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Aaron747
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$825B Stimulus?

Sat Jan 24, 2009 6:54 am

Am I missing something here? What is the President and the Congress thinking? I know it's an obvious question, maybe too obvious, but exactly how does nearly $1 trillion more in government debt stimulate the economy? Is this more of Dick Cheney's deficits don't matter stuff? What happened to the inaugural address and bringing a new era of fiscal responsibility? What about all the pork in this package? What are the Republicans thinking? They're mostly on board with it. Massive federal failure all over again.

I just don't get it. This is the best they can do?? This is swift and bold??? These people are still going to parties, still patting each other on the back, etc.

http://www.politico.com/news/stories/0109/17834.html

The Congressional Budget Office has yet to issue a formal evaluation of the House bill, but Republicans, citing an early CBO computer run, have complained that much of the discretionary spending won’t really begin to outlay until the new fiscal year that begins Oct. 1.

Obama’s economic team argues that the net impact will be faster when the tax cuts and expanded benefits, such as increased food stamps and jobless payments, are factored into CBO’s equation. And much depends on how governors and mayors put to use more than $300 billion that will be pumped out to state and local governments to forestall layoffs and tax increases that would be a drag on the economy.
If you need someone to blame / throw a rock in the air / you'll hit someone guilty
 
Klaus
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RE: $825B Stimulus?

Sat Jan 24, 2009 1:10 pm



Quoting Aaron747 (Thread starter):
Am I missing something here?

Possibly. This is a very different situation than before.

Quoting Aaron747 (Thread starter):
What is the President and the Congress thinking?

Apparently: "Without a substantial intervention, the economy will suffer lasting damage from the financial crisis."

Quoting Aaron747 (Thread starter):
I know it's an obvious question, maybe too obvious, but exactly how does nearly $1 trillion more in government debt stimulate the economy?

The debt doesn't. Judicious investments do.

Quoting Aaron747 (Thread starter):
Is this more of Dick Cheney's deficits don't matter stuff?

No. Cheney applied it to tax breaks for the wealthy and massively expanded military spending (both unproductive for the wider economy) while choking off the middle class and letting the housing bubble inflate so they wouldn't be as aware of their sliding incomes. All the while coddling the old energy infrastructures and further entrenching the dependency on their supplies.

If the Obama administration manages to make a radical change here by redirecting funds from unproductive consumption to productive investment (especially for productive long-term changes such as energy efficiency), the gains achieved can and should exceed the interest payments over the long run.

By the way: Much of these amounts is not actually spending, as far as I know, but lending with interest which should cover the defaulting risks involved.

Quoting Aaron747 (Thread starter):
What happened to the inaugural address and bringing a new era of fiscal responsibility?

He will have to plausibly demonstrate to the taxpayers that his proposals are effective and profitable in the long run. Quite a challenge, no doubt.

Quoting Aaron747 (Thread starter):
What about all the pork in this package?

What pork do you already see attached at this point? Obama has committed to avoiding it as far as possible; We'll have to see if he can really manage that with either party.

Quoting Aaron747 (Thread starter):
What are the Republicans thinking? They're mostly on board with it.

They've just been handed a crushing defeat not just at the ballot, but many of their ideologies have come crashing down as well. The Reagan ideology on which they have steadfastly relied has openly been discredited; They themselves have been forced to eat dinosaur-sized crow when they were forced to assent to the first rescue package still under Bush. Their foreign policy is in shambles. None of their claims and predictions have been validated.

I would say they will be rather busy trying to search for a new platform for a while. "The market knows best!" and "Government is the problem!" won't cut it any more, not even speaking of their foreign policy delusions.

Obama has clearly extended an open hand for constructive bipartisan cooperation and has backed them into a corner in that regard.They may find it difficult to visibly obstruct an unideological, constructive course proposed by the president. (And I guess that also applies to some of the more rigid democratic delegates.)

Even Bush had ran with promises of bipartisan cooperation, his idea of it was just limited to the Democrats meekly assenting to everything he proposed. Obama seems to be ready and willing to actually engage the Republicans and their ideas and to actively integrate them into a common solution. Not an easy thing to do, but so far he seems to be actually serious about it.

Quoting Aaron747 (Thread starter):
Massive federal failure all over again.

So what exactly is your plausible proposal for an alternative?

Quoting Aaron747 (Thread starter):
I just don't get it. This is the best they can do?? This is swift and bold???

