Obama spanks Wall Street.

[classicman]

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

Originally Posted by classicman

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

According to Nobel economist Paul Krugman and many others, the comparison to Japan that appears to be the talking points of those opposed to spending here, ignores two facts:

Japan was timid in spending and in fact overrepresented how little they spent on job creaton, and yet still created jobs.

Until, after one-two years, they decided to try to balance the budget and raised the national sales tax, killing whatever economic progress they made up to that point.

Media cite Japan's "lost decade" to criticize Obama's economic stimulus plan, but economists disagree

To do it right will take more courage than the Japanese...understanding that the impact on the deficit will be significant (although no more significant than Bush's tax cuts and Iraq war, which contributed to raising the US debt from just under $5 trillion when he took office to $10 trillion when he left office)

But I would ask again...what would you suggest as a more viable option with a greater likelihood of success?

[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.

[sugarpop]

Originally Posted by tw

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.

Well said. And I think they should get rid of all the tax cuts (except the ones they originally actually wanted) and put the spending money back in that republicans demanded they take out, and force them to fillibuster or just pass it without any republicans. Call their bluff. See if they really are willing to shut down the government again, when we are in such dire straights. I mean really. McCain wrote a bill that was nothing BUT tax cuts, and every republican voted for it. Have they learned NOTHING?

Paul Krugman is the one they should be listening to. He has a better grasp of the situation than any other economist I've heard talk about it. And, he wrote a book about it (predicting it) before it happened, back in 1999 or something.

[tw]

Originally Posted by sugarpop

Well said. And I think they should get rid of all the tax cuts (except the ones they originally actually wanted) and put the spending money back in that republicans demanded they take out, and force them to fillibuster or just pass it without any republicans. Call their bluff.

Long before we can do that, first, we must decide what is necessary to _fix_ the economy. Many still advocate throwing money at the economy to fix it. Same nonsense was from extremist liberals and conservative alike. Ironically, the same Republicans who openly advocated this concept under George Jr are now screaming about TARP costs while advocating what we know never works long term - tax cuts without spending cuts.

Long before anyone can decide how to respond, we as a people must first define a difference between throwing money at a problem (ie money given without strings to bad banks) verses investing in long term projects that actually have an ROI. Every project by government or private industry has a Return on Investment for society. A concept that many still do not understand as we advocated nonsense such as the privatization of Social Security - only because it was promoted by a political agenda.

Whereas infrastructure investments were long needed and should have an ROI, still, many want that to restore the economy this year. If yes, then it is not economic stimulus - only welfare. Typically solutions mean projects today fix the economy in four years. Meanwhile, bankruptcy, job loses and income reductions are necessary especially in economic areas most unproductive and harmful - ie Wall Street, Detroit, hedge funds, and anywhere that top management foolishly said the purpose of a company is to make a profit; ignored what only matters - the product.

A philosophy if we really want to fix this economy? The product is everything.