It's the Maginot line all over again!

It's the Maginot line all over again!

I want you to really quickly click on this link.

http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260

Now the thing I want you to notice is that this article is from 10 years ago. It talks about how the Clinton Administration put all of this pressure on the republican congress to pass housing reform in order to make it easier for the banks to approve mortgages. The roots of the mess we are all in today.

I have always blamed both parties. I blamed President Bush and the democratic controlled congress for approving disasterous bail out packages that, for some reason, noone can figure out where the money went. And I blame the Clinton Administration and the republican controlled congress back then for giving banks the power to give mortgages to anyone and anything that happened to be capable of picking up a pen and signing their name. To make a long story short. It is 1990s Japan all over again.

Let's make some analogies. The Maginot line, a supposedly well thought of defensive barrier built by the French before World War 2 was supposed to stop the Germans from invading France. The Germans simply went around it and the Maginot line was useless. The Israelis repeated that same mistake all those years later in थे 1973 वर with the Bar Lev line when the Egyptians simply went around and over the line, consequently making it useless. The Israelis simply failed to learn from past mistakes.

So here we are in 2009, repeating the same economic mistakes Japan made in the 1990s. It is truly incredible. Japan was suffering from a huge contraction in their economy. So in order to fix it, the economists over there decided the government should pump billions into Japan, nationalize a whole bunch of institutions and well.... fast forward to 2009 and they are still suffering. WHY did we not learn from their example???

Why are we giving billions of dollars to companies that screwed up??? Why are we giving billions to CEOs who destroyed their company??
The obvious solution would be to buy up the mortgages, make them into 30 year FHA loans and, yes, MAYBEEEE, we should give money to companies in order to cover their losses, but they should fill some prerequisites first. They should fire the people who screwed up the company instead of giving them bonuses and they should change their business model before getting a dime.

Once upon a time in the late 70s, Lee Iococca, who was in charge of Chrysler, asked the government for a billion dollar loan. There was a great debate about it. They agreed to change their business model, fire some people, and eventually the company got its money and paid the American people back. This is how it shouldve been done all these years later. Instead we are giving pointless amounts of blind dollars to companies that will die eventually.
GM should just declare bankruptcy so that they can renegotiate the union contracts because if they dont, then no matter what happens, they will always be behind the 8ball and die as well because their profits just cannot cover the money they owe to people in the union, whether its to retirees or people who were laid off. The contracts are just too unrealistic and need to be renegotiated, and this can only happen if they declare bankruptcy.

It's time to get some economists who know what they are doing. Its too soon to tell if Obama will be great, but if he keeps repeating the same past mistakes, then I can guarantee we will still be in the same mess 4 years from now, with little chance of a swift recovery.