If the funds are actually spent for constructive investment instead of being blown on ideologically motivated castles in the sky, then the answer may indeed be a "Yes"!
 
MadameConcorde
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RE: $825B Stimulus?

Sat Jan 24, 2009 1:13 pm



Quoting Aaron747 (Thread starter):
how does nearly $1 trillion more in government debt stimulate the economy?

This is what I was wondering too. They will print the $1 trillion but what will be its real monetary value?

How can the governments of bankrupt countries (U.S. and U.K. for example) afford all these bailouts? What is the good for them of running more debt? Somebody is going to have to pay it off at some time or other or do they expect to have the debt cancelled?
There was a better way to fly it was called Concorde
 
Klaus
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RE: $825B Stimulus?

Sat Jan 24, 2009 4:23 pm



Quoting Klaus (Reply 1):
By the way: Much of these amounts is not actually spending, as far as I know, but lending with interest which should cover the defaulting risks involved.

To further elaborate: Part of it isn't even actually loaned out, it is merely allocated as backing for already existing loans. How much of that backing will actually be called (after the loaner defaulting and the pre-existing collateral being insufficient) remains to be seen.

The numbers still remain staggering even so, but the actual price to be paid will most probably be much lower than the nominal numbers which delineate the total maximum of funds being allocated.

On a much lower level the situation in Germany is similar at this point: Credit lines and security funds being provided but mostly with the expectation of a payback down the line, plus interest.
 
seb146
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RE: $825B Stimulus?

Sat Jan 24, 2009 4:45 pm



Quoting Aaron747 (Thread starter):
And much depends on how governors and mayors put to use more than $300 billion that will be pumped out to state and local governments to forestall layoffs and tax increases that would be a drag on the economy.

So, how is a $300+ billion loan to state and local governments bad? There is a lot of road work that needs to be done around Oregon. One town in the mountains has quit plowing streets unless the snow is over a foot deep because they just do not have the money. Portland is trying to find a way to build three bridges (two are old and crumbling, the third would be new) plus fix the potholes. I fail to see how putting people to work is a bad idea. The stimulus that Bush signed went to corporations who, then, re-decorated offices, among other things.
Life in the wall is a drag.
 
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Aaron747
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RE: $825B Stimulus?

Sun Jan 25, 2009 11:30 pm



Quoting Klaus (Reply 1):
"Without a substantial intervention, the economy will suffer lasting damage from the financial crisis."

Not a single reputable economist has said the current stimulus proposal holds water.

Quoting Klaus (Reply 1):
Judicious investments do.

So more "borrow now, pay later" is what passes for a judicious investment these days, if it happens to come from Washington?

Quoting Klaus (Reply 1):

What pork do you already see attached at this point? Obama has committed to avoiding it as far as possible; We'll have to see if he can really manage that with either party.

I highly dispute any such conclusion. The bill includes, among other things, money for sex education. It's in the Congressional record, and the Democrats don't deny it.

There's also this:

- Brigham City, Utah, wants $15 million for a sports park.

- Miami, Fla., needs $15 million for a "Moore Park Community Center, Tennis Center and Day Care" facility. The city is also desperate for $3.6 million to build a covered basketball court and a new tennis court at Robert King High Park.

- La Porte, Texas, wants $7.6 million for a "Life Style Center." And Oakland, Calif., needs $1 million for Fruitvale Latino Cultural and Performing Arts Center.


http://online.wsj.com/article/SB122887075956093233.html

Quoting Klaus (Reply 1):
So what exactly is your plausible proposal for an alternative?

Something along the lines of an emergency federal infrastructure Manhattan project. Direct all state and local job centers to identify unemployed people suitable for public works within 45 days and ask state highway boards for a list of priority projects to begin by summer.

Quoting Klaus (Reply 1):

If the funds are actually spent for constructive investment instead of being blown on ideologically motivated castles in the sky, then the answer may indeed be a "Yes"!

Some of the funds in this bill won't be spent until 2010.
If you need someone to blame / throw a rock in the air / you'll hit someone guilty
 
windy95
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RE: $825B Stimulus?

Mon Jan 26, 2009 12:04 am



Quoting Klaus (Reply 1):
Quoting Aaron747 (Thread starter):
What is the President and the Congress thinking?

Apparently: "Without a substantial intervention, the economy will suffer lasting damage from the financial crisis."

