Obama spanks Wall Street.

[tw]

Originally Posted by classicman

Can you tell me how the Pelosi/Reid?Obama plan (whatever) differs from that which Japan did for a decade?

It makes one mistake that the Japanese made. It protects the problem. The Pelosi/Reid/McConnel/Bernanke/Paulson/Tax cut myth solutions only do the same thing.

Threat of bankruptcy is essential to force the necessary changes including destruction of top management jobs (and few employee job losses), the breakup and sale of massive inefficient organizations (ie GM, AIG, US Steel, Morgan Stanley, Citigroup, Chrysler, some drug companies, Sears/Kmart) that routinely stifle innovation and make money by only playing money games, heavy regulation (government or open market) on industries that are historically corrupt without that regulation (ie stock brokers, investment bankers, energy traders), and to cause companies to innovate again rather than believe the purpose of a company is to make money.

Japanese did nothing to address the problem because they protected the problem. Eventually, a prolonged recession (due to continued protection from free market forces) forced those changes to happen. Many Japanese companies - especially their banks - needed massive shakeup that only a bankruptcy threat can provide.

The American government has, instead, protected the problem such as AIG, Chrysler, GM, banks, and other institutions that need new management or be sold off S&L style.

But then the economic stimulus plan that Obama will get only blunts the short term economic problems and does not address what creates recessions. Its not what he wanted. But then many here also foolishly still believe that tax cuts create economic growth. And so the stimulus plan is more tax cuts - at the expense of economic solutions.