$825 Billion Stimulus Plan

trrenter_IHB

trrenter_IHB

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You can find this article just about anywhere <a href="http://news.yahoo.com/s/ap/20090116/ap_on_go_co/obama_stimulus">$825 Billion Stimulus</a>



I was opposed to Bush's stimulus and now I am certainly opposed to this. I was also opposed to Bush's tax cuts while we were at war with Iraq. (don't want to debate the war just pointing out I was critical of those decesions as well). I was also opposed to Tarp.



So my oposition is to the Stimulus not Obama.



There are a few parts that really are counter productive and unfair. This link <a href="http://blogs.wsj.com/independentstreet/2009/01/06/is-obamas-stimulus-plan-unfair-to-small-firms/">WSJ article.</a>



Then the new Sod for the National Mall and millions of $40 coupons for digital converter boxes?



Estimates are that this stimulus package will cost $275,000 for each new job created.



Finally Obey admits that much of the money won't flow into the economy immediatly. <a href="http://www.lubbockonline.com/stories/011609/loc_377890937.shtml">One more link for shiggles.</a>
 
Agreed. Since they ever mentioned the word bailout, I opposed it. It is anti everything America is known for. It moves us towards socialism vs. staying in capitalism. Let the market decide, even if the system collapses. Perhaps the DOW would be at 3K now if it did collapse, but we sure as hell would know where we stand. There wouldn't be this "un-certanty" as to where we are or where we are going. We would definately know how bad the banking system really is, how much unemployment there really is etc. You can't buy your way out of a problem, they are simply delaying it.



Let the system go into cardiac arrest, perform triple bypass surgery and move on. Instead we are using bandaids to solve a far greater problem. Eventually, we will bleed to death.
 
What would the social cost be if we just let economy tank and have it all eventually correct itself through the invisible guiding hand of the free market? I'm not saying that throwing money at the problem (like is being done) is the solution. I'm only trying to point out that there is a human cost to all of this as well.



BTW, bailouts and subsidies are very much an American thing. It's nothing new to this crisis.
 
[quote author="green_cactus" date=1232670518]What would the social cost be if we just let economy tank and have it all eventually correct itself through the invisible guiding hand of the free market? I'm not saying that throwing money at the problem (like is being done) is the solution. I'm only trying to point out that there is a human cost to all of this as well.



BTW, bailouts and subsidies are very much an American thing. It's nothing new to this crisis.</blockquote>


The social cost would be less if left to it's own devices. The human cost is greater as the government introduces more inefficiency.
 
But thats the whole point green. You have to do what is fair and let the free market take its course. However, this isn't a free market anymore. Why does Joe Shmoe get a bailout and Joe Doe doesn't? Why does BofA get a bailout, but the little startup credit union down the street get overlooked? Why did Lehman get nuked, but not AIG? Why aren't these CEO's being put on trial for fraud, while Kenny from Enron nation sits in a cell?

When I came to America, I admired it and proudly spoke of its values. America has changed over the past 10 years and is showing how corrupt it really is.

Forget moving towards socialism, this is socialism. Either you're a free market, or you're not. You can't say you're a vegetarian, but eat turkey once a year on Thanksgiving Day. One or the other.



Why not just move to Communism next? Where our govt can tell us what religion to be a part of and tell us what we will do for a living!

This to me is about moral hazard and placing a major burden on generations to come.
 
The problem with any bail out or stimulus is once it is enacted we will never know "what would have happened" without it.



I would venture a guess and say that TARP has helped artificially prop up housing prices in some markets, by how much is anybodies guess. I would think that any Bank receiving TARP money today would be liquidating foreclosures if not for the TARP money. The human cost is a person buying a home in one of those markets will have to put more of their income toward debt retirment for 30 years.



Why is B of A not liquidating the 20,000 homes that Countrywide owns? Estimated value is 3 billion dollars. I would say that if they reduced the price of these foreclosures by 40% they could sell many of them and raise some of their own cash.



People and companies profitted exponentially on the way up now we are trying to protect those same people on the way down.
 
[quote author="blackvault_cm" date=1232674343]But thats the whole point green. You have to do what is fair and let the free market take its course. However, this isn't a free market anymore. Why does Joe Shmoe get a bailout and Joe Doe doesn't? Why does BofA get a bailout, but the little startup credit union down the street get overlooked? Why did Lehman get nuked, but not AIG? Why aren't these CEO's being put on trial for fraud, while Kenny from Enron nation sits in a cell?

When I came to America, I admired it and proudly spoke of its values. America has changed over the past 10 years and is showing how corrupt it really is.

