The Economy, stupid

[Cknolls]

Until Sarbanes Oxley, the US was burying the rest of the world in tradng volume and listings. I would say that until that point it was obvious that the rest of the world came to the US for its markets. Now as the government as gotten more involved, that advantage has disipated, and people have started going overseas when possible. If you start taxing the very people who make a market liquid, yes, it will hurt more. Its basic economic sense that the more something costs, the less of it that will be demanded. In a world wide setting the UK is no where near the many other world markets.

 

 

The lost income tax revenue and unemployment this tax would cause far outweighs any revenue it generates. And with Obama being from the futures capital of the world this will never pass........Next tax, please.

[mr_genius]

Wow, we might see Dow 9000 today the way things are going. Flattening and flirting a bit around 8950 though, so, we could also collapse back pretty quickly.

 

 

could drop below 8k soon

[Balta1701]

Circuit City to liquidate its remaining merchandise, shutter its remaining 567 stores, lay off 30,000.

 

Aside from the impact of dumping those people on to the job market, another thing a liquidation like this one really does is it hurts an awful lot of smaller shops. Think about your neighborhood Circuit City...how many of them share parking lots with another store? Or have a small cafe next to it? Or even sit as part of a mall? All of those shops now suddenly will have lost a big part of their customers, because no one's coming there for the Circuit City any more, and if the building starts to get run down or trashy, then you're talking major urban blight.

[NorthSideSox72]

Circuit City to liquidate its remaining merchandise, shutter its remaining 567 stores, lay off 30,000.

 

Aside from the impact of dumping those people on to the job market, another thing a liquidation like this one really does is it hurts an awful lot of smaller shops. Think about your neighborhood Circuit City...how many of them share parking lots with another store? Or have a small cafe next to it? Or even sit as part of a mall? All of those shops now suddenly will have lost a big part of their customers, because no one's coming there for the Circuit City any more, and if the building starts to get run down or trashy, then you're talking major urban blight.

It will definitely be painful - that's a big company to be ceasing operations. But, companies like Best Buy and the like will benefit in the long run, and they will hire more people.

 

[southsider2k5]

This is why spending is the absolute wrong plan if the economy is in such immediate danger as we keep getting told. Don't miss the line that states that only $26 billion of the $355 in appropraitions would actually be spent in 2009. Things like tax cuts and extended benefits hit peoples pocketbooks immediately. The rest of the appropriations are just pork barrel stuff, and have no business being passed off as a stimulus plan. That goes for both the green energy and the construction plans. The merits of it being needed can be debated, but there is no question this will do nothing for the near term economy in the US.

 

http://www.bloomberg.com/apps/news?pid=206...&refer=home

 

One-Quarter of Stimulus Money Won’t Be Spent by 2011, CBO Says

 

By Brian Faler

 

Jan. 20 (Bloomberg) -- At least one-quarter of House Democrats’ proposed $825 billion economic stimulus plan wouldn’t be spent until at least 2011, according to a report that suggests the package may take longer than expected to boost the economy.

 

A Congressional Budget Office analysis said most of the plan’s $355 billion in appropriations for programs such as highway construction wouldn’t be spent until after 2010. The government would spend about $26 billion of that money this year and $110 billion more next year, the report estimated. It projected the government would spend $103 billion in 2011, $53 billion in 2012 and $63 billion from 2013 to 2019.

 

The plan, crafted with President-elect Barack Obama’s economic team, is aimed at helping lift the economy out of recession through a combination of tax cuts for families and businesses and $550 billion in new federal spending on infrastructure projects, expanded jobless benefits, renewable energy initiatives and scores of other initiatives.

 

The report, e-mailed to reporters by Senate Minority Leader Mitch McConnell’s office, only analyzed the discretionary section of the plan and didn’t examine the $275 billion worth of tax cuts or approximately $195 billion in mandatory spending changes such as increased jobless benefits.

 

It suggested that much of the stimulus may not come until after the economy has begun to recover. The Congressional Budget Office has said it expects a “slow” recovery to begin later this year and that the economy will expand by a “modest” 1.5 percent in 2010.

 

Highway Construction

 

The report said the government would spend less than $5 billion of the $30 billion provided for highway construction in the next two years. The government would be able to spend less than $3 billion of the $18.5 billion provided for energy efficiency and renewable energy programs by the end of next year, the study said.

 

The timing of spending on different programs would vary because some, such as building a highway, take longer to implement than others, such as providing bigger unemployment assistance checks.

 

House Appropriations Committee Chairman David Obey, a Wisconsin Democrat, declined last week to say how quickly he believed the government could spend the stimulus money. He said that while lawmakers looked for programs that could be implemented quickly, they didn’t focus exclusively on “shovel- ready” projects because they also wanted to address longer-term problems.

