[kharris]

I would be interested to hear what any of CBTL's resident economists think of the proposed stimulus package.

[eric.hanke]

I would be interested to hear what any of CBTL's resident economists think of the proposed stimulus package.

I am against any stimulus package.

[Tim]

Tough to know what to think about it. Has anything already tried really improved things - or even kept them from getting worse? It doesn't seem like it. But when Obama says if we don't do something soon a bad situation will get much worse I'm inclined to believe a stimulus package really needs to happen.

[Dave]

I don't know if the proposed stimulus bill will work in preventing/reversing the economic downturn, but I certainly hope it does. Because some economics folk are saying that this whole mess could be as bad as the Graet Depression, and I don't like what it took to get us out of that.

[Tim]

It's hard to put trust in a gov't that would pull a blunder like this -

AP – Obama caps executive pay tied to bailouts

* Bailout Bonanza Play Video Video: Bailout Bonanza FOX News
* Obama facing big struggles in Middle East Play Video Barack Obama Video: Obama facing big struggles in Middle East AP

Related Quotes Symbol Price Change
C 3.53 0.00
^GSPC 845.85 0.00
^IXIC 1,546.24 0.00
Treasury Secretary Timothy Geithner, right, convenes his first meeting as AP – Treasury Secretary Timothy Geithner, right, convenes his first meeting as chairman of the President's …

WASHINGTON – A government watchdog has concluded that the federal government gave financial institutions a $78 billion subsidy last year by overpaying for stocks and other assets as part of its massive Wall Street rescue program.

In a report scheduled for release Friday, the Congressional Oversight Panel for the bailout funds found that in some cases the government paid dramatically more than the actual value of the stocks at the time of the transactions.

Financially ailing insurance giant American International Group, deemed by the Treasury Department to be too big to be allowed to fail, received $40 billion from the Treasury for assets valued at $14.8 billion, the oversight panel found.
____________

Gee - wonder how many foreclosures could have been avoided with that 78 billion - rather than throwing it into the sewer, I mean. And then they gave all the money to the banks with NO STRINGS! When asked what they were doing with the money, certain bank big-wigs said "we don7t really track that...." Let's put it in our terms -

Son: Dad, I know it's only Tuesday, but I already went through the $20 you gave me for the week.

Dad: No problem, Son - here's MORE MONEY!!!!

Right. I realize these goofs were under Bush. Let's hope the Obama team is not as fxxking stupid.

[lovethiscity]

Right. I realize these goofs were under Bush. Let's hope the Obama team is not as fxxking stupid.

I have a funny feeling that is one of the reasons the Bush folks have been removed from power

[Southsider2k12]

I would be interested to hear what any of CBTL's resident economists think of the proposed stimulus package.

You rang?

Ah the stimulus package. I have been into some interesting debates on this. Having studied basically every panic and recession in US history, the Depression comparisons are interesting. They are even more interesting when you start to compare the reactions then, to the reactions of now. The biggest similarity is the banking crisis, and the effect it has had on our economy. Banks have ceased lending, which is just killing the business community right now. The TARP program has been a disaster, as has the Obama team's response to "fix" it. The original idea of buying bad debts to clear them off of the banks books is still what needs to be done. What is being done now isn't helping, and instead we are staying in the contraction cycle at the most vital levels.

It is pretty interesting, when you are talking about adding an estimated 330,000 government jobs. Its also only spends an estimated 8% of the funds in 2009. The economic study on the multiplier effect and the velocity of money (the amount of time it takes money to flow through an economy.) tells us that in an economy the size of the US's, it takes about a year for any change in fiscal policy to be felt in the economy for any real effect. With as long as it is taking for some of this money to be spent (2014 in some cases) I am afraid that we are locking ourselves into a plan, without having any idea what the final look of our economy will be, even in as short as a year or six months from now.

Here are my keys to a stimulus plan.