Forget moving towards socialism, this is socialism. Either you're a free market, or you're not. You can't say you're a vegetarian, but eat turkey once a year on Thanksgiving Day. One or the other.



Why not just move to Communism next? Where our govt can tell us what religion to be a part of and tell us what we will do for a living!

This to me is about moral hazard and placing a major burden on generations to come.</blockquote>


I wouldn't go as far as calling it socialism - that's a bit of a stretch. Actually, your egalitarian stance on the bailout is closer to the definition of socialism. :p



My problem with letting the free market take its course is that I don't believe in the general good of people. There is not a sufficient degree of altruism and selflessness for me to let the invisible hand do its magic. The motivation seems to always be (short term) profit above everything else.
 
[quote author="green_cactus" date=1232675939][quote author="blackvault_cm" date=1232674343]But thats the whole point green. You have to do what is fair and let the free market take its course. However, this isn't a free market anymore. Why does Joe Shmoe get a bailout and Joe Doe doesn't? Why does BofA get a bailout, but the little startup credit union down the street get overlooked? Why did Lehman get nuked, but not AIG? Why aren't these CEO's being put on trial for fraud, while Kenny from Enron nation sits in a cell?

When I came to America, I admired it and proudly spoke of its values. America has changed over the past 10 years and is showing how corrupt it really is.

Forget moving towards socialism, this is socialism. Either you're a free market, or you're not. You can't say you're a vegetarian, but eat turkey once a year on Thanksgiving Day. One or the other.



Why not just move to Communism next? Where our govt can tell us what religion to be a part of and tell us what we will do for a living!

This to me is about moral hazard and placing a major burden on generations to come.</blockquote>


I wouldn't go as far as calling it socialism - that's a bit of a stretch. Actually, your egalitarian stance on the bailout is closer to the definition of socialism. :p



My problem with letting the free market take its course is that I don't believe in the general good of people. There is not a sufficient degree of altruism and selflessness for me to let the invisible hand do its magic. The motivation seems to always be (short term) profit above everything else.</blockquote>


Who would be suffering really? and how? The people? They are going to lose jobs regardless. It's the CEOs that we are protecting and those in power.

Well maybe you're ok with protecting those that committed fraud and got rich on the way up with tax payer dollars. I'm not.
 
[quote author="blackvault_cm" date=1232674343]You have to do what is fair and let the free market take its course. However, this isn't a free market anymore.</blockquote>


Has the market ever been free? Not in my lifetime. Not in my grandfather's lifetime.
 
[quote author="blackvault_cm" date=1232676167][quote author="green_cactus" date=1232675939][quote author="blackvault_cm" date=1232674343]But thats the whole point green. You have to do what is fair and let the free market take its course. However, this isn't a free market anymore. Why does Joe Shmoe get a bailout and Joe Doe doesn't? Why does BofA get a bailout, but the little startup credit union down the street get overlooked? Why did Lehman get nuked, but not AIG? Why aren't these CEO's being put on trial for fraud, while Kenny from Enron nation sits in a cell?

When I came to America, I admired it and proudly spoke of its values. America has changed over the past 10 years and is showing how corrupt it really is.

Forget moving towards socialism, this is socialism. Either you're a free market, or you're not. You can't say you're a vegetarian, but eat turkey once a year on Thanksgiving Day. One or the other.



Why not just move to Communism next? Where our govt can tell us what religion to be a part of and tell us what we will do for a living!

This to me is about moral hazard and placing a major burden on generations to come.</blockquote>


I wouldn't go as far as calling it socialism - that's a bit of a stretch. Actually, your egalitarian stance on the bailout is closer to the definition of socialism. :p



My problem with letting the free market take its course is that I don't believe in the general good of people. There is not a sufficient degree of altruism and selflessness for me to let the invisible hand do its magic. The motivation seems to always be (short term) profit above everything else.</blockquote>


Who would be suffering really? and how? The people? They are going to lose jobs regardless. It's the CEOs that we are protecting and those in power.

Well maybe you're ok with protecting those that committed fraud and got rich on the way up with tax payer dollars. I'm not.</blockquote>


Not really what I'm arguing for. The whole culture of CEOs is messed up in my view. They get hooked up with a golden parachute and options that are incentive to produce short term success (instead of long term sustainability with moderate growth). It is not in their best interest to see the company do well in the long term. They are better off with a volatile short term growth and then they can either jump ship or get fired yet get a nice severance package. Either way, they are going to be filthy rich afterward.
 
