Well, I opened my big mouth

I opened my big mouth and whined about the stupid "bailout' in my post "Congressional IQ". So Jim Gatos called by bluff and asked what should be done about it. Well, in order to have the right to whine, one must also have some suggestions to fix the thing he is whining about, so here is my reply to what Jim asked. You can read Jim's comment here: Jim's comment and here is my reply:

Hey Jim,

For more on what is causing this financial meltdown watch this video: Money as Debt

You asked, "first is what should be done, and secondly is what can the country do to make sure this mess doesn't happen again."

Interestingly there was a law that could have prevented this sort of thing from happening. It was called the Glass-Steagall Act and it prohibited investment banks from acting as commercial banks. Investment banks (which make speculative bets) could not own commercial banks (which accept savings deposits from customers) and so depositor's savings would not be put into risky investments.

The Glass-Steagall Act was made law shortly after the Great Depression and was meant to help stop another such depression. The Act was repealed in 1999 after the banking industry poured $200 million into lobbying efforts to get rid of it. See this article for much more data: The Con In Central Bankers' Confidence. A fascinating (though scary) article which explains a lot about how we got into this mess.

Your questions are tough to answer. Here is what I'd do if I were in a position of power: I would apply the "Danger Formula" - a part of Scientology Ethics. Here are the steps of the formula (in quotes) and what I would do. My suggestions are based on the little data that I have on this mess. I'm sure people who know more about it could come up with better ideas.

Also the actions I suggest to take are my suggestions only and have nothing to do with my Church. The Church of Scientology does not get involved in politics or government.

"1. Bypass (ignore the junior or juniors normally in charge of the activity and handle it personally)"
I would bypass the financial institutions which brought this about. The next step of the formula gives what I'd then do.

"2. Handle the situation and any danger in it."
There are a couple of ways this could be done.

a) To handle the "credit crunch": the government could set up its own agency to give loans to businesses and individuals. They already have the SBA in place so its role could be expanded.

The rules for qualifying for a loan could be set to the same rules as the average bank followed before the craziness hit.

Once this agency starts giving out loans, following reasonable qualification requirements, it is likely that banks would start to follow suit and lend out on similar terms. Otherwise they'll go broke because no one will be getting loans from them.

Also the government could mandate the rules banks must follow to decide who can get a loan. This will bypass the psychotic pendulum swing that went from "Yes I will give your pet duck a loan" to "You need a credit score of 25,000 to qualify for a $10 loan".

The end product of these handlings is that loans will start to flow again but following sane loan qualification guidelines.

b) To handle the problem of homeowners not being able to pay their mortgages: one handling would be to allow them to change their mortgages from 30 year to 40, 50 or 60 year mortgages. This would reduce their monthly payment and allow them to stay in their home and allow banks to keep the house on their books as an asset.

I'm sure the bright boys and girls in the banking industry can think of other solutions. So people who made dumb mortgage choices (with the help of unethical banks) can keep a roof over their heads.

c) To handle the problem of banks with worthless "assets" on their books. With steps a) and b) underway the housing market should be starting to recover. So the value of houses will be better. The banks should fix up foreclosed houses so they can be sold - perhaps at a loss but at least at a price in a recovering market. They could also offer longer-term mortgages so more people can afford to buy with less chance of being unable to pay three or four years down the road.

"3. Assign the area where it had to be handled a Danger condition."
Tell the financial sector that they are in trouble and better get their act together otherwise they'll be out of a job and in even bigger trouble.

"4. Assign each individual connected with the Danger condition a Personal Danger condition and enforce that they follow the formula completely, and if they do not do so, do a full Ethics investigation and take all actions indicated."
(The steps of the Personal Danger Formula are similar to the steps here. If you want to know more then buy the book Introduction to Scientology Ethics)

First, every individual in the sectors of the financial industry where this happened have to write up, in exact detail, the crimes and other unethical actions they did or were involved with. If they do an honest job of this then the penalties will be lessened. If they don't and their activities and crimes are found out later then the penalties will be increased. Then they do the steps of the Personal Danger Formula.

I'd also have further investigations carried out based on what came up in these write-ups. All crimes found would be made public and prosecuted.

I would also have a major investigation convened into the revoking of the Glass-Steagall Act. Every politician who voted for its revocation, every lobbyists who lobbied to have it revoked and those who funded them would be looked into. Everything found would be made public and all crimes prosecuted.

"5. Reorganize the activity so that the situation does not repeat."
I would disband the Federal Reserve and put the country back onto the Gold Standard, initially. On a longer term I would find another standard to use that reflects the productivity of the country rather than how much gold we have in reserve. For example, use the GNP as the basis for how much money we can allow in circulation. We produce a billion dollars worth of product then we can issue that many dollars.