Adding another trillion in debt is not the answer. Spiralling debt is what put us into this mess in the first place. We cannot borrow and spend our way out of this

Quoting Seb146 (Reply 4):
So, how is a $300+ billion loan to state and local governments bad?

Congressional Budget Office review of the nearly $355 billion in spending aimed at infrastructure indicated that less than half the amount would actually be spent in the next two years. Not much help there.
 
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DocLightning
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RE: $825B Stimulus?

Mon Jan 26, 2009 12:31 am

I'm all for the infrastructure part. That's not debt; that's an investment in natural resources that will ultiimitely pay for itself. But the corporate bailouts have to stop. Let foreign companies invest and take the debt. It's up to us as Americans to work hard to produce so well that we pay back our debt. And to be frugal, as well.

Infrastructure spending helps frugality overall, actually.
-Doc Lightning-

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PSA53
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RE: $825B Stimulus?

Mon Jan 26, 2009 12:51 am

Maybe forget the any stimulus plan.I might be in favor of start using the "N" word.

Nationalize the banks.

If the government can administer the banks properply,it could be the fastest way to restore confindence in lending and credit.In ten years return the banks to the private sector after the feds make a profit.If you hadn't notice,even CD's are not a safe haven.What?1.5% now..So,there is a lot of panic out there right now.
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Charles79
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RE: $825B Stimulus?

Mon Jan 26, 2009 2:06 am



Quoting Aaron747 (Thread starter):
I know it's an obvious question, maybe too obvious, but exactly how does nearly $1 trillion more in government debt stimulate the economy?

To be honest I don't think anyone knows right now what the effects of this bailout--or the Bush one-- will have in terms of rectifying the economy. Something has to be done, that much is true, we can't sit bone idle while the house collapses...but I'm afraid that the last administration opened a door which is now too darn heavy to close. What bothers me the most, though, is that the record deficit that we ran for the last, what, umpteen years have left little to show for it. Right, so we got a few new fancy military weapons, we got a couple of wars, we had some kind of education initiative, a new fence along the border, and....am I missing something else here?

Seriously, this is the part that scares me the most. For the better part of this decade we have overspent by a big margin yet we still have serious infrastructure issues, poor education, rising costs in health care, etc. Where the heck did the money go? Who got all that money? The wars in Iraq and Afghanistan only count for like 10% or even less of our debt. So where is the rest? Our roads and bridges are overtaxed and in disrepair, the ATC system is antiquated, government agencies are bankrupt, so what's going on?

I sure hope that if Congress does approve this $825B bailout that it indeed goes to the purposes that Obama has laid out, but the previous administration did a great job in erasing any faith I had in government, and I can't help but think that the new administration is a bit over its head. I can only pray for the nation.
 
Okie
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RE: $825B Stimulus?

Mon Jan 26, 2009 3:00 am



Quoting PSA53 (Reply 8):
Nationalize the banks

Leaping Anacondas, we had Barney Frank and others cooking the books at Freddy and Fannie.

In my generally less than humble opinion, I am not so sure we need to Nationalize the banks.

Okie
 
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Aaron747
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RE: $825B Stimulus?

Mon Jan 26, 2009 3:00 am



Quoting Charles79 (Reply 9):

I sure hope that if Congress does approve this $825B bailout that it indeed goes to the purposes that Obama has laid out, but the previous administration did a great job in erasing any faith I had in government, and I can't help but think that the new administration is a bit over its head.

You've nicely summed up my thoughts on the matter to a 'T'.
If you need someone to blame / throw a rock in the air / you'll hit someone guilty
 
PPVRA
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RE: $825B Stimulus?

Mon Jan 26, 2009 5:04 am



Quoting Seb146 (Reply 4):
So, how is a $300+ billion loan to state and local governments bad? There is a lot of road work that needs to be done around Oregon.

You need to export stuff, not a smoother ride for imports.
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
PPVRA
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RE: $825B Stimulus?

Mon Jan 26, 2009 5:10 am

To go the ‘Soviet’ Britain way isn't going to help, either. Can't export benefit payments and freeways, and nor do they generate returns to pay off debt.
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
Flighty
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RE: $825B Stimulus?

Mon Jan 26, 2009 5:31 am

Our infrastructure is by and large pretty good. Infrastructure is something that takes 8-12 years, 15, 20 years to really do, anyway. It is one of the slowest kinds of projects.