[quote author="T!m" date=1232677029][quote author="blackvault_cm" date=1232674343]You have to do what is fair and let the free market take its course. However, this isn't a free market anymore.</blockquote>


Has the market ever been free? Not in my lifetime. Not in my grandfather's lifetime.</blockquote>


Somalia has a free market ... no government to step in the way. :p
 
Look at the WSJ article. This SMB owner took precautions to NOT take losses and she doesn't benefit. Baby leg warmers(cracks me up)



I would argue she would be an owner that knows how to run a business. She made corrections to her business and has remained solvent and seems to have good business acumen. Now maybe one of her competitors will survive based on this stimulus that may have folded. (don't know how many baby leg warmer companies there are)



I would rather the unprofitable business fail and the profitable business will win more business, hire more employees and we know the person running the surviving entity is the better business person.

That is the cycle of life that these stimulus and bail outs may stave off.
 
I'm not against helping people who need help, but I would rather spend $825 Billion AFTER the collapse when it is clear who really needs the help and who would directly benefit. I acknowledge that this would be immensely painful in the short term, but it would go a long way towards providing a solid base for growth in the future and clear out inefficient uses of both human and physical resources in the meantime. What we are getting now is politically motivated infusions that are intended to prop up this increasingly unstable economy in an effort to prevent people from being hurt.
 
I am not against helping people who need help, but choosing the government as the "helper" is in actuality the opposite of helping. People need help from other people. Caring for people has to be personal. And yes, giving money is extremely personal.

The government does not help people overall. It feeds itself. And grows larger.

People have the best intentions, but putting the responsibility on the government is the opposite of helping. It is trying to make someone else help. It is turning one's back on those who need help. It is saying, "I care, but someone else has to pay. And since I care, I know what is best, and others have to pay for what I say is best. If anyone does not agree with me, then they do not care, proving that I am right."
 
Thank you. That is all I'm trying to say. I want the pain now, then we can really decide what needs help and who needs help. Right now we are just throwing money at things we don't even know about or know how they function. It makes me very uncomfortable knowing that people are getting rich off this, the fact that we have no clue what our money is even used for as they won't disclose it and the fact that we will continue to pour more money "hoping" something sticks.
 
The idea of just letting things collapse and starting over might be seductive, but I think it misses something. By letting things collapse, you can actually end up with a much, much bigger problem than if you try to have a slow decline. Think of a parachute. With or without it, you still fall the same distance.



Another analogy that comes to mind is the broken windows policy in law enforcement. Here the idea is that if you clean things up and deal with even small crimes, the overall crime rate goes down.



Studies have shown that if you walk into a bathroom that has trash on the floor, you are less likely to make sure you throw your paper towel into the trash can compared to a bathroom that has no trash on the floor.



If the government did nothing, it is possible that it will cost more in the long run to get the economy going again. For that matter, how long do we wait before the government does something? What constitutes the bottom? Do we wait until we have 10% of the population starving? 20%? How about 10% not starving but not quite being able to provide proper nutrition and medical care for their children? Maybe just until no one is paying to have their children vaccinated and we get outbreaks of diseases that we can prevent? If you think we should not have the government involved at all, then there doesn't seem to be a reason to have a government. One of the purposes of the govt is to help organize and facilitate. Wanting to rely on your fellow man to help is great, but if all your fellow men are also broke, then what?



I am guessing that every person alive can find at least 1 thing wrong with the bailout. How many permutations of these problems can there be? I think the govt needs to do something though.



A lot of things have tipping points. If you can address a problem before it gets to the tipping point, you can keep a problem from becoming catastrophic.
 
[quote author="T!m" date=1232686517]The idea of just letting things collapse and starting over might be seductive, but I think it misses something. By letting things collapse, you can actually end up with a much, much bigger problem than if you try to have a slow decline. Think of a parachute. With or without it, you still fall the same distance.



Another analogy that comes to mind is the broken windows policy in law enforcement. Here the idea is that if you clean things up and deal with even small crimes, the overall crime rate goes down.



Studies have shown that if you walk into a bathroom that has trash on the floor, you are less likely to make sure you throw your paper towel into the trash can compared to a bathroom that has no trash on the floor.



If the government did nothing, it is possible that it will cost more in the long run to get the economy going again. For that matter, how long do we wait before the government does something? What constitutes the bottom? Do we wait until we have 10% of the population starving? 20%? How about 10% not starving but not quite being able to provide proper nutrition and medical care for their children? Maybe just until no one is paying to have their children vaccinated and we get outbreaks of diseases that we can prevent? If you think we should not have the government involved at all, then there doesn't seem to be a reason to have a government. One of the purposes of the govt is to help organize and facilitate. Wanting to rely on your fellow man to help is great, but if all your fellow men are also broke, then what?