 

To contact the reporter on this story: Brian Faler in Washington at [email protected]

[mr_genius]

Whoa, the market is completely tanking today. DOW -317 at the moment

 

 

[kapkomet]

This is why spending is the absolute wrong plan if the economy is in such immediate danger as we keep getting told. Don't miss the line that states that only $26 billion of the $355 in appropraitions would actually be spent in 2009. Things like tax cuts and extended benefits hit peoples pocketbooks immediately. The rest of the appropriations are just pork barrel stuff, and have no business being passed off as a stimulus plan. That goes for both the green energy and the construction plans. The merits of it being needed can be debated, but there is no question this will do nothing for the near term economy in the US.

 

http://www.bloomberg.com/apps/news?pid=206...&refer=home

This is completely bogus. It's not a stimulus plan, it's a plan to shove everything down our throat in one massive pork barrell bill. That's why we keep being told "how bad it is" so they can push this s*** through.

 

 

[lostfan]

Geithner says he wants to be more careful with the remaining 350 billion, and to actually pay attention to where it's going this time.

http://money.cnn.com/2009/01/21/news/geith...dex.htm?cnn=yes

NEW YORK (CNNMoney.com) -- Treasury Secretary-designate Tim Geithner called for bold action to blunt the economic downturn and promised to tighten the terms for companies getting federal financial help.

 

In prepared remarks before the Senate Finance Committee Wednesday morning, Geithner called on senators to support President Obama's proposed stimulus plan. The comments come as the Senate panel prepares to consider whether to confirm Geithner as the nation's top financial officer.

 

"Senators, the ultimate costs of this crisis will be greater, if we do not act with sufficient strength now," Geithner's testimony read. "In a crisis of this magnitude, the most prudent course is the most forceful course."

 

In his testimony, Geithner - who is currently the president of the Federal Reserve Bank of New York - also advocated "aggressive action to address the housing crisis and to get credit flowing again," though he offered no specifics.

 

The comments come a day after President Obama took office, only to confront the worst-ever Inauguration Day selloff in the stock market.

 

The Dow Jones industrial average dropped 4% Tuesday, led by another free fall in bank stocks. The KBW Bank index plunged 20% to its lowest level since 1994, amid worries that big financial institutions such as Citigroup (C, Fortune 500), Bank of America (BAC, Fortune 500) and JPMorgan Chase (JPM, Fortune 500) will require additional federal aid that could wipe out shareholders.

 

Geithner said that if confirmed as Treasury secretary, he would work to reform the government's most visible response to the financial sector crisis - the $700 billion financial bailout plan enacted by Congress last fall after September brought the collapse or takeover of six major financial institutions.

 

The Bush administration's approach to the Troubled Asset Relief Program, or TARP, has become deeply unpopular with legislators and the public.

 

Many skeptics complain that there was no plan in place to make sure the first $350 billion in government funds were used to boost lending to consumers and businesses.

 

Geithner said a revised TARP plan will contain "tough conditions to protect the taxpayer and the necessary transparency to allow the American people to see how and where their money is being spent and the results those investments are delivering."

 

The comments echo those made recently by another top Obama economic aide, National Economic Council chief-designate Larry Summers.

 

Addressing another prominent concern, Geithner promised to develop a plan to unwind the government support for financial markets and institutions as soon as possible, and to develop a plan to put the nation on sounder footing fiscally.

 

The budget deficit is expected to exceed $1 trillion in coming years as tax receipts plunge and federal spending expands to fill the shrinking private sector.

 

"We need to demonstrate with clear and compelling commitments now, that when we have effectively resolved the crisis and recovery is firmly established, that as a nation, we will return to living within our means," Geithner said.

[NorthSideSox72]

Geithner says he wants to be more careful with the remaining 350 billion, and to actually pay attention to where it's going this time.

http://money.cnn.com/2009/01/21/news/geith...dex.htm?cnn=yes

Novel idea.

 

[lostfan]

Novel idea.

Yeah, ya think?

 

That's like a pitcher going "oh, maybe I would stop walking so many guys if I threw strikes instead of trying to make them swing and miss all the time."

[Cknolls]

http://www.redstate.com/brianfaughnan/2009...-stimulus-plan/

 

 

Any thoughts?

 

 

I really like the first idea pertaining to tax rates.