-Truely temporary spending, in that it would be one time outlays, and not any continuing programs.
-Tax cuts and rebates. This gets money into peoples hands now, and not in 2011, 2012, or whenever.
-Revoke Sarbane's Oxley. It has caused more problems that it has solved. It wouldn't have prevented Enron or Worldcom, and it hasn't stopped fraud from happening. All it has done is added an expensive layer of compliance to each companies statements, which is wasted money.
-Make sure you have the ability to adjust to future economic challenges, but not making too many permanent changes. The economy could be better in 2-3-4 years, and all of this spending could be causing inflation. It could be worse, and we need something different or new instead. The point is we don't know, and we can't use up all our ammo when no one knows what will happen.
-Don't allow state and local governmental agencies who receive any kind of temporary funds from a stimulus package to raise taxes. If they do, take away funds on a dollar for dollar basis. It does no good to the general public if they get money from one source, only to get it taken away by another.

I apologize in advance if I used too many industry terms. If I need to explain anything further, just ask.

[kharris]

You rang?

Ah the stimulus package. I have been into some interesting debates on this. Having studied basically every panic and recession in US history, the Depression comparisons are interesting. They are even more interesting when you start to compare the reactions then, to the reactions of now. The biggest similarity is the banking crisis, and the effect it has had on our economy. Banks have ceased lending, which is just killing the business community right now. The TARP program has been a disaster, as has the Obama team's response to "fix" it. The original idea of buying bad debts to clear them off of the banks books is still what needs to be done. What is being done now isn't helping, and instead we are staying in the contraction cycle at the most vital levels.

It is pretty interesting, when you are talking about adding an estimated 330,000 government jobs. Its also only spends an estimated 8% of the funds in 2009. The economic study on the multiplier effect and the velocity of money (the amount of time it takes money to flow through an economy.) tells us that in an economy the size of the US's, it takes about a year for any change in fiscal policy to be felt in the economy for any real effect. With as long as it is taking for some of this money to be spent (2014 in some cases) I am afraid that we are locking ourselves into a plan, without having any idea what the final look of our economy will be, even in as short as a year or six months from now.

Here are my keys to a stimulus plan.

-Truely temporary spending, in that it would be one time outlays, and not any continuing programs.
-Tax cuts and rebates. This gets money into peoples hands now, and not in 2011, 2012, or whenever.
-Revoke Sarbane's Oxley. It has caused more problems that it has solved. It wouldn't have prevented Enron or Worldcom, and it hasn't stopped fraud from happening. All it has done is added an expensive layer of compliance to each companies statements, which is wasted money.
-Make sure you have the ability to adjust to future economic challenges, but not making too many permanent changes. The economy could be better in 2-3-4 years, and all of this spending could be causing inflation. It could be worse, and we need something different or new instead. The point is we don't know, and we can't use up all our ammo when no one knows what will happen.
-Don't allow state and local governmental agencies who receive any kind of temporary funds from a stimulus package to raise taxes. If they do, take away funds on a dollar for dollar basis. It does no good to the general public if they get money from one source, only to get it taken away by another.

I apologize in advance if I used too many industry terms. If I need to explain anything further, just ask.

Don't apologize ... I find your answer very informative. I have heard that if the monies being debated for stimulus were given directly to taxpayers, that every taxpayer could receive something in the amount of $100 to $200 thousand dollars. Not saying that I agree with this concept, but for the sake of argument, if something like that were to take place, would it not immediately put the money into the economy. My simple view of this is that the every day joe could pay off his/her debts which helps the banking industries, would be able to ourchase new automobiles, applieance, etc, which could put people back to work to produce the goods that the public is now able to purchase. Again, this is simplified, non-economic educated view just to throw something else out there for debate.

[Craig1971]

Don't apologize ... I find your answer very informative. I have heard that if the monies being debated for stimulus were given directly to taxpayers, that every taxpayer could receive something in the amount of $100 to $200 thousand dollars. Not saying that I agree with this concept, but for the sake of argument, if something like that were to take place, would it not immediately put the money into the economy. My simple view of this is that the every day joe could pay off his/her debts which helps the banking industries, would be able to ourchase new automobiles, applieance, etc, which could put people back to work to produce the goods that the public is now able to purchase. Again, this is simplified, non-economic educated view just to throw something else out there for debate.

I think alot of avg. joes fell the same way.......I also think that the US need to change the way that we trade with other countries......and we have to stop being the bank for the rest of the world......help you own people before you help other countries.......