I would make the issuance of money follow the Constitution.

I would abolish income tax and replace it with a national sales tax. This would encourage people to save and would only tax them when they spend.

I would figure out a way to phase out the fractional reserve system of banking and get to a much more rational system that doesn't cause inflation and the sort of crash we are experiencing.

"6. Recommend any firm policy that will hereafter detect and/or prevent the condition from recurring."

Reinstate the Glass-Steagall Act.

Add learning about money to school curricula: its history, how it is manipulated, how the fractional reserve system was used by bankers to amass huge personal fortunes and power, how the Federal Reserve system brought about the current mess, basics on how to stay solvent, how to balance your check book, etc., etc. That way future generations won't get fooled again.

There are probably lots of other things that can be done, but this is not my field, so I'll leave it up to people who know more about it.

So, Jim, that's my suggestion.

Scientology As A Philosophy (6)

One important part of Scientology Ethics are the Condition Formulas. A condition is an operating state. For example a business is doing a bit better than it was before so it is in a "Normal" condition. A ship about to hit an iceberg is in a "Danger" condition.

A Condition Formula is a sort of recipe for handling the existing condition and moving into a better one. For example, if you had just gotten another speeding ticket and one more will mean your license may be suspended then you need to take steps not just to avoid the problems of a suspended license but also the fact that you are driving recklessly. The Danger formula gives you the steps to handle the immediate danger and then to reorganize your life so the condition is completely handled and won't reoccur.

There is a very good course that trains you on what the conditions are, what the formulas are and how to apply them: How to Improve Conditions in Life Course.

Scientology is Wisdom: Ethics

One area of philosophy which has been made incredibly complicated over the centuries is the subject of ethics. Just try and look it up and get a basic understanding of it from an average encyclopedia and you'll probably be left with a big question mark hovering over your head.

Ethics in Scientology is described in a way that anyone can understand and use to improve their own lives and the lives of those around them.

Ethics actually consists of rationality toward the highest level of survival for the individual, the future race, the group, Mankind and the other dynamics [areas of life] taken up collectively. Ethics are reason. Man's greatest weapon is his reason.

Ethics consists simply of the actions an individual takes on himself. it is a personal thing. When one is ethical ... it is by his own determinism and is done by himself.

- L. Ron Hubbard from the book "Introduction to Scientology Ethics"

So ethics is basically the subject that covers what actions one should take in order to survive, not just for yourself, but for all areas of existence.

And by "survive", I don't mean bare necessity. Survival at an optimum level must include having enough of the things one needs to survive and having some reserve in case of emergency. If it cost you $400 a week to live and you make $400 a week then you are living on a knife edge and barely surviving. If you need $400 and you make $4,000 then you are going to be surviving very well.

It is not always easy to figure out what actions you should take in order to survive. How do you know if an action is going to help or hinder? For example, in the current economic state many companies are cutting back on their advertising budgets. Is that going to help their survival or hinder it? That question is answered in Scientology Ethics.

In Scientology we have a set of things called the Ethics Conditions and a formula for each Condition to improve it. Example: there is an Ethics Condition called "emergency" which is the condition where things are either staying the same or are just starting to get worse. Let's say you've been making the same wage for five years and have not had a raise in all that time. You are in emergency. Your wage is actually less than it was five years ago because of inflation: things cost more than they used to but you are not making more so you can't buy as much.

So what should you do?

The steps to take to solve your situation are given in the Emergency Formula, which is a part of Scientology Ethics. This same formula also applies to the business that is starting to hit hard times because of the economic crisis. The formula for that condition will tell the business owner whether he should cut back on advertising or not.

Here we have "accumulated knowledge of life" that was "gained through experience" - which is the definition of Wisdom that I am using.

Further data on Scientology Ethics:

• Scientology is Solutions: Improving Conditions in Life
• Applying the Formula for the Danger Condition to The Economic Crisis

Scientology is Solutions: Improving Conditions in Life

Life can see pretty confusing at times. You have a thousand things going on that all seem unrelated and each one appears to require its own solution.

But with a basic understanding of the "States of Existence" and the formulas for solving or improving them, that apparent confusion that is life starts to calm down and become something you can handle and improve.

The article I linked to talks about the different states of existence but doesn't go into much detail, so I'll give you an example: Applying the Formula for the Danger Condition to The Economic Crisis.

Just knowing the states of existence (usually called the "Conditions") so you can recognize what condition some part of your life is in, and applying the formulas for improving each condition can improve any situation in your life and the lives of your family and friends.

Further study:

• How to Improve Conditions in Life Course
• Improving Conditions in Life Booklet (also called Ethics and Conditions booklet)
• Introduction to Scientology Ethics Book (contains all the data on the conditions, the formulas and much more)