[Balta1701]

This is why spending is the absolute wrong plan if the economy is in such immediate danger as we keep getting told. Don't miss the line that states that only $26 billion of the $355 in appropraitions would actually be spent in 2009. Things like tax cuts and extended benefits hit peoples pocketbooks immediately. The rest of the appropriations are just pork barrel stuff, and have no business being passed off as a stimulus plan. That goes for both the green energy and the construction plans. The merits of it being needed can be debated, but there is no question this will do nothing for the near term economy in the US.

 

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Controversial CBO Report On Stimulus Turns Out Not To Exist

Reports of a recent study by the Congressional Budget Office, showing that the vast majority of the money in the stimulus package won't be spent until after 2010, have Democrats on the defensive and the GOP calling for a pullback in wasteful spending.

 

Funny thing is, there is no such report.

 

"We did not issue any report, any analysis or any study," a CBO aide told the Huffington Post.

 

Rather, the nonpartisan CBO ran a small portion of an earlier version of the stimulus plan through a computer program that uses a standard formula to determine a score -- how quickly money will be spent. The score only dealt with the part of the stimulus headed for the Appropriations Committee and left out the parts bound for the Ways and Means or Energy and Commerce Committee.

 

Because it dealt with just a part of the stimulus, it estimated the spending rate for only about $300 billion of the $825 billion plan. Significant changes have been made to the part of the bill the CBO looked at.

 

The CBO numbers were given to a small number of congressional Democrats and Republicans, but were not posted online because they're not an official CBO product. (Media outlets, while reporting widely about the "report," have declined to post it online. Here's the whole thing.) Democratic aides say they are certain that the GOP leaked it to the Associated Press in order to undercut the spending portion of the stimulus.

 

A Republican aide for the House Appropriations Committee denied involvement, saying that her staff did not see the CBO numbers until after the AP reported them. The Washington Post followed the AP and reported that aides provided the numbers to Senate Minority Leader Mitch McConnell (R-Ky.).

[kapkomet]

This is a bulls*** article. The "plan" changes every day.

 

[NorthSideSox72]

This is a bulls*** article. The "plan" changes every day.

Kind of like a bulls*** CBO report?

 

[southsider2k5]

Controversial CBO Report On Stimulus Turns Out Not To Exist

 

So in other words its not a "report" because it wasn't published for public consumption. Notice they don't dispute any of the facts IN the report though, right?

[kapkomet]

So in other words its not a "report" because it wasn't published for public consumption. Notice they don't dispute any of the facts IN the report though, right?

That was my point.

[Balta1701]

I was just at a talk given by a guy who's one of the National Medal of Science winners from a few years ago. In the late 90's, he also won an award for his work that carries a $1 million prize.

 

His statement on that, to paraphrase:

PG: Well, about that $1 million. Half went to taxes, so that part's gone, and the other half, well I lost that half.

(Former director of JPL in the audience): How'd you lose the other half?

PG: I invested it.

[Balta1701]

So in other words its not a "report" because it wasn't published for public consumption. Notice they don't dispute any of the facts IN the report though, right?

The actual report is out. Out of the $606 billion in spending included in the bill that they analyzed, $374 billion will be out the door by the end of 2010.

[southsider2k5]

The actual report is out. Out of the $606 billion in spending included in the bill that they analyzed, $374 billion will be out the door by the end of 2010.

 

So much for this needing to be done immediately. You pretty much just proved that point. Not to mention how much of that money isn't going for actual stimulus, but just pork barrel spending and rewards for loyal constituents, such as contriceptives and money for the NEA.

[Balta1701]

So much for this needing to be done immediately. You pretty much just proved that point. Not to mention how much of that money isn't going for actual stimulus, but just pork barrel spending and rewards for loyal constituents, such as contriceptives and money for the NEA.

Do you actually realize what kind of limb you're going out on here? The CBO report on the actual package essentially undercuts every single element you're trying to go after. Also, after some slight checking...that 64% number is not the end of 2010, it's September 30th of 2010. By the end of 2010, it's actually up to 79% of the package, $477 billion. The remainder consists of a few tax credits, which btw I'd be more than happy to get rid of in favor of additional infrastructure spending, and more long-term projects, like upgrades to highways and the electrical grid which simply take longer to complete than 2 years. And also, the CBO assumes that the package is passed in the middle of this year, which at this point seems too cautious, given that it's likely to be done in Feb.

 

But even with that, I'm going to fire back at you the...well, the CBO analysis.

Without a major economic stimulus plan, "the shortfall in the nation's output relative to its potential would be the largest – in terms of both length and depth – since the Depression of the 1930s," said new CBO Director Douglas Elmendorf in testimony prepared for the House Budget Committee.

 

The... bill, Elmendorf said, "would provide a substantial boost to economic activity over the next several years relative to what would occur without any legislation."