[Southsider2k12]

Don't apologize ... I find your answer very informative. I have heard that if the monies being debated for stimulus were given directly to taxpayers, that every taxpayer could receive something in the amount of $100 to $200 thousand dollars. Not saying that I agree with this concept, but for the sake of argument, if something like that were to take place, would it not immediately put the money into the economy. My simple view of this is that the every day joe could pay off his/her debts which helps the banking industries, would be able to ourchase new automobiles, applieance, etc, which could put people back to work to produce the goods that the public is now able to purchase. Again, this is simplified, non-economic educated view just to throw something else out there for debate.

For the last year the IRS released records (2005) the US received tax returns involving about 135 million people. Of those people, just a shade under 100 million actually had a tax liability. So just doing simple rounding, 100 million people, divided by 900 billion dollars would equal about $9000 per each taxpayer. It would also concentrate all of the money into the middle to upper tax brackets, because on average the bottom 40% of people do not have any tax liability, and wouldn't be considered taxpayers. The really interesting thing is that in general, the richer you are, the worse of a stimulator of the economy you are per dollar received. The people at the highest incomes are able to save more than someone making minimum wage. This means that someone at the bottom of the incomes ladder will spend all of the money they receive, versus someone at the top who will save a chunk of it. From a pure economic standpoint, putting the money into the hands of people who will spend it most will have the most positive effect on economy.

The twist is now that with layoffs, getting the money to the corporations who pay the lowest people on the totem pole, might actually be the most effective thing of all. By keeping people employed, you are actually making the most positive impact of all, because not only are you putting money into their pockets (or more accurately stopping them from losing their jobs), but you are also stopping the from being a drain on the government, by needing assistance programs, such as welfare or unemployment.

Honestly there really isn't a "right" answer, because no one knows what is going to happen exactly. Its all theory versus history right now.

[eric.hanke]

I can't help but recall an episode of NBC's The West Wing. During the episode President Josiah Bartlet (played by Martin Sheen) was dealing with an economic stimulus issue. His reply was you don't push on one economic stimulus lever alot, you push on all of the levers a little.

I feel that this recent stimulus package pushes a single lever too much, as did former President Bush's plan when giving hundreds of billions to banks, auto manufacturers, and investment firms, some of which have subsequently layed off employees and paid huge bonuses to senior management.

Another issue I have with the government printing more money (that is all it's doing right?) is that an expectation is being set. You can't tell me that the automotive industry executives did not know that their companies were in financial trouble. But now that the government has made money available most of them are crying that without money they won't be able to keep the doors open for x number of months. This can also be said for big Wall Street investment firms. What these companies should of been doing is trimming costs, just like I have to do, to make their company financially secure.

This is a slap in the face of the American people. The government needs to stay clear of the free enterprise system, the banks need to own up and help homeowners stay in their houses, and start lending money. Wall Street needs to wake up and take some ownership of this shit hole we are in. Real consequences need to be enforced for those who have mislead investors in financial schemes.

[IndyTransplant]