I am guessing that every person alive can find at least 1 thing wrong with the bailout. How many permutations of these problems can there be? I think the govt needs to do something though.



A lot of things have tipping points. If you can address a problem before it gets to the tipping point, you can keep a problem from becoming catastrophic.</blockquote>


Until the banks can start lending money to GOOD credit risks on a regular basis the economy will faulter. It is the credit crunch that is effecting business' that could prosper if given a credit facility to expand. This in my belief is the tipping point.



With the parachute analogy we could say imagine falling to earth with a ripped parachute, when you hit ground you will splat. The end result will still be the same "splat" however one is over with much quicker.



The government trying to spend money proactively scares me. I don't understand how Sod and High Speed internet (in rural areas) will stimulate the economy.



That thinking alone leads me to believe this stimulus is flawed. Not to mention Obey is clear there may be more needed.



As much as I am opposed to TARP I think I would rather them stimulate the economy by unfreezing the banks with that cash. Or taking that $825 Billion and open the National Bank of the United states and start making loans to good credit risks.
 
[quote author="skek" date=1232679140]Cactus, have you ever read Adam Smith? The invisible hand isn't premised on altruism or a sense of do-goodery. It is based on the idea that if you are seeking your best interest and I'm seeking my best interest, any transaction we engage in will represent the optimum use of the goods and services trading hands. It is the opposite of what you are describing. The problem is when the system is rigged to give certain participants an advantage and I think that's what BV is talking about.



Also, please don't confuse a free market with anarchy. You know better than that.</blockquote>


I guess the :p made it past you on my Somalia comment ...



You are right about Adam Smith if you limit it to revenue alone and look at a closed system. Once you factor in environment, health and global impact it is not as simplistic.
 
[quote author="T!m" date=1232686517]The idea of just letting things collapse and starting over might be seductive, but I think it misses something. By letting things collapse, you can actually end up with a much, much bigger problem than if you try to have a slow decline. Think of a parachute. With or without it, you still fall the same distance.



Another analogy that comes to mind is the broken windows policy in law enforcement. Here the idea is that if you clean things up and deal with even small crimes, the overall crime rate goes down.



Studies have shown that if you walk into a bathroom that has trash on the floor, you are less likely to make sure you throw your paper towel into the trash can compared to a bathroom that has no trash on the floor.



If the government did nothing, it is possible that it will cost more in the long run to get the economy going again. For that matter, how long do we wait before the government does something? What constitutes the bottom? Do we wait until we have 10% of the population starving? 20%? How about 10% not starving but not quite being able to provide proper nutrition and medical care for their children? Maybe just until no one is paying to have their children vaccinated and we get outbreaks of diseases that we can prevent? If you think we should not have the government involved at all, then there doesn't seem to be a reason to have a government. One of the purposes of the govt is to help organize and facilitate. Wanting to rely on your fellow man to help is great, but if all your fellow men are also broke, then what?



I am guessing that every person alive can find at least 1 thing wrong with the bailout. How many permutations of these problems can there be? I think the govt needs to do something though.



A lot of things have tipping points. If you can address a problem before it gets to the tipping point, you can keep a problem from becoming catastrophic.</blockquote>
T!m, the problem has already become catastrophic. Is it possible that things will cost more to rebuild post collapse? Certainly.



But consider this: We are going to spend trillions on a parachute, to use one of your metaphors, at which point we will still land at the 'bottom'. When we get there, we will be asked to spend the same amount on rebuilding that we need to spend in my "let it crash" scenario. We aren't going to avoid one simply by doing the other. What the world looks like when we get to this 'bottom', and our ability to be effective in aiding our own recovery, will largely be the result of how we handled the crash.



As for when we need to do "something", I think that events will determine that on their own. Unemployment is already covered, as is providing food and vaccinations, under existing programs. Allowing banks with bad balance sheets, businesses who failed to keep prudent cash reserves and chose to rely on credit, and homeowners with mortgages they cannot service, to fail due to their own actions will shorten the length of the crash and reduce the amount of time people feel the pain that is coming. We can extend unemployment payment indefinitely or until true uneployment levels off. We can provide food, food stamps, and school lunches to prevent starvation (and provide a market for domestic farmers at the same time) in the general population. Once the deleveraging, bankruptcies, and unemployment has peaked and subsided, we can then focus on rebuilding... with a national balance sheet that isn't already bloated with debt that was used to prevent the unpreventable, with banks and businesses that survived because they maintained sound fundamental business practices, and with a domestic population that is ready, willing, and able to rebuild while putting their 'wants' in proper relation to their needs.
 
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