on stimulus

Patrice Ayme
Hautes Alpes

Obama passed a pseudo stimulus package of around 800 billion dollars. Some of it was fake, such as the AMT adjustment (a standard part of the Fed budget), some was running in place: such as money sent to states that are cutting their own spending. Best example: 50 billion dollars of the Federal stimulus is sent to California, at the time when California state budget went into a deep freeze (thousands of California state projects were stopped, all employees were told to stay home, and not be paid one Friday out of two; starting July first, it's three days with no work and no pay, almost two months worth of salary, and work, a year, now reduced to zero, and the pitiful Obama stimulus cannot stop that non sense).
Moreover, the Obama "stimulus" spent so far is about 50 billion dollars. China's stimulus was about 500 billions, but three quarters of it has been spent, and it's on real infrastructure.
By comparison, Goldman Sachs, through TARP money sent to AIG, got a gift of 13 billion dollars from the proverbial "taxpayers", the government of the USA, in the name of the American People. Question: what does Goldman Sachs make? What employment does it support? For example, Boeing makes planes. Goldman Sachs makes transactions, as many as possible, and then extracts a cut for each.
When FDR was president the Federal budget was a very small part of GDP (this changed only with World War Two) . So FDR could do little, but to legislate very creatively and very boldly and intelligently, and all of that he did
Obama, by contrast controls a huge part of the GDP, but he gave it mostly to the dim witted foxes he put in charge of watching the hen house (see above: 50 billion stimulus, so far, 13 billion for Goldman Sachs alone, if not more through the central bank secret operations). Obama can do a lot, but, as long as he puts the profiteers in charge of not changing the system, all he can show is the profiteers profiteering again, as he boasts of regularly on TV, as if he accomplished something important. Well, maybe important to him.
Just two examples from France: the government there has decided to create a gigantic fast automatic 24/7 train in an immense eight connecting all four of Paris airports and business districts and central hubs. Cost: 50 billion dollars. Work on four new high speed train lines is proceeding. The high speed train line through the "metropolises" of the French Riviera (Marseilles-Toulon-Cannes-Nice) was decided this week. It will be underground a lot, so it's immensely expensive: 30 billion dollars. Next generation nuclear reactors are also being built. And so on. That is what one calls really stimulating.
Eco-nomy means house-management. It does not mean profiteering from the house. As long as Obama puts financiers (Summers, Geithner, and various other mental gnomes from Goldman Sachs) in charge of managing the house, they will keep on stealing it. that's all they know.
house-management is fundamentally not about money. Money helps to motivate the children, and keep tabs on their activities, but rather it's just a way to help, not the essence of the thing. The essence is productive work. It's for the People and its democratically elected government, guided by the deepest thinkers to decide that, it is not the business of the money swindlers. Such is Obama's mistake, and it could all end very badly, if he does not correct this in time.
I know someone with a PhD who works as an quality control inspector overseeing the Food and Drug Administration. She informed me an hour ago that all her portion of the overseeing system she works for will be cancelled in September. Meanwhile Mr. Obama is stimulating the Afghans by killing and terrorizing a lot of them. Change you can sneer by.

Patrice Ayme
http://patriceayme.wordpress.com/


Artie Gold
Austin, TX

The real question at this point is "will we get to 1937?"
A lot of the problem is that 9.5% unemployment is something we've seen before; a quarter of a century is but one generation. Yes, things are bad -- but to many, it's a restoration of "the way things are supposed to be" (hideous wealth distribution, the commoditization of labor and everything else). The big difference is that our expectations have changed to such a great extent. After all, the last time we saw unemployment at these levels it preceded a pair of decades of considerable growth (the second better shared than the first, to be sure -- and even then medians barely touched the pre-oil-shock levels).
Perhaps the first thing we need to do is to un-massage the unemployment numbers; if the "real" number were promulgated (is it 13%? 14%? more, using the pre-Reagan standard?) Of course, the "other side" would immediately demagogue that issue too -- happily comparing apples to oranges...
Yes, what must happen is to drive a stake through the heart of the trickle-down worldview that got us into this mess. There's a somewhat creepy predestination-type argument that keeps being made, that the whole problem was that people got loans who didn't deserve them -- indeed who were not WORTHY of them -- and THAT'S what brought things down.
No, dammit, the fact is that a consumer-based society coupled with a consistently upward-redistributable (read: "low tax") economy is, by its very nature, unsustainable.
Here's my prescription:
Raise the minimum wage by 30% over two years.
Institute a sharply progressive income tax for incomes over, say $400000, up to, say, 60% for incomes over 1500000 and 75% over 5000000.
Establish a living wage, at likely 150% of minimum wage; wages paid below that create a corporate tax liability of 25% of the difference (against profits).
Fund the shortfalls of the states.
Create a significant fund for very low cost loans for education.
Pass a reasonable form of Universal Health Care.
Might all this be inflationary? Yes. Most likely. Truth is, inflation has been artificially low for decades now. Capital has had its party. If we are dependent upon consumption, money has to be placed in the hands of those who will use it to consume.

When the party (finally) gets started -- and goin' pretty good -- *then* you take the punchbowl away. But not until we cut unemployment by half.

Look, I'm not an economist, nor am I an MBA (many of whom are wonderful people, but as a group -- in terms of their overall effect -- not so much). I am, however an observer of the scene and have been around the block likely a few more times than I have left. Still, it seems pretty obvious.