I also am not trained in economics and therefore anything I say is just an uneducated opinion. However I have worked in various levels and aspects of the business world for 30 years. The vast majority of my experience (over 20 years) was in real estate (residential).Therefore this comment is only going to be on this aspect of the total economic crash. I saw the housing crash coming a long time ago. The housing appreciation rates were raised by the numbers of people purchasing homes (supply and demand, although the demand was artificial in a way). Many of these home buyers were people who did not have the economic security to purchase homes in the price ranges they were allowed and even encouraged to borrow money to purchase. Therefore, It was no surprise to me that both the housing market and the mortgage market crashed. I was not a popular R.E. Broker since I would discourage buyers from taking advantage of large loan offers that would put them in peril if they had an economic downturn. However I took my fiduciary duties seriously and often dispensed unpopular advice. I am finally going to voice an opinion that is not often said aloud and will be very politically incorrect. We, the American people have been greedy and for many many years have been purchasing homes, cars, and other material items far beyond our means. A few years ago, the banking industry was even offering home equity loans (LOL) for up to 125% of the home's value. So the American people were encouraged to borrow much more than their home was worth. Unfortunately some of the American people did not think twice or examine how they would be able to pay for this or even be able to sell their home if the value of their home did not rise (but instead depreciated, as has now happened). We, in our greed and in some cases ignorance, have been a huge factor in causing our own current misery. Foreclosures and bankruptcy are not new; the economic downturn for many started happening years ago. In reality it has been happening for years to people at the lower end of the economy. There was not a huge outcry as many of these people were of a mindset that "stuff happens" and moved on without a huge outcry to the media and their govt. The only thing that made the government and news media sit up and take notice is that at this time it is happening to everyone and especially to those in the upper and middle levels of our economy, which had a greater effect on unemployment and disposable dollars. The brick finally connected with their head. I am not sure the (sometimes, now former) middle and upper classes will be able to handle as well the economies they are being forced to face
I am not letting the government off the hook in this. Both the Clinton and Bush administrations through Congressional action backed new programs to encourage home purchases by those who did not have the funds to do so. Now they propose to spend tax dollars that don't really exist (basically they have to be just printing money since the tax dollars they are discussing have to be coming from the future, they do not exist in the present) to get us out of this mess. Despite the fact that I am not economically educated, I am pretty sure that printing dollars with no backing behind them leads to nothing but growing inflation rates. I have fears for our future years out, not just the next year or two. Feel free to set me straight if you feel differently. I do not have great ideas for what the government should do now, but I am nervous about throwing nothing more than more money after the problem. I do believe that we, the people, need to do what we can to weather whatever is coming. We could use this as a learning tool to start practicing personal economics that do not rely so heavily on aid from outside sources. We should learn to "look a gift horse in the mouth" when it comes to borrowing. Read the fine print, know the terms and if the amount they are offering to lend seems too good to be true, it probably is. If we can learn to live within our means, perhaps whatever the government does short term may actually stay short term. My fear is that if we learn nothing from this and change nothing but the government throwing out money, we will continue needing bailout after bailout.
OK I now have stuck my neck out on a very long limb LOL.

[eric.hanke]

OUCH! My eyes. IndyTransplant, love the post, but reading it gave me a headache.

[IndyTransplant]

OUCH! My eyes. IndyTransplant, love the post, but reading it gave me a headache.

Thanks Eric......and I am sorry I caused your headache, should I have provided aspirins with my diatribe? I have a habit of writing novels and have never been accused of being too succinct. LOL

[kharris]

For the last year the IRS released records (2005) the US received tax returns involving about 135 million people. Of those people, just a shade under 100 million actually had a tax liability. So just doing simple rounding, 100 million people, divided by 900 billion dollars would equal about $9000 per each taxpayer. It would also concentrate all of the money into the middle to upper tax brackets, because on average the bottom 40% of people do not have any tax liability, and wouldn't be considered taxpayers. The really interesting thing is that in general, the richer you are, the worse of a stimulator of the economy you are per dollar received. The people at the highest incomes are able to save more than someone making minimum wage. This means that someone at the bottom of the incomes ladder will spend all of the money they receive, versus someone at the top who will save a chunk of it. From a pure economic standpoint, putting the money into the hands of people who will spend it most will have the most positive effect on economy.

The twist is now that with layoffs, getting the money to the corporations who pay the lowest people on the totem pole, might actually be the most effective thing of all. By keeping people employed, you are actually making the most positive impact of all, because not only are you putting money into their pockets (or more accurately stopping them from losing their jobs), but you are also stopping the from being a drain on the government, by needing assistance programs, such as welfare or unemployment.

Honestly there really isn't a "right" answer, because no one knows what is going to happen exactly. Its all theory versus history right now.

I accept that explanation. But now let's take a little further and talk about all of the "fluff" as I like to call it, that has been a sticking point in putting this bill through. I do not recall the actial number, but I believe there are at least 10'2 of billions, if not 100's of billions, written into the legislation that has absolutely nothing to do with stimulating the economy. Things like monies for the endowment of the arts, resodding the national mall, education for aids and std's, and on and on .....

These are things that are nothing but pet projects for some senators (on the D side) and amount to nothing more than irresponsible spending on the part of the government. And though that may be considered business as usual for government, the remarks from the president and his spokespeople actually somewhate anger me. When the issue of all of this non-stimulation spending is inquired by the press, the answers seem to evolve into something like "you're not looking at the whole picture" , or "it doesn't matter because the bill will stimulate the economy" . I am also quite concerned that Obama seems to be more on a PR blitz than he is in working on the problems at hand, and actually seems to becoming quite put out that his plan is being scrutinized as deeply as it is.

