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FREE THE MARKET!!!


VIVA LA FREE MARCHE!!

lukethedrifter wrote:FREE THE MARKET!!!


VIVA LA FREE MARCHE!!

You are quite obstreperous today. Try to have a nice forum.

Hungary Jack wrote:

lukethedrifter wrote:FREE THE MARKET!!!


VIVA LA FREE MARCHE!!

You are quite obstreperous today. Try to have a nice forum.

You can't blame people for being angry at free markets these days. Contrary to what some pundits and politicians might say, it's the free market and lack of oversight that got us into this mess.

Sen. Arlen Specter (R-PA), who broke with his party to support President Obama's stimulus package last week, said before the final vote Friday that more of his colleagues would have joined were they not afraid of the political consequences.

http://www.huffingtonpost.com/2009/02/1 ... 66875.html

Jocephus wrote:

Sen. Arlen Specter (R-PA), who broke with his party to support President Obama's stimulus package last week, said before the final vote Friday that more of his colleagues would have joined were they not afraid of the political consequences.

http://www.huffingtonpost.com/2009/02/1 ... 66875.html

Although that's a big "DUH!", it took courage for him to say so publicly.

The more I look at this Recovery Act, the less enthusiastic I get about it. I'm a bit surprised to even hear myself say this, but there's way too much needless spending in it. I'm happy with the tax cuts, and I'm happy with spending that's actually an investment in future growth, and I'm even happy with spending that invests in future savings (retrofitting public places to be more energy efficient, etc)... but a lot of it just seems like the Federal government is paying the bills for State governments (like the Medicaid program).

I wasn't a big fan of the bank bailout, but I understood that it was probably needed to maintain liquidity. But where is the regulation of that market that been missing for so many years? What good is that bailout and this recovery act going to do if the system doesn't get at least put in check, if not a complete overhaul? And what are the plans for all these bad assets that we know are going to continue to default?

Honestly, and maybe I'm just being pessimistic, but feel like we just pissed away about $1.5 trillion dollars. But I guess we can still look forward to maybe another $1-2 trillion in spending to really bail the financial markets out this time - at least with that plan they will try to address these toxic assets.

Ugh

I feel that the concept of stimulus has not been explained well given that there is so much talk about the contrast between "spending" and "stimulus". Stimulus is spending. That's the point. Here's the cartoon version:

At any given time, our economy has a certain capacity for production determined by our resources (people, factories, materials, etc.). During a recession, output falls but not because our actual capacity has been reduced. The problem is that there is insufficient demand for output. In this case, that has been caused the huge loss in housing wealth leading to a huge loss in stock wealth, a contraction of credit, and uncertainty leading people to save rather than spend. In such circumstances, there is a large unused productive capacity. Since the private market is not taking advantage of this, the government can. That's stimulus. Government spending to fill the gap left by the failure of the private marketplace.

Paying state government's bills is definitely stimulus. State governments often have balanced budget rules or limited capacity to borrow forcing them to make cuts during a recession. This compounds the failure of the private markets. Federal support prevents state governments from laying people off and allows these governments to continue to provide essential services when they are needed most.

clement wrote:

Jocephus wrote:

Sen. Arlen Specter (R-PA), who broke with his party to support President Obama's stimulus package last week, said before the final vote Friday that more of his colleagues would have joined were they not afraid of the political consequences.

http://www.huffingtonpost.com/2009/02/1 ... 66875.html

Although that's a big "DUH!", it took courage for him to say so publicly.

Yeah. Specter is amazingly couragous.

Spending vs stimulus is semantics - it's good spending vs bad spending that I'm concerned about. I don't disagree that the government's roll in this situation is to follow a Keynes-type model and to start buying goods and services, but I do disagree that helping states with their budget shortfalls (particularly with things like Medicaid and education) is an effective implementation of that stimulus model. Is it stimulus? Sure. Is it an effective use of money? I don't think so. I count about $200 billion in this Act that could have been more effective elsewhere (or even cut).

You can also provide stimulus through lower interest rates (in normal times). Clearly this is no longer an option to almost every central bank in the G7 during these times. Thus an unfortunate reliance on fiscal stimulus, and all the political baggage (pork) that it carries. I generally think tax cuts are the way to go, because they tend to be fairer and much quicker than the federal government picking regions and/or industries to receive the benefit of spending. The exception to the latter is in cases where long-term investment makes sense (energy efficiency measures, transportation measures, etc.).