American Industrial Redevelopment Bank Needed

Like some third world countries asking for basic loans to build basic infrastructure, it is time to rebuild the decimated industrial base of the American Economy.

I am not talking about municipal bonds to build schools and roads but while we are on the subject, that sounds like a good idea.

Our money system is mixed where the Fed ignores housing inflation and the underground cash economy. The Fed is myopic and only sees Wall Street as the alpha omega of any and all possible investment.

We used to have factories my fine white collared suits currently standing waist high in the debris of the current economic meltdown.

Lets get some new ideas, common sense ideas. Lets start categorizing money according to usage and national need.

Let us start to issue bonds or notes to develop industrial parks building only GREEN. Or refit obsolete automobile assembly lines to do so. It is time to archive an obsolete one size fits all banks Hamiltonian, general nineteenth century Wall Street only money need basis.

Let Americans buy Industrial Redevelopment Notes and make them tax free on interest until America regains its place in the world or at least has a safe at home industrial base to protect in its defense against foreign domination in the industrial sector. Let only industrial lending be done with this bond generated money.

Let the treasury only notes, cash/cash general purpose junk notes, continue to be issued and tax the hell out of money that does not build but only parasites and ponzis money off other money.

Our brilliant nineteenth century economists need new ideas and new formulas that put people, American people, back into all levels of economic equations and dequations.

The Bunting Dequation of Banking

There is not a whole lot on the Internet about late First Pennsylvania Bank which was one of the large regional banks in the sixties and seventies. Being a native of Philadelphia I remember gossip and talk about this institution. There was a dynamic young Turk who was President of the that bank. His ultimate failure in my opinion was in going from local and going global ahead of his time. His name was John R Bunting.

Bunting was not Ivy League but got his degree from the state supported Temple University. I think that the chairman of 1st Pa. brought him to shake things up in the usual Ivy League, Union League thin blooded banking crowd.

To make a long story short let me describe Philly in the late sixties and seventies. Philly used to be a factory town. It called itself the “workshop of the world” because of all his manual nineteenth century steam powered might. After World War II, the factory base changed. The textiles industries went south to find cheaper labor. White flight to the suburbs and across the river to New Jersey left a drain on the general economy.

Some of the big stodgy banks on south Broad Street were investment banks for the trust funds left over from the glory days of Robber Barons in coal and railroads from the nineteenth century. These banks only invested their money in stocks and bonds – money making money.

A bank like First Pennsylvania made its big money from loaning to businesses. And let’s face it business was leaving the city and the profit margins were low on loans to existing businesses in need of modernization like factories.

Talking to a realtor in the middle seventies I was told that First Pennsylvania Bank would not make a conventional home mortgage loan for less than thirty thousand dollars. The average row house in Philly was selling for 10-20 thousand at the time. Thirty thousand was the bottom end of suburban home prices.

One of the things that brought down that bank was easy money. Large origination fees and positive publicity had First Pennsylvania loaning big amounts to the then thought to be future growth market in banking – emerging third world countries. No doubt dinner with the United Nations and State Department crowd and lets not forget those big origination fees made for a long term headache and eventually demise of the largest bank in Pennsylvania and not to mention one of the oldest banks in the U.S..

There was a quasi kind of gentlemen’s agreement with the government to make loans to countries that were in line with the foreign policy goals of the United States. The government was thought to be the unofficial guarantor of such third world loans

The basic Bunting Dequation is this:

Know and keep your local base secure.
– and –
Never assume that the government will guarantee your bad loans.

I think that there will come a time in the next six to eighteen months when the U.S. government will no longer in reality be able to bail out these presently merged toxic loan based mega banks.

The catch phase in 2008 has been something like “they are too big to let them fail”.

The catch phrase in 2009 and 2010 will I think be something like “make some room to let those dinosaurs roll over and die.”

Economic Dequations - American Style

I am not talking about economic equations.

I am wondering when the prices of houses in the United States skyrocketed out of the reach for the average wage earner - where on all this pious horses***, meal ticket, economics, academic, Chinese checker rules - style federal bureaucratic equations – where did the “inflation” of the price of housing doubling and tripling and quadrupling in a decade – where were these precious announcements from the Federal Reserve Bank about this unaccounted for housing inflation?

The Economics reported in government statistics is many times footnoted to say that this or that segment of the economy with growth or downturn is factored into or out of any general prognostication or economic forecasts and the like.

Didn’t anybody in the government get fired some week or two ago when the news was announced that the recession started last December? What a joke for what passes for competence these days in the fading old dream of America. We are not laughing.

In fact I think I heard the retired Chairman of the Federal Reserve Bank deliver a few pearls of wisdom from his sermons on the mount delivered before Congress in Congressional investigative hearings. I heard a teaspoon of warning about the possible dangers of unbridled deregulation or what not. Then I heard about five pounds worth of "if workers wages go up that would be a dangerous thing – inflationary".

I am talking off the cuff here. But there are many network news stations and major newspapers who seemed to rubber stamp what seemed more like Public Relation Press Releases from the Fed instead of challenging the voodoo, K-Y jelly, free market, 24/7, non-stop economic mantra heard over American airwaves and in newspapers these past decades. That to tell you the truth, what I heard or read back when did not sound or look like the macro or micro economics 101 and 102 that I took freshman year in college.

The retired Chairman, venerated as he was for decades, was in fact retired the first day he took office for all the good or real warning or real sound economic advice that he never bothered to dispense to prevent the present financial meltdown and crisis.

"Faded Jaded Mandarin", a lyric from somewhere, would have been a better title for the Fed Chairman but let us not do the blame game. He looked out his front door and there were no riots or blood in the streets – so his Economic Dequation – like some weather reports was good with only a chance of cloudiness.

And they pay people to do this? Wow! America is a great country! (or at least it once was)