I agree there is probably no "right" answer ... but I am troubled that the president seems to think his is the only plan worth looking. In just the past month, government seems to be growing at an astounding rate, and that most certainly cannot be a good thing for the country.

[Southsider2k12]

I also am not trained in economics and therefore anything I say is just an uneducated opinion. However I have worked in various levels and aspects of the business world for 30 years. The vast majority of my experience (over 20 years) was in real estate (residential).Therefore this comment is only going to be on this aspect of the total economic crash. I saw the housing crash coming a long time ago. The housing appreciation rates were raised by the numbers of people purchasing homes (supply and demand, although the demand was artificial in a way). Many of these home buyers were people who did not have the economic security to purchase homes in the price ranges they were allowed and even encouraged to borrow money to purchase. Therefore, It was no surprise to me that both the housing market and the mortgage market crashed. I was not a popular R.E. Broker since I would discourage buyers from taking advantage of large loan offers that would put them in peril if they had an economic downturn. However I took my fiduciary duties seriously and often dispensed unpopular advice. I am finally going to voice an opinion that is not often said aloud and will be very politically incorrect. We, the American people have been greedy and for many many years have been purchasing homes, cars, and other material items far beyond our means. A few years ago, the banking industry was even offering home equity loans (LOL) for up to 125% of the home's value. So the American people were encouraged to borrow much more than their home was worth. Unfortunately some of the American people did not think twice or examine how they would be able to pay for this or even be able to sell their home if the value of their home did not rise (but instead depreciated, as has now happened). We, in our greed and in some cases ignorance, have been a huge factor in causing our own current misery. Foreclosures and bankruptcy are not new; the economic downturn for many started happening years ago. In reality it has been happening for years to people at the lower end of the economy. There was not a huge outcry as many of these people were of a mindset that "stuff happens" and moved on without a huge outcry to the media and their govt. The only thing that made the government and news media sit up and take notice is that at this time it is happening to everyone and especially to those in the upper and middle levels of our economy, which had a greater effect on unemployment and disposable dollars. The brick finally connected with their head. I am not sure the (sometimes, now former) middle and upper classes will be able to handle as well the economies they are being forced to face
I am not letting the government off the hook in this. Both the Clinton and Bush administrations through Congressional action backed new programs to encourage home purchases by those who did not have the funds to do so. Now they propose to spend tax dollars that don't really exist (basically they have to be just printing money since the tax dollars they are discussing have to be coming from the future, they do not exist in the present) to get us out of this mess. Despite the fact that I am not economically educated, I am pretty sure that printing dollars with no backing behind them leads to nothing but growing inflation rates. I have fears for our future years out, not just the next year or two. Feel free to set me straight if you feel differently. I do not have great ideas for what the government should do now, but I am nervous about throwing nothing more than more money after the problem. I do believe that we, the people, need to do what we can to weather whatever is coming. We could use this as a learning tool to start practicing personal economics that do not rely so heavily on aid from outside sources. We should learn to "look a gift horse in the mouth" when it comes to borrowing. Read the fine print, know the terms and if the amount they are offering to lend seems too good to be true, it probably is. If we can learn to live within our means, perhaps whatever the government does short term may actually stay short term. My fear is that if we learn nothing from this and change nothing but the government throwing out money, we will continue needing bailout after bailout.
OK I now have stuck my neck out on a very long limb LOL.

Hey, you don't have to apologize for going on a rant here! That's the great thing about this format. Unlimited space and time. You can give your opinion however you like! To be honest, most of it is stuff I fully agree with.

I accept that explanation. But now let's take a little further and talk about all of the "fluff" as I like to call it, that has been a sticking point in putting this bill through. I do not recall the actial number, but I believe there are at least 10'2 of billions, if not 100's of billions, written into the legislation that has absolutely nothing to do with stimulating the economy. Things like monies for the endowment of the arts, resodding the national mall, education for aids and std's, and on and on .....