If we need some "money" this year, why don't we just distribute it in the form of tax cuts? Just say $2000 to every family, and so on. That ought to tide us through, keep the rents paid, help with mortgages, get people out to the movies et cetera. Money in the people's hands is not money lost. The object is consumption but if not, savings is good too.

I really think tax cuts is a purer way that is less prone to waste. Everyone ensures their tax cuts are well spent. Giant earmarks for unneeded highway overpasses is basically a corrupt outcome. I am against projects that fail a cost-benefit analysis. If it costs more than it's worth, it should not get built. Instead that money should be in the people's hands.

Suddenly everyone wants to play witch doctor. The economy is "in crisis" and "needs dramatic measures." This hysteria reminds me of the march to war in late 2002. There was no evidence Iraq had WMD, but by golly, there was consensus that something had to be done. And we took action all right. We spent money and lives, for nothing.

In the same way that 9/11 fuzzily justified our Iraq invasion, the mortgage-asset pricing shock is somehow being used to suggest we need to blow a ton of money -- just a ton -- on making some mid-20th century transportation planner's fantasy diorama come to life. There is a lot of misinformation. The banking crisis was a shock event. But that does not justify anything and everything to follow. Personal responsibility continues. Projects that are dumb, should not be funded.

Furthermore, we should save our money for the priorities we need as citizens. Spending for its own sake is a religion, a cult-like notion packed with so much drama, people have no choice but to believe it again. Obama 2008 is acting like Bush in 2002. A man with a mandate. Sure do hope he takes time to question himself -- consider reversing course -- consider doing nothing. I thought his methods were different from Bush! Just because we're massively powerful (and we can borrow $1 trillion) does not mean it's wise. Are we honestly going to borrow every last penny we can? What about the future?

Why don't we make a 25 year financial plan? Seriously, a 25 year plan. Map out health care, taxes, military and the economy. This needs to be done. Only then will it be clear, that borrowing $1T right now is stupid in the long run. We need to educate the next generation, protect the environment, get energy security. All of this can be done very cheaply. It won't cost a dime. We can map out "what will make us wealthiest and happiest over the next 25 years" and do exactly that.

The notion that we should be "counter-cyclical spenders" carries the requirement that we must pay down the debt in good times. But we never do! Thus, we are not counter-cyclical spenders. Bush presided over a huge economic expansion 2004-2007 which also had huge deficits. He was not adhering to a counter-cyclical policy. What is this, in good times spend lots of money, in bad times triple it? Obama says so. But I think we need to recalibrate. We should sit this out. In good times, we should start paying down debt. In bad times, borrow.... MODESTLY.
 
N174UA
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RE: $825B Stimulus?

Mon Jan 26, 2009 7:00 am



Quoting PSA53 (Reply 8):
If the government can administer the banks properply

What government can administer anything propertly? How well is TSA doing? The less the government gets involved, the greater chance of long-term success.

Quoting DocLightning (Reply 7):
But the corporate bailouts have to stop

 checkmark  The sooner they do, the sooner our economy can find its footing and move ahead. Think of a huge forest fire...destructive in the short term, but the "forest" comes back healthier afterward. Let these banks and other companies who lived high on the hog for too long fail.

Quoting Charles79 (Reply 9):
the record deficit that we ran for the last, what, umpteen years have left little to show for it.

And the deficit they're running now, we'll have even less to show.

Quoting Charles79 (Reply 9):
the previous administration did a great job in erasing any faith I had in government, and I can't help but think that the new administration is a bit over its head. I can only pray for the nation.

Just a bit? The next month or two will likely determine how the next four years go. Remember that auto bailout? I seem to recall it was only to tide them over to the Spring...it wasn't a "permanent fix" by any means.

Quoting Flighty (Reply 14):
Just say $2000 to every family, and so on. That ought to tide us through, keep the rents paid, help with mortgages, get people out to the movies et cetera.

Really? Cutting a check only results in a very short term "bump"...long term, it solves nothing, regardless of which party takes credit for it.

$2,000? That covers rent or a mortgage for a month, maybe two, depending on where you live. Giving people a $2,000 tax rebate doesn't solve the longer term problem. Financial education, i.e. teaching people to live within their means, is.

Quoting Flighty (Reply 14):
Why don't we make a 25 year financial plan? Seriously, a 25 year plan

The Soviets used to try 5-year plans for the economy. Can you point to a case where it went according to plan? So why 25? SERIOUSLY.....go to a used bookstore and find a textbook on macroeconomics. Read up on the chapter about how the economy goes through cycles, and see if you can some examples of where government intervention during bad times helped solved a nation's economic ups and downs over a long-term time horizon.
 
