Pacific Book Review   

21st Century Great Global Depression:  The Perfect Economic Storm begins by discussing the 60 year credit expansion which is  ready to pop. Over the past decade, greater margin leveraging has eroded the credit markets by expanding the caps from 12:1 to 30:1 and beyond.  The book cites a failing banking system, implosion of the housing market, undercapitalized small business, skyrocketing federal budget deficits, huge unfunded liabilities, loss of the manufacturing base, burgeoning military commitments, overdependence on foreign oil, the decline in the education system, derivatives and the aging baby boomer generation. None of the these problems are easy to solve; however, a detailed resolution critique will be presented. 

(1) Not all of the banking system is in a failing mode.  Thousands of smaller banks have continued to prosper in the 2008 period and beyond. Our banking system should emulate the success models. 

(2) The residential housing market imploded because many unworthy borrowers were given credit although there was little possibility that the mortgages could be repaid. The solution would have been to expand the Section 8 housing program instead of placing poor credit risks into a mortgage . In addition, a bank could make a decent profit at a 4 to 5% mortgage. Pricing mortgages above this level merely invited trouble. In addition, we need to get back to the idea of the family farm to grow more food and eat organic. 

(3) The government should have provided more stimulus money to small businesses- the engines of economic growth over the past 
several decades. 

(4) Federal spending needs to be aligned to the growth increments in the GDP. Spending beyond that leads to fiscal irresponsibility. 

(5) Baby bonds at birth would provide a huge funding mechanism over a person's lifetime. The growth of $1 over 70 years or more can be as much as $1000 or more for every dollar invested.  This is the way to fund many social programs. There is another way; namely, taxing excess consumption or wasteful consumption at much higher rates. 

(6) There is an historic opportunity to build the manufacturing base with solar products, hybrid cars, the "artificial sun" fusion power, high speed rails and servicing , infrastructure, wind power and a plethora of new industries too numerous to mention in a finite review. 

(7) Military commitments should be kept to a predefined percentage of GDP. 3 % of GDP would be a good reference point. In addition, the USA should make better use of commandos and unmanned monitoring devices in the field. 

(8) There is no sane reason for over-dependence on foreign oil.  The USA has over 400 years coal reserve, centuries of natural gas supplies plus outer space supplies on Saturn, the artificial sun, solar energy and wind energy. 

(9) The education system should emphasize training in the new trades, as well as academic education. More working professionals should be employed by the schools to add a practical dimension to the education itself. 

(10) Deal with unfunded or underfunded liabilities by taxing junk food, hard liquor, tobacco and a host of activities which have nothing to do with health. 

(11) Derivatives need to be defined in the Uniform Commercial Code.  The rights, duties, responsibilities and recourse of the parties and counterparties to derivative transactions must be set forth unequivocally so that Courts can interpret contracts more easily. 

(12) Real estate is in temporary decline yet the global population marches on.  The rule in real estate has always been location. Properties in 
highly desired areas have continued to rise in value despite the global recession. This rule will never change. 

(13) The aging baby boomers are not a liability at retirement.  They are an asset. Their training and education should be utilized to pave the way for the next generation to take over industries of the future. Many already make significant contributions via burgeoning small businesses on the internet and elsewhere. 

This book is a good starting point aimed at securing a brighter global economic future for us all. The author should look again at some of 
the comments made above to secure a permanent end to the Great Recession.