These are things that are nothing but pet projects for some senators (on the D side) and amount to nothing more than irresponsible spending on the part of the government. And though that may be considered business as usual for government, the remarks from the president and his spokespeople actually somewhate anger me. When the issue of all of this non-stimulation spending is inquired by the press, the answers seem to evolve into something like "you're not looking at the whole picture" , or "it doesn't matter because the bill will stimulate the economy" . I am also quite concerned that Obama seems to be more on a PR blitz than he is in working on the problems at hand, and actually seems to becoming quite put out that his plan is being scrutinized as deeply as it is.

I agree there is probably no "right" answer ... but I am troubled that the president seems to think his is the only plan worth looking. In just the past month, government seems to be growing at an astounding rate, and that most certainly cannot be a good thing for the country.

There is no question in my mind that this isn't a true "stimulus" package, but a spending package for the most part. The studies that I have read really stress that the majority of this money won't be spent until 2010, which does nothing to stop the bleeding today.

To be honest, this reminds me of the lead up to the Iraq War with President Bush, when we rushed headfirst into the conflict over there. The name calling has already begun, as has the rush to make sure we don't have time to research all of the lines of this bill. I think they both realized at the time that if we slowed down and took a real good look at things, the way we are/were proceeding weren't the smartest way to do things.

[Michelle]

http://www.snopes.com/politics/taxes/dividend.asp

There was an e-mail going around last fall that put the figure erroneously at $425,000/adult citizen for the AIG bailout. It would actually be $425 ($3,500/adult citizen for the entire bailout plan from last fall). Unfortunately, the e-mail was paraphrased in some other media sources, so it's possible that the wrong information proliferated that way.

[kharris]

Hey, you don't have to apologize for going on a rant here! That's the great thing about this format. Unlimited space and time. You can give your opinion however you like! To be honest, most of it is stuff I fully agree with.
There is no question in my mind that this isn't a true "stimulus" package, but a spending package for the most part. The studies that I have read really stress that the majority of this money won't be spent until 2010, which does nothing to stop the bleeding today.

To be honest, this reminds me of the lead up to the Iraq War with President Bush, when we rushed headfirst into the conflict over there. The name calling has already begun, as has the rush to make sure we don't have time to research all of the lines of this bill. I think they both realized at the time that if we slowed down and took a real good look at things, the way we are/were proceeding weren't the smartest way to do things.

Does anyone else think that an awful lot of what is going on in regards to layoffs, businesses closing, etc. might have something to do witht he fear factor. Don't get me wrong ... I understand the fear ... my wife works for a local company who just filed chapter 11 and I have a business that I have owned for the past 10 years that is suffering miserably ... but are a lot of actions being predicated upon fear. That we have do layoff or we have close this division, becuase of what might happen down the road. My business is suffering because discresionary spending has gone away. I can't spend the money to fix the computer this month because I might need it to buy groceries next month. I kind of have this idea that the situation is fueling itself at this point in time.

[Tim]

Does anyone else think that an awful lot of what is going on in regards to layoffs, businesses closing, etc. might have something to do witht he fear factor. Don't get me wrong ... I understand the fear ... my wife works for a local company who just filed chapter 11 and I have a business that I have owned for the past 10 years that is suffering miserably ... but are a lot of actions being predicated upon fear. That we have do layoff or we have close this division, becuase of what might happen down the road. My business is suffering because discresionary spending has gone away. I can't spend the money to fix the computer this month because I might need it to buy groceries next month. I kind of have this idea that the situation is fueling itself at this point in time.

Fear is certainly an element of any company right now, I'd think. But is it fear that's causing lay-offs? I don't think so - rather the grim reality when a company looks at how much money they have coming in and what they can afford to pay for with it.

[southyards]

These hard financial times have been forthcoming for a long, long time. Common sense should have told us that we can’t be hemorrhaging jobs, resources, and dollars overseas without it eventually having an effect right here at home. It seems like among other things, the combination of business failings, unhindered corporate greed, pork barrel politics, unequal trade agreements, poor judgment in our foreign policies and lack of effective enforcement of immigration laws have amounted to a Perfect Storm that feeds on itself and is growing. It impacts almost every one of us in one form or another and it appears that the losers far outnumber the benefactors. Unfortunately, the “fix”, if indeed there can be a fix, will be long and painful. IMHOP only, of course.