WunalaYann
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RE: $825B Stimulus?

Mon Jan 26, 2009 7:37 am



Quoting PPVRA (Reply 12):
You need to export stuff, not a smoother ride for imports.

Time to bring up that "Alpha" by which the US has been able to borrow substantially beyond its repayment means...  Wink

Quoting Aaron747 (Reply 5):
Something along the lines of an emergency federal infrastructure Manhattan project. Direct all state and local job centers to identify unemployed people suitable for public works within 45 days and ask state highway boards for a list of priority projects to begin by summer.

Agreed, although why wait for the summer? Considering that lobbyists were already circling the new administration with pork projects, you would think that States and counties would already know exactly where investment is needed, how much and over what period. I would think that the list of priority projects is already sitting on the desk of every Governor and Mayor, and that all that is needed to launch "action phase" is capital and workforce.

Quoting DocLightning (Reply 7):
Infrastructure spending helps frugality overall, actually.

 checkmark  I could bore you senseless with Vehicle Operating Costs reductions in transport models, but I am aware of the fact that it does not behoove me to put everyone to sleep.  Smile
 
baroque
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RE: $825B Stimulus?

Mon Jan 26, 2009 12:44 pm



Quoting Klaus (Reply 1):
They may find it difficult to visibly obstruct an unideological, constructive course proposed by the president. (And I guess that also applies to some of the more rigid democratic delegates.)

I was nodding furious agreement till you got to that bit. Oh yes they will obstruct. Must be in the veins. Also the f'ing chaos that is so damned close will not, they happily think, affect them.

Quoting Aaron747 (Reply 5):
Quoting Klaus (Reply 1):
"Without a substantial intervention, the economy will suffer lasting damage from the financial crisis."

Not a single reputable economist has said the current stimulus proposal holds water.

Aside then from P Krugman who thinks it is not enough???

http://www.cbsnews.com/stories/2008/12/28/ftn/main4688594.shtml
Actually PBS has been able to lassoo at least two or three who seem of that sort of mind.

Quoting Charles79 (Reply 9):
Something has to be done, that much is true, we can't sit bone idle while the house collapses...but I'm afraid that the last administration opened a door which is now too darn heavy to close.

Well I hope and nearly pray that you guys do not sit bone idle while ......... cos if you do, you will do an even better job of bringing the house down than you have done so far. And, hats off, you have done pretty damned good so far!!!

Dare one suggest that the whole picture would look rather different had the base deficit/suplus near the peak of the last cycle NOT been about half a trillion in the RED rather than the half a trillion in the BLACK which is where it would have been had the Clinton trajectory been continued.

That is not a politically partisan comment, it is just observing what the damned numbers tell us.

Had it been about half a T in the black, last years 700 billion would have more or less wiped out the surplus. And NOW Obama would for the first time, be dipping into deficits to bail out the US from a rather nasty fate.

Do some folk really think that the 1930s were not looming in Oct/Nov 2008???????

I have had plenty of unkind things to say about Howard and indeed he too was spending like a drunken sailor in 2007, but even so he did leave a substantial surplus in the Australian Federal budget - close to the half a trillion when translated to the US.

In Aus we have no net Federal debt and attempts to rescue our economy will perhaps put us in TOTAL debt of 20 to 50 billion, about a Trillion carried over to the US case.

See, you could have been in that position. But just because you were in deficit BEFORE the S**T hit the fan does not mean it is sensible to curl into a ball.

That is what hedgehogs do in front of an oncoming truck.

Remember Pam Ayres' statistic.
http://www.independent.co.uk/news/sc...e/hog-in-the-limelight-513642.html
Pam Ayres, magical versifier of the mundane, put the situation uncommonly well:

It is statistically proven,
In chapter and in verse,
That in a car and hedgehog fight,
The hedgehog comes off worse.

There is such pathos about a flattened hedgehog. What was it thinking, just before the wheels of the 44-tonner cheese lorry from Boulogne-sur-Mer so radically altered its geometry? Ho-ho? Can't get me here? Let's see anything try and get through these spines?


The objectors want the US to behave like an hedgehog and rest assured the French are ready to cheerfully driving a 44-tonner truck full of cheese at your hedgehog - your choice. I would use a B-double myself.
 
allstarflyer
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RE: $825B Stimulus?

