Obama's Economic Plan
In my previous posting I wrote about some of the possible problems with the Obama and the Democrat's strategy. I was reminded in the the Washington Times article in my aforementioned posting that the whole point of the stimulus package is to be quick and implemented quickly. Stimulate the economy sooner the better the later the worse. Spending would "break the cycle." Although I can not say I know the whole argument but it sounds like if there was overwhelming spending now the econmic tailspin won't spiral out of control. I think the assumption is that the unemployment rate shouldn;t reach more than 10% with this plan. It will stop the economic domino effect. Giving people more jobs would lead to more consumer spending sparing more industries while the market reaches the bottom over the next several months. Spending this money later in the year or once we reach the bottom may be to late to save some industries already weakening. If this happens then it would much harder to get back on track. The New Deal and the Japanese plans did not react quick enough make their plans really effective.
Saturday, February 7, 2009
Thursday, February 5, 2009
Is Large Deficit Spending the Right Approach to the Economy?
There has been a lot of talk over the last month especially in conservative circles that deficit spending is not the best way to stimulate the economy. They argue that when similar actions occurred during the New Deal it was WWII that got us out of the Great Depression. Der Speigel has an interesting piece calling for President Obama not to pull a Roosevelt. The article mentioned that even Roosevelt's Treasury Secretary, Henry Morgenthau said it was a bad policy.
"We are spending more than we have ever spent before, and it does not work ... I say after eight years of this administration, we have just as much unemployment as when we started -- and an enormous debt to boot."
The Stimulus packages that are being proposed in Congress supported by Obama should help stimulate the economy but it will not be the ticket out of the recession and the deficit could actually hamper any type of recovery with increase in interest rates and inflationary concerns. With the global economy slowing, countries like China need to spend more at home and will not keep up purchasing US$ to help finance our debt. They will continue to buy but not in the large quantities that it previously had.
According to the Washington Times. The Congressional Budget Office says that the stimulus package will actually hurt the economy in the long term by "crowding out private investment."
There has been a lot of talk over the last month especially in conservative circles that deficit spending is not the best way to stimulate the economy. They argue that when similar actions occurred during the New Deal it was WWII that got us out of the Great Depression. Der Speigel has an interesting piece calling for President Obama not to pull a Roosevelt. The article mentioned that even Roosevelt's Treasury Secretary, Henry Morgenthau said it was a bad policy.
"We are spending more than we have ever spent before, and it does not work ... I say after eight years of this administration, we have just as much unemployment as when we started -- and an enormous debt to boot."
The Stimulus packages that are being proposed in Congress supported by Obama should help stimulate the economy but it will not be the ticket out of the recession and the deficit could actually hamper any type of recovery with increase in interest rates and inflationary concerns. With the global economy slowing, countries like China need to spend more at home and will not keep up purchasing US$ to help finance our debt. They will continue to buy but not in the large quantities that it previously had.
According to the Washington Times. The Congressional Budget Office says that the stimulus package will actually hurt the economy in the long term by "crowding out private investment."
Tuesday, February 3, 2009
Republicans Offer Stimulus Plan of Their Own
Alas, the Republicans are finally starting to offer stimulus ideas of their own. Its about time that the party in opposition takes a stand and do what their jobs are and that is not to just vote no. The Republican plan calls for cuts in payroll taxes in half and cutting the corporate rate from 35% to 25%. The $445 billion plan also includes $65 billion for repairing roads and bridges and $11 billion to stabilize the housing industry. -Reuters The main theme of this plan is the tax cuts. The democrats plan is a bit more ambitious costing almost $900 billion mostly being spent on infrastructural projects, focusing on green technology and tax cuts. The problem with both plans is the reliance on tax cuts. The last tax cuts that were sent out as rebate check last spring failed. Americans have become more frugal and consumer confidence has been sagging for the past sixt months and will most likely continue. People are saving their money. Prior to this recession, Americans have been spending more than they earn, and are in massive debt. Taking on more debt would be unsustainable and not contribute to real economic growth. People are realizing that they need to pay down their debt and that they can't spend every dollar if they think they may lose their jobs. You can bet my tax refund will be put in savings. I can't live in the parents basement forever. More talk on both packages later.
