared insolvent, and most of the other top-25 big banks would also be closed and liquidated.
Read the entire article here