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RISMEDIA, July 27, 2010—Someone once remarked that the definition of insanity is doing the same thing over and over, and expecting a different outcome. Despite the willingness of many in the media to blow one small bit of good news into a full blown recovery, the things that really matter aren’t getting any better, and may be about to get worse because we just keep doing the same things over and over again.

By almost any standard, jobs, manufacturing, exports, municipal, state, business and personal bankruptcies, homelessness, health care, education and infrastructure, things have gone horribly awry.

I’ve heard it may be years before we recover, and that many of today’s unemployed may not work again for a decade. It’s hard to tally the lost productivity and social cost of that scenario

Our teachers are still smart, our first responders are still brave, our small business people are still innovative, and our workforce is the envy of the world working longer and producing more per worker than any other country on the planet.

Even if the unemployment rate were marginally improved, joblessness is spreading to families who had not yet been touched, and no job is guaranteed. Entire police forces have been laid off, and it isn’t like we are about to turn the corner anytime soon.

We’ve lost roughly eight million jobs since December 2007. For perspective, that is the equivalent of all jobs created since 2001.

Back in May, President Obama hailed the 290,000 jobs created in April, saying that job growth is “the truest measure” of economic recovery, noting that it was the highest number of jobs created in four years.

Even if that had been a turning point, it would still take more than 27 months of similar job creation before we regained the jobs lost. But, it wasn’t the turning point and jobs were actually lost in June.

Foreclosures continue unabated. Now, homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.

There are more than 7.3 million home loans in some stage of delinquency, according to Lender Processing Services.

Sure, life still is and will always be wonderful, except when the cumulative effects of our decline inevitably catch up with us.

It’s the debt.

We are treating the symptoms while ignoring the disease. Here is what no one wants to talk about; the economy cannot improve because the debt that got us here is still here.

Just look at the ratio of debt to GDP. In 2007, it was 57%, today 94%, and according to Forbes magazine, it is 840% when you factor in unfunded entitlements.

According to a research paper by Carmen M. Reinhart, Department of Economics, University of Maryland, and Kenneth S. Rogoff, Economics Department, Harvard University, titled Growth in a Time of Debt, “High debt/GDP levels (90 percent and above) are associated with notably lower growth outcomes.”

So, for all of the recent predictions of an improving economy, exactly the reverse is occurring. Seasonal variations and other events can suggest improvement in some areas, but the reality is that we are between a rock and a hard place.

Wedged between oppressive debt payments that are growing to consume the entire budget, and the difficult choice between dramatically higher taxes or budget cuts, that will destroy our local governments, we are out of wiggle room.

From observing the response of government officials, it is becoming clear that we are in uncharted waters, and the tepid and inadequate response is much like the response to the Gulf oil spill; it really doesn’t seem like anyone knows what to do about either of these problems.

The old, so called “good ideas” aren’t working

We need an idea so edgy that the concept is a little unnerving for some, makes others laugh, and will send lobbyists rushing to Washington in droves.

Note: To the financial geniuses who got us to this point, I am here with the best idea you’ll never have. Obviously, you missed the unintended consequences of the phony boom.

So listen up, don’t get testy, and let an uneducated old merchant break it down for you.

Do what I suggest and everyone will be back to work immediately. It could be done overnight.

The big wave of foreclosures yet to come will decimate our communities over the next three years, but they can be prevented.

Consumers are unwilling or unable to spend.

Except for automobiles, we no longer have a manufacturing and exporting business to offset domestic ups and downs. We are like a big small town, if somebody doesn’t buy something, we all go broke. So like it or not, it’s a consumer-driven economy that we have and it isn’t working; its getting worse, and there are no signs of recovery for a long time.

For the economy to create jobs, consumers have to be spending. For consumers to spend, they need confidence and disposable income.

Uncertainty isn’t good for the economy. Not knowing how far values will fall, not knowing when job losses will abate, and seeing no light at the end of the tunnel are paralyzing. Not just to consumers, but also to small business owners who are the hiring engines we need to pull us out of this recession. They need to know that consumers can and will spend before they start rehiring.

By restoring the lost equity in homes, we immediately stabilize real estate prices by establishing a “floor,” and the true market value of property.

By stopping foreclosures, communities start to see their tax basis improve. They can start to rehire laid off workers such as teachers and emergency responders.

As crazy or distasteful as this may seem to some, it’s time to admit that there are no other solutions. The value is gone, never was really there, a few people got rich, a lot of people got poor, and now we have to fix it.

Sure, we propped up industry and financial services, and what did we get in return? No jobs, no lending, no significant loan modifications. The legacy is a tax bill that a nation with so many financial casualties cannot afford to pay.

For the governments to pay their debts, taxes must be paid; for taxes to be paid, there must be employment; for there to be job creation, money from some source must be spent.

For that to happen, we need a huge idea, a crazy idea, a last minute MacGyver, Hail Mary scheme that seems so counterintuitive that it just might work. How about we declare a Jubilee on all residential mortgages? I’ve heard plenty of resistance to the “free house” concept but there are no other ways of stimulating job creation and rebuilding America for the future that aren’t crazy.

George Mantor is a nationally respected authority on all areas of real estate and is frequently quoted in a wide range of publications. He is an oft invited guest of Fox Business Network and for many years, he was the host of “Keepin’ It Real…Real talk about the real thing, real estate” on KCEO radio.His articles have also recently appeared in Real Estate Finance, The Real Estate Professional, National Real Estate Investor, Broker Agent News, and Realty Times. His blog is