Alas, the Republicans are finally starting to offer stimulus ideas of their own. Its about time that the party in opposition takes a stand and do what their jobs are and that is not to just vote no. The Republican plan calls for cuts in payroll taxes in half and cutting the corporate rate from 35% to 25%. The $445 billion plan also includes $65 billion for repairing roads and bridges and $11 billion to stabilize the housing industry. -Reuters The main theme of this plan is the tax cuts. The democrats plan is a bit more ambitious costing almost $900 billion mostly being spent on infrastructural projects, focusing on green technology and tax cuts. The problem with both plans is the reliance on tax cuts. The last tax cuts that were sent out as rebate check last spring failed. Americans have become more frugal and consumer confidence has been sagging for the past sixt months and will most likely continue. People are saving their money. Prior to this recession, Americans have been spending more than they earn, and are in massive debt. Taking on more debt would be unsustainable and not contribute to real economic growth. People are realizing that they need to pay down their debt and that they can't spend every dollar if they think they may lose their jobs. You can bet my tax refund will be put in savings. I can't live in the parents basement forever. More talk on both packages later.
Monday, February 2, 2009
France's Economic Stimulus Plan.
The French Government plans to stimulate their stagnant economy by increasing spending on infrastucture and corporate investment. The French Prime Minister, François Fillon, said in a speech that they did not want increase the national debt and were more concerned with increasing competiveness. They believe that boosting consumer spending with more debt to stimulate their economy is not the right approach.
The French Government plans to stimulate their stagnant economy by increasing spending on infrastucture and corporate investment. The French Prime Minister, François Fillon, said in a speech that they did not want increase the national debt and were more concerned with increasing competiveness. They believe that boosting consumer spending with more debt to stimulate their economy is not the right approach.
It's the Economy, Moron
"It's the Economy, Stupid" is a famous slogan that propelled Bill Clinton to the presidency in 1992. Engineered by campagin strategist James Carville, the phrase was used to remind people that the US was in recession at the time. George H. Bush had many successes as president but the economy was his archilles heel. The economic performance of any country shapes the lifestyles of the citizens within them. It effects everything from environment to health, to war and peace and even love and hate. The Housing bubble led to the Subprime Mortgage Crisis, which was then followed by the fall of Lehman Bros Bank, which stirred the Panic of '08. Banks fearing to become the next Lehman's stopped lending, making it hard for even credit worthy companies, to access loans to invigorate their business. People are being layed off everywhere and consumer confidence is lagging. Mass protests are occurring all over the world due to the ripple effect of the Subprime Mortgage Crisis and has already brought down the government of Iceland.
There are many important events occurring in this great big world, but in the end "it's the economy, stupid." ....This blog will discuss this on going story that is the Great Recession.
"It's the Economy, Stupid" is a famous slogan that propelled Bill Clinton to the presidency in 1992. Engineered by campagin strategist James Carville, the phrase was used to remind people that the US was in recession at the time. George H. Bush had many successes as president but the economy was his archilles heel. The economic performance of any country shapes the lifestyles of the citizens within them. It effects everything from environment to health, to war and peace and even love and hate. The Housing bubble led to the Subprime Mortgage Crisis, which was then followed by the fall of Lehman Bros Bank, which stirred the Panic of '08. Banks fearing to become the next Lehman's stopped lending, making it hard for even credit worthy companies, to access loans to invigorate their business. People are being layed off everywhere and consumer confidence is lagging. Mass protests are occurring all over the world due to the ripple effect of the Subprime Mortgage Crisis and has already brought down the government of Iceland.
There are many important events occurring in this great big world, but in the end "it's the economy, stupid." ....This blog will discuss this on going story that is the Great Recession.
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