Mon Jan 26, 2009 1:03 pm



Quoting Klaus (Reply 1):
Apparently: "Without a substantial intervention, the economy will suffer lasting damage from the financial crisis."

We heard that before the last bailout, Klaus, and what did we get - a bunch of money tossed at companies like AIG, i.e. a bunch of money tossed into the sewer.

Quoting Klaus (Reply 1):
Quoting Aaron747 (Thread starter):
Massive federal failure all over again.

So what exactly is your plausible proposal for an alternative?

Let the losers fail and the winners (companies like JPChase) pick up the pieces and deal w/consumers in the right way they have been.

Quoting PSA53 (Reply 8):
Nationalize the banks.

 thumbsdown  I hope not, but I see it happening on the larger level - hopefully not on all levels, since there are some fairly strong local and regional banks.
Living the American Dream
 
baroque
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RE: $825B Stimulus?

Mon Jan 26, 2009 2:30 pm



Quoting Allstarflyer (Reply 18):
Quoting Klaus (Reply 1):
Apparently: "Without a substantial intervention, the economy will suffer lasting damage from the financial crisis."

We heard that before the last bailout, Klaus, and what did we get - a bunch of money tossed at companies like AIG, i.e. a bunch of money tossed into the sewer.

I just wish there was a parallel universe where you guys could go and see what would have happened and leave us in peace to try and fix the mess.

That is the trouble with large systems like this - you cannot perform controlled experiments. Much as I would like to indulge your wish to enjoy a society where the banking system has collapsed completely, happily both US administrations have been fairly fully seized of the perils of that course.

Would you care to explain what the attractions of a collapsed banking system are for you?

Hint, as the dominoes collapsed, your " fairly strong local and regional banks" would be gone in the first wave.
 
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CALTECH
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RE: $825B Stimulus?

Mon Jan 26, 2009 2:34 pm



Quoting Aaron747 (Thread starter):
Am I missing something here?

After January 20th 2009, massive federal budget deficits are now okay.
UNITED Would Be Nice
 
allstarflyer
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RE: $825B Stimulus?

Mon Jan 26, 2009 3:06 pm

Quoting Baroque (Reply 19):
I just wish there was a parallel universe where you guys could go and see what would have happened and leave us in peace to try and fix the mess.

   Baroque, why do you insist on painting a bullseye on yourself . . .

Quoting Baroque (Reply 19):
Hint, as the dominoes collapsed, your " fairly strong local and regional banks" would be gone in the first wave.

  

The strongest banks have been the locals, then the trend decreases the larger they get - http://money.cnn.com/2008/09/25/news...es/banks_lending/index.htm?cnn=yes

So, as the smaller banks are still lending, the larger banks don't have the capital to do much at all . . .

http://money.cnn.com/2008/07/03/news...s/index.htm?postversion=2008070304 and http://www.boston.com/business/artic...l_banks_step_into_mortgage_market/

To help you out, this the worst news I could find concerning local banks - http://www.bizjournals.com/atlanta/stories/2009/01/19/daily36.html - which says nothing about the relation of large and small banks, much less about who would fall first.

Also - http://www.bloomberg.com/apps/news?p...601213&sid=aBS2WkScxpKo&refer=home - local banks are running strong -

"Small banks with little or no exposure to the toxic debt that crippled Wall Street have money to lend as U.S. homebuyers struggle to find credit. While the largest lenders retrenched in the third quarter, loan volume for institutions with less than $1 billion in assets rose 6.8 percent, according to Pacific Coast Bankers’ Bank, a San Francisco-based trade group. Barry James, chief executive officer of James Investment Research Inc. in Xenia, Ohio, says that trend will continue.

'There’s some real strength in these smaller institutions that didn’t get in trouble,' said James, whose $650 million Golden Rainbow Fund owns community bank shares and has beaten 99 percent of its competitors over the past five years, according to Bloomberg data. 'They are picking up business.' "

Small banks stand, Baroque - the other ones are in the most danger.

Edited for content

[Edited 2009-01-26 07:13:40]
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steeler83
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RE: $825B Stimulus?

Mon Jan 26, 2009 3:43 pm



Quoting Seb146 (Reply 4):
There is a lot of road work that needs to be done around Oregon. One town in the mountains has quit plowing streets unless the snow is over a foot deep because they just do not have the money. Portland is trying to find a way to build three bridges (two are old and crumbling, the third would be new) plus fix the potholes.

