Mike Norman solution to the ongoing crisis

1) Fed needs to lend to all banks on an open basis, without term and limit and accept all collateral as stated on their discount window list of collateral. (Even if this means abandoning their interest rate target temporarily.)

2) The Fed must expand FX dollar swap lines to foreign central banks. There is an acute shortage of dollars in financial markets around the world and the Fed, as monopoly issuer, must provide much more to normalize rates such as Libor. (There could be resistance to this on the part of the ECB, which might feel as if the euro were becoming a "dollar-backed" currency, but with the recent rate cut and statements by Trichet about cutting rates even more, attitudes may be changing.)

3) Treasury should immediately rescind its comment about "taking ownership stakes in banks." This is highly irresponsible in that it threatens the holdings of existing shareholders. Moreover, the government already has an "ownership" stake in all corporations via the 35% corporate tax rate. That's enough of a "payback" to taxpayers. In cases where the Treasury deems it necessary to provide capital, they must do that without it being punitive to existing shareholders.

4) Congress must authorize an immediate fiscal package that includes:

-$500 billion for infrasructure projects
-Immediate short-term loans to states
-R&D spending on altenative energy
-Increase in Medicare, Medicaid spending
-Extension of unemployment benefits
-A cut or temporary elimination of the payroll tax

5) Suspend mark-to-market accounting

6) Open-ended ban short selling.

7) Ban pension funds and other institutional investors from buying crude oil, gasoline, corn and other important commodities. Impose strict position limits on all speculative futures trading activity.

These above actions would function to restore global financial sector liquidity, bolster confidence on the part of risk taking equity investors, boost aggregate demand and long-term productive capital stock, and limit speculative excess that has been driving oil and food prices higher.

If you agree with the above please send a copy of this to your Congressional representatives.