If we make the stated policy goal to eclipse the former high in real median income by 10% we'll be all right. Otherwise it's gonna be a long slog.



Zach
NY

Where is the economic stimulus going to come from the Obama administration? He's planning to increase government spending on all fronts therefore putting America more into debt, and plans to tax the productive in society even more, ignoring that the loathed big corporations are also big employers . What's this fantasy that the Cap and Trade tax, that will drain trillions of dollars from manufacturers, and that is going to make the price of everything increase, is going to create tens of millions of green jobs and provide cheap renewable energy for everyone? Some of this tax money will be given away to foreigners also? Everyone in America will be making wind turbines and solar panels and have a wind turbine and solar panel on their house? America's financial sector has swindled our 401K's, and these money shufflers still make criminal levels of income, for producing absolutely nada. With all this talk about deflation, why do the price of essentials like food, fuel, utilities, medical treatment and insurances keep going up? OK gas is down from a year ago but it's still high. I don't see prices dropping for consumables at places like Walmart either. What if foreigners start dumping the US dollar, China, Russia, Brazil, and South Africa would like to see an alternative global currency. If the rest of the world dumps and devalues our currency, printing more dollars will be necessary to buy the foreign manufactured goods we crave, increasing inflation. The blue states in particular are going bankrupt right now, California is the fiscal equivalent of a banana republic. To get ones house in economic order one must be sovereign over that house. What's this idea that the USA can continue to ignore it's national sovereignty and forever allow tens of millions of foreign nationals to uncontrollably enter our country, until our population hits half a billion in 40 years, and a billion before the century is out? What a great future for our grandkids, larger crowds of American consumers at Walmart. The only people I see getting wealthy in our future are politicians and other government employees and their media cheerleaders, and guess what, these folks don't do any real work or produce anything. I'm willing to wait 8 years for the Obama miracle to happen. It'll have to be a miracle as Bush and his buddies sold us all down the river. Let's see if the new guy isn't all talk. Progressives with 60 senators own this country now, let's see what you guys are made of.


pdxtran
Minneapolis

The first thing the Obama administration needs to do is stop pouring money into Afghanistan and Iraq, wars that were war crimes to begin with and are now being fought with no clear purpose in mind.

Then billions of dollars per month that are being spent on killing mostly innocent people and lining the pockets of corrupt private contractors can be used to meet our pressing domestic needs.

However, I fear that our Democrats are either complicit in this monstrosity of a war or are too chicken-hearted to withstand Republicans' cries of "Soft on terrorism!"



AnnS
MI

Obama is not FDR - not even close. He doesn't have a Harry Hopkins who shoveled money out the door for projects as fast as possible on the grounds that people needed work NOW because they eat ever day - and couldn't wait for work to buy food until the 'system' maybe might possibly recovered on its own.

Obama's advisers are so closely ties to and imbibed with the culture of Wall St one owners if they have ever deal with the regular median income household. Obama himself is a Chicago politician to the bone. The only difference between him and Richard Daley SR who knew where the bodies were buried in Chicago politics - and used that information - and whose mantra was to keep the voters happy by keeping the trash picked up and snow plowed is that instead of selling services to please the voters, he sells nice speeches and fine words which are not supported by backbone, grit, determination and a fundamental knowledge of how to make the legislative process work or where the bodies are buried among the Congress Critters. He is selling some phantasmagorical version of an alternative reality where everyone will play nice because he asks them to.

They will have to hurry to do something. By the U-6 unemployment data which shows 16.1% unemployed and underemployed ( and the number closest to the methods used to estimate unemployment in the 1930s) it is already late 1931 - early 1932 and moving fast to repeat the past.

I do not expect squat from Obama or his advisers. They are too timid in dealing with Congress, they are too inexperienced in dealing with Congress and Obama is simply too insipid and too unforceful with his focusing on vague ideas rather than the practicalities of getting things done. The only plus is that it would have been even worse if McCain had won.



Mehul Shah
Boston, MA

[Paul Krugman keeps asking for a bigger stimulus package] This is the guy who if you go back to his writings in 2001-2002 called for a housing bubble to offset the tech slump.

We all know how the artificial demand we pumped played out, and now Mr. Krugman is calling for more stimulus, more artificial aggregate demand pumping. Enough of this non-stop Keynesian bubble creation.....

This is not a partisan issue. We simply can't spend our way out of this mess. Let's take our bitter medicine and lay foundation for sustainable economic growth.



soso
Canada

Dear Economist Krugman, clearly you are trying to reason more, but most unfortunately, America has gone mad, perhaps permanently. Just read the headlines, many from NYTimes, your own paper, and tell us if you think otherwise.

New major offensive is mounted in Afghan; Iraq occupation continues.

Many, including a 12 year old boy captured, tortured, held at Gitmo.

700 billion annual defense budget, full of waste, rules the world.

Total jobless rate hits 9.5%, effective rate 18.6%, and still rising.

California and other states have, or are on the verge of bankruptcy.
South Carolina Governor prefers romantic adventure in South America.

50 million people with no health insurance, many more under insured.

The climate legislation reduced to meaningless in corporate Congress.
China is speeding ahead: Green Power Takes Root in the Chinese Desert.

WSJ reported today that “big pay packages” are back on Wall Street. Annual bonuses could reach 2007 levels, Goldman Sachs $700,000 each.

Well the root cause is now known = The Great American Bubble Machine
Matt Taibbi on how Goldman Sachs has engineered every major market manipulation since the Great Depression.