 

With the bill, CBO figured economic output would be between 1.3 percent and 3.6 percent higher at the end of this year, higher by a similar amount at the end of 2010 and even higher in 2011.

 

The help is needed to reverse a downturn that CBO estimates will easily surpass the 1981-82 and 1973-75 recessions, each of which last 16 months, by mid-year.

 

"It could also be the deepest recession during the postwar period in terms of the difference between actual and potential output," Elmendorf said. By his estimates, output over the next two years will average 6.8 percent below normal.

 

On the contraceptive plan...that is actually a good plan, and it's the sort of plan that saves money in the medium term by you know, having people have fewer unplanned pregnancies. But that's being pulled after the usual pattern of Republicans complaining and having the bill made worse because of it so that they can say that government doesn't work.

[southsider2k5]

Do you actually realize what kind of limb you're going out on here? The CBO report on the actual package essentially undercuts every single element you're trying to go after. Also, after some slight checking...that 64% number is not the end of 2010, it's September 30th of 2010. By the end of 2010, it's actually up to 79% of the package, $477 billion. The remainder consists of a few tax credits, which btw I'd be more than happy to get rid of in favor of additional infrastructure spending, and more long-term projects, like upgrades to highways and the electrical grid which simply take longer to complete than 2 years. And also, the CBO assumes that the package is passed in the middle of this year, which at this point seems too cautious, given that it's likely to be done in Feb.

 

But even with that, I'm going to fire back at you the...well, the CBO analysis.

 

 

On the contraceptive plan...that is actually a good plan, and it's the sort of plan that saves money in the medium term by you know, having people have fewer unplanned pregnancies. But that's being pulled after the usual pattern of Republicans complaining and having the bill made worse because of it so that they can say that government doesn't work.

 

Here is a crazy idea then... don't call it a stimulus package when the majority of it has nothing to do with stimulating the economy on the short term. Its a bait and switch. We have Obama on TV telling us that this has to be passed NOW because the economy depends on it, yet the majority of it won't hit the economy for over a year, when the economy will be correcting itself already according to most estimates. Realize that the velocity of money dictates that even if you put a trillion dollars into the pockets of American's tomorrow, that the real effects aren't felt statistically by the economy for AT LEAST 6 months, and probably more like year depending mostly on the savings rates of those who receive these funds. The whole idea of a stimulus package it to get money into the economy as soon as possible, which isn't economically possible in a vast majority spending bill. If the money isn't even scheduled to be spent until 2010, 11, 12, and even 13 in some cases that isn't going to help us at all before 2011. We are essentially punting on the economy for two entire years now. Don't lie to the American people and tell them that this is a stimulus plan, it is a spending plan, plain and simple. Basic macroeconomics bears this out factually. Barack Obama is contradicting himself every time he goes on TV and talks about this as being important to stimulate the economy as soon as possible.

[kapkomet]

Do you actually realize what kind of limb you're going out on here? The CBO report on the actual package essentially undercuts every single element you're trying to go after. Also, after some slight checking...that 64% number is not the end of 2010, it's September 30th of 2010. By the end of 2010, it's actually up to 79% of the package, $477 billion. The remainder consists of a few tax credits, which btw I'd be more than happy to get rid of in favor of additional infrastructure spending, and more long-term projects, like upgrades to highways and the electrical grid which simply take longer to complete than 2 years. And also, the CBO assumes that the package is passed in the middle of this year, which at this point seems too cautious, given that it's likely to be done in Feb.

 

But even with that, I'm going to fire back at you the...well, the CBO analysis.

 

 

On the contraceptive plan...that is actually a good plan, and it's the sort of plan that saves money in the medium term by you know, having people have fewer unplanned pregnancies. But that's being pulled after the usual pattern of Republicans complaining and having the bill made worse because of it so that they can say that government doesn't work.

LMFAO.

 

Are you serious? And then you call this a stimulus bill, just like Obama, right? Holy s***. That's just f***ed up. It's a SPENDING bill, not a damn stimulus. They are ramrodding everything they can of their pet projects, all while standing up front of the American people saying we need this NOW! What a crock of s***.

 

Oops. Didn't see southsiders post when I typed this.

