NYT editorial on Obama, Republicans and Democrats

February 06, 2009 7:23 am

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There are much less problems between the President and the political parties than it appears. The main issue is overcoming the conventional wisdom that Democrats, Republicans and the Administration share. The oxymoron called financial industry instigated the crisis by overextending mortgage lending beyond any reasonable credit criterion, then it claimed that without bailout the world will collapse, while their leaders pocketed about twenty billion dollars into their private accounts; now they refuse credit to industry and business because of lack of securities ... The failed bankers are still the judge and jury in deciding which business will survive and which will fall. To an observer from Mars or another planet this state of affairs must look as complete folly. In economic terms the banking system has been obsolete long time already. The huge success stories of the past century, high tech and biotechnology were financed outside the banking system. Lehman Brothers went into bankruptcy and no earthquake followed. It is high time to provide a new credit institution which will lend money to industry after checking only if the lender invested, say, 20 percent in equity.

The mortgage interest rate decreased substantially in the last year. It is feasible to decrease the loan payments by approaching the notorious banks, hiring consultants and lawyers and refinancing the loans. Most lenders do not have the patience, skill and money to do that. The administration should pass a law according to which the loans will be recalculated automatically without the need for paperwork. Nobody will loose anything, the number of loan failures will decrease dramatically, and even the (notorious) bankers will make more money. The decreased mortgage payments will immediately stimulate the consumption and economy.

The path for fast recovery must pass through new high tech industries and the stimulus should be directed toward them rather than to the old giants that fail.

When the military does not perform efficiently the government emphasizes civilian leadership. When the bankers fail, the economic leadership should be taken away from them and their lobbyists and pass some other disciplines, even used car salesmen would be better.

— Aharon Meytahl, Vestal, New York