I think we all have our share of needy public works projects. Pennsylvania has its own share of bumpy roads and bridges that are beyond disrepair. Port Authority of Allegheny County needs extra money to finish the T-extension. The costs went through the roof and now they're out of money. Things aren't exactly peachy for SEPTA either. They're trying to replace 40+year-old equipment (how about those 45-year-old silverliner II and III cars still in use?) and upgrade their system. Hello, West Chester is still without adequate regional rail service...

If you ask me, I think a good chunk of any new spending should be spent on upgrading our public transit systems. I just see them altimately revitalizing downtown business centers, as well as ultimately eliminating some of the congestion in urban areas. Property values will increase, driving up demand for downtown office space -- bringing (hopefully) more businesses and jobs into the urban cores. I also think that such projects would create new jobs in the fields of urban planning and engineering, which is right up my alley...
Do not bring stranger girt into your room. The stranger girt is dangerous, it will hurt your life.
 
baroque
Posts: 12302
Joined: Thu Apr 27, 2006 2:15 pm

RE: $825B Stimulus?

Mon Jan 26, 2009 3:53 pm



Quoting Allstarflyer (Reply 21):
This isn't one of our lesser public schools where you pass just for showing up, Baroque - you need to do your homework so you don't get schooled.

If the US banking system is so stable and sound, why is it losing capitalization more rapidly that, to take an example the Australian listed bank system.

http://www.theaustralian.news.com.au...ory/0,28124,24961870-36418,00.html
Although shares in the Big Four banks have collapsed more than 50 per cent in the past year, with new multi-year lows struck on Friday, they have stood up far better than their UK and US counterparts.
.....
BUT
"The Australian banking sector is now roughly a quarter the size in market capitalisation of the US listed banking sector and much larger than the UK, which raises the question why not expand and become seriously global," Mr Davison said. "However, we believe the most likely scenario is domestic banks will simply be in suspense from the ever changing effects from the nationalisation of banks in these foreign markets and survival as a private entity will be deemed being successful."

I don't have the comparative sizes prior to the disaster, but the US system was greater than than the ratio of GDPs which was just over 18. So it looks as if the US banking system has lost value at more than 4 times the rate of the Australian banking system - over the past 8 months or so.

And if you think the second and third tier banks in the US would survive the total collapse of the larger ones, good luck. That is why the mantra of saving Wall St to prevent a disaster in the High St has some resonance.

Perhaps I am incorrect in assuming that such stability as US banks have is related to FDIC and backing under FDIC would essential come out of the same bucket that Obama is proposing to use to try and prop up the whole US economy.

Do you expect to be able to find a link that states "The entire US banking system is about to collapse"? You are not going to find that, even the day of the collapse. It would cause what is called a run on the bank.

However, a collapse was being forecast if the TARPS funding was not provided. So if your banks do not collapse, it would be unwise to assume it is because they are well capitalized and stable, but rather that they have been supported by first the Bush and now the Obama administrations.

And just one more question Allstarflyer, why do you have to be so rude in replying to a perfectly rational suggestion? Time was when Americans were renowned for being polite.
 
allstarflyer
Posts: 3264
Joined: Mon Jan 10, 2005 7:32 am

RE: $825B Stimulus?

Mon Jan 26, 2009 4:09 pm



Quoting Baroque (Reply 23):
Do you expect to be able to find a link that states "The entire US banking system is about to collapse"?

Actually, Baroque, I found this assertion by you . . .

Quoting B[quote=Baroque (Reply 19):
Would you care to explain what the attractions of a collapsed banking system are for you?

Hint, as the dominoes collapsed, your " fairly strong local and regional banks" would be gone in the first wave.

. . . which was soundly refuted by the evidence presented in my post - you asserted that the locals would be the first to go, insinuating that they were among the weakest, when the evidence from sources like Bloomberg and CNN clearly refutes you.

Quoting Baroque (Reply 23):
And just one more question Allstarflyer, why do you have to be so rude in replying to a perfectly rational suggestion? Time was when Americans were renowned for being polite.

I edited my post with a timestamp that predates your latest post, Baroque - I tempered my remarks, regardless of accuracy. Don't confuse rudeness with soundly meeting your unfounded condescension, Baroque . . .

Quoting Baroque (Reply 19):
I just wish there was a parallel universe where you guys could go and see what would have happened and leave us in peace to try and fix the mess.