 

Edited January 28, 2009 by kapkomet

[Balta1701]

Here is a crazy idea then... don't call it a stimulus package when the majority of it has nothing to do with stimulating the economy on the short term. Its a bait and switch. We have Obama on TV telling us that this has to be passed NOW because the economy depends on it, yet the majority of it won't hit the economy for over a year, when the economy will be correcting itself already according to most estimates. Realize that the velocity of money dictates that even if you put a trillion dollars into the pockets of American's tomorrow, that the real effects aren't felt statistically by the economy for AT LEAST 6 months, and probably more like year depending mostly on the savings rates of those who receive these funds. The whole idea of a stimulus package it to get money into the economy as soon as possible, which isn't economically possible in a vast majority spending bill. If the money isn't even scheduled to be spent until 2010, 11, 12, and even 13 in some cases that isn't going to help us at all before 2011. We are essentially punting on the economy for two entire years now. Don't lie to the American people and tell them that this is a stimulus plan, it is a spending plan, plain and simple. Basic macroeconomics bears this out factually. Barack Obama is contradicting himself every time he goes on TV and talks about this as being important to stimulate the economy as soon as possible.

The problem with your whole line of thinking though is that it assumes that the recession is going to end on its own rather than move in to a spiral. So far, we are in the liquidity trap spiral stage. Right now, if every single person makes the rational spending decision for his or her family, and every state makes the rational decision to cut back on spending, and every business seeing its sales drop cuts back on spending, and the federal government also cuts back on its spending, then there will be absolutely no reason for the recession to end. As people, businesses, and governments spend less, that provides incentive to continue cutting back, which provides even more incentive to spend less.

 

In a typical environment, the federal reserve can cut interest rates enough to make it a rational choice for people to resume spending because they can once again turn a profit by doing so if money is cheap enough. But given that interest rates are essentially sitting at zero, all of that ability to make it a rational choice for someone to spend more has gone away.

 

If you don't do this, then there is no reason for those estimates of when you're pulling out of the recession to be right, because there will be no reason to pull out of it. Right now, everyone making the rational economic decision winds this country up in a depression. The only one left who can spend money irrationally is the federal government.

[kapkomet]

The problem with your whole line of thinking though is that it assumes that the recession is going to end on its own rather than move in to a spiral. So far, we are in the liquidity trap spiral stage. Right now, if every single person makes the rational spending decision for his or her family, and every state makes the rational decision to cut back on spending, and every business seeing its sales drop cuts back on spending, and the federal government also cuts back on its spending, then there will be absolutely no reason for the recession to end. As people, businesses, and governments spend less, that provides incentive to continue cutting back, which provides even more incentive to spend less.

 

In a typical environment, the federal reserve can cut interest rates enough to make it a rational choice for people to resume spending because they can once again turn a profit by doing so if money is cheap enough. But given that interest rates are essentially sitting at zero, all of that ability to make it a rational choice for someone to spend more has gone away.

 

If you don't do this, then there is no reason for those estimates of when you're pulling out of the recession to be right, because there will be no reason to pull out of it. Right now, everyone making the rational economic decision winds this country up in a depression. The only one left who can spend money irrationally is the federal government.

Wow, you're thinking too short term, me thinks. Which is interesting. Money will be spent again - because people are inherently greedy. Sort of.

 

I understand what you're saying but I think you miss the point of what they are really trying to do - and that's disguise long term programs behind the "stiimilus" word, and that's wrong, because the effects can be devastating 5-10-25 years out.

 

[Balta1701]

For a different perspective on the timing of the stimulus arrival, here's last year's Nobel Prize winner for Economics.

It’s not a problem if some or even most of the stimulus arrives after the official recession, as determined by the NBER, is over. Why? Because in modern recessions, unemployment keeps rising long after the NBER has determined, based on things like industrial production, that the recession proper is over. You can see that the need for stimulus doesn’t end with the recession by the simple fact that in each of the last two recessions the Fed continued to cut interest rates long after the official cycle trough. if it’s good enough for the Fed, it’s good enough for fiscal policy.

 

So what is the right criterion? Actually, I think it’s quite straightforward. The reason we’re talking about fiscal policy is the fact that monetary policy is up against the zero lower bound. Stimulus will still be valuable as long as we’re still up against that bound — which is likely to be the case for a long time.

 

Again, I think it’s helpful to look at the last two recessions, even though we didn’t hit the zero bound either time. The 1990-1991 recession officially ended in March 1991; but the Fed kept cutting rates, and it didn’t start raising the target rate until Feb. 1992, 2 years and 11 months later. The 2001 recession officially ended in Nov. 2001; but the Fed kept cutting, and didn’t start raising rates until June 2004, 2 years and 7 months later. This suggests a long window, even after the recession officially ends, before the zero bound stops binding, and hence before the current strong case for fiscal expansion goes away.

 

Suppose, for example, that the recession ends this summer (which seems wildly optimistic). If recent experience is any guide, the Fed will still be keeping rates at zero 2 1/2 years later, that is, at the end of 2011.