 Wink
Living the American Dream
 
baroque
Posts: 12302
Joined: Thu Apr 27, 2006 2:15 pm

RE: $825B Stimulus?

Mon Jan 26, 2009 4:32 pm



Quoting Allstarflyer (Reply 21):
The strongest banks have been the locals, then the trend decreases the larger they get - http://money.cnn.com/2008/09/25/news...es/banks_lending/index.htm?cnn=yes

So, as the smaller banks are still lending, the larger banks don't have the capital to do much at all . . .

http://money.cnn.com/2008/07/03/news...s/index.htm?postversion=2008070304 and http://www.boston.com/business/artic...l_banks_step_into_mortgage_market/

To help you out, this the worst news I could find concerning local banks - http://www.bizjournals.com/atlanta/stories/2009/01/19/daily36.html - which says nothing about the relation of large and small banks, much less about who would fall first.

Also - http://www.bloomberg.com/apps/news?p...601213&sid=aBS2WkScxpKo&refer=home - local banks are running strong -

Trouble is the two CNN refs are July and Aug 2008 so they do not relate to the situation as it developed.

Bizj rather suggests medium and small banks do have troubles.

That bloomberg article did not come up last time. On the face of it, it supports your thesis. The Boston link ?is just a repeat of Bloomberg. Then again, why does the Bloomberg article make me nervous? If I had access to a US expert I know the question I would like to ask, and I wonder what the answer would be. ??Looks like pumping.

That medium and small banks were not ALL exposed to the bad debt and the associated packaged rubbish may well be true. Although have you checked the extent of their disclosures?

In any event, they may well be able to lend AT PRESENT. But if credit freezes up again, they simply do not have the capital adequacy to continue lending. They would likely collapse.

What time scale is associated with?
Nearly all the major finance players in Georgia saw double-digit percent losses on their stocks.
http://www.bizjournals.com/atlanta/stories/2009/01/19/daily36.html

As it reads it could be the falls last week. In which case I would be correct and you should be worried.

We shall see if my "condescension" was unfounded or not. If not, then send your thanks to Pres Obama.
 
Flighty
Posts: 7681
Joined: Thu Apr 05, 2007 3:07 am

RE: $825B Stimulus?

Mon Jan 26, 2009 6:13 pm



Quoting N174UA (Reply 15):
Really? Cutting a check only results in a very short term "bump"...long term, it solves nothing, regardless of which party takes credit for it.

Oh I don't pretend anything can be "solved." It's just a mild and temporary stimulus to consumer spending. We don't have permanent consumer spending shortfalls, we have temporary ones. Over the long term, there is no problem with it.

The real solutions are things like education, capping and reducing health care costs by 30-40%, things like that.

Quoting N174UA (Reply 15):
The Soviets used to try 5-year plans for the economy. Can you point to a case where it went according to plan? So why 25?

Look, there is a difference between a planned soviet country and a capitalist country with smart long term management.
 
PSA727
Posts: 845
Joined: Mon Feb 06, 2006 7:49 am

RE: $825B Stimulus?

Mon Jan 26, 2009 9:51 pm

What angers me the most is that they're calling it a stimulous package. It's not. It's a spending package, pure and simple. How is improving roads and bridges going to boost the housing market and the devalued stock market? Which is really what is ailing the domestic economy. And so much of federal spending dollars is lost to waste in the first place, adding another trillion dollars of debt, in addition to the amount of debt for the already existent budget deficits that will be in place for the next few years. Remember, our accumulating debt is only good if other countries continue to extend us the loans, otherwise it's to the printing presses and inflation like this country has never seen before! And relying upon other nations for loans also affects our foreign policy. Do you think that the U.S. will have any bargaining leverage with China if we really need them to loan us big sums of money? That's not change I can believe in.
fly high, pay low...Germanwings!
 
baroque
Posts: 12302
Joined: Thu Apr 27, 2006 2:15 pm

RE: $825B Stimulus?

Mon Jan 26, 2009 9:58 pm



Quoting PSA727 (Reply 27):
Do you think that the U.S. will have any bargaining leverage with China if we really need them to loan us big sums of money? That's not change I can believe in.

Well you do have a choice. You could allow large numbers of companies to go bankrupt and the only folk who appear to have the money to buy the wrecks would be - the Chinese. So which would you prefer, a loan from them or ownership by them?

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