44th President and 111th Congress (US Gov't 2009-2011)

[ZephyrLeanne]

As they always say, it's all politics.

[Shadow Kira01]

It's not just the Republicans. There were 11 Democratic "nay" votes too. However, Obama still received an approval to his stimulus package because it was 244:188 win. Considering the number of disapprovals, it certainly don't seem to be a good sign, especially that Obama is just in office for less than 2 weeks. If it was a landslide approval from both the Democrats and the Republicans, it would had been more assuring, yet it isn't now.

[ClockWorkAngel]

But regardless its going off, hopefully something good will follow.

I've always wondered how can you Americians afford to keeping giving yourselves money?

[Vexx]

Originally Posted by mg1942

hmmm I read somewhere that only about 90 billion will go to actual real job creation and stimulating the economy.
The rest of it... 700 billion or so is simple giveaway (yay money rain!)

You need to stop reading "somewhere" and find more specific real places to read information
Many of the congresspeople and the administration have specific detailed breakdowns of the Recovery Act and update it as it morphs through negotiations with various factions.

[Cluelessly]

Originally Posted by ClockWorkAngel

But regardless its going off, hopefully something good will follow.

I've always wondered how can you Americians afford to keeping giving yourselves money?

Yeah, I wonder about that too sometimes.

I think it involves magical ponies.

Anyway, WSJ breakdown of the simulus: http://online.wsj.com/public/resourc...MULUS0109.html

I find it a bit funny that the "aid to states" stimulus isn't really split down by state deficits.

[ZephyrLeanne]

Originally Posted by Cluelessly

Yeah, I wonder about that too sometimes.

I think it involves magical ponies.

Anyway, WSJ breakdown of the simulus: http://online.wsj.com/public/resourc...MULUS0109.html

I find it a bit funny that the "aid to states" stimulus isn't really split down by state deficits.

No, it involves Chinese folk saving money and China buying T-Bonds from USA. That's how: selling T-bonds.

[james0246]

Originally Posted by mg1942

hmmm I read somewhere that only about 90 billion will go to actual real job creation and stimulating the economy.
The rest of it... 700 billion or so is simple giveaway (yay money rain!)

About 33% of the 825 billion is direct stimulus (tax-cuts, etc) to the American people. So, about 250 billion dollars is being used to directly 'stimulate' the economy...I think .

[sikvod00]

People also need to understand that providing assistance to low-income families (increasing food stamps, extending unemployment benefits, etc). also stimulates the economy. Republicans put way to much emphasis on tax cuts\supply side economics.

Spoiler for Stimulus Measures Should Be Targeted on People Who Will Spend the Money Quickly:

When the economy is weak, generating more demand for goods and services is what creates and preserves jobs. Retailers that face stronger demand for their products are more apt both to hire and retain employees and to maintain or increase orders from their suppliers. The initial boost in spending thus gets multiplied through the economy.

To boost demand for goods and services, fiscal stimulus should be targeted where it is most likely to be spent immediately. This suggests targeting on low- and moderate-income individuals and unemployed workers who need a replacement for lost income. People whose income is disrupted in a recession and who lack the savings to tide them over and maintain their normal consumption, and people whose incomes are so low to start with that they have difficultly making ends meet, are the people most likely to spend quickly any added income they receive. Assisting them consequently provides strong stimulus.

More affluent individuals, in contrast, are more inclined to save a substantial share of additional income they receive, because they do not need it to meet their immediate needs.

This distinction is crucial. The Congressional Budget Office (CBO) has stated that “the efficacy of fiscal stimulus depends critically on households’ tendency to spend the income placed in their hands.” The larger the share of income that a group of households spends, “the more powerful is the ultimate boost to demand” from stimulus measures that increase those households’ income.[1] Similarly, in a 2008 analysis, CBO stated that “Lower-income households are . . . more likely to be among those with the highest propensity to spend. Therefore, policies aimed at lower-income households tend to have greater stimulative effects.”[2]

[Cluelessly]

Originally Posted by sikvod00

People also need to understand that providing assistance to low-income families (increasing food stamps, extending unemployment benefits, etc). also stimulates the economy. Republicans put way to much emphasis on tax cuts\supply side economics.

Spoiler for Stimulus Measures Should Be Targeted on People Who Will Spend the Money Quickly:

When the economy is weak, generating more demand for goods and services is what creates and preserves jobs. Retailers that face stronger demand for their products are more apt both to hire and retain employees and to maintain or increase orders from their suppliers. The initial boost in spending thus gets multiplied through the economy.

To boost demand for goods and services, fiscal stimulus should be targeted where it is most likely to be spent immediately. This suggests targeting on low- and moderate-income individuals and unemployed workers who need a replacement for lost income. People whose income is disrupted in a recession and who lack the savings to tide them over and maintain their normal consumption, and people whose incomes are so low to start with that they have difficultly making ends meet, are the people most likely to spend quickly any added income they receive. Assisting them consequently provides strong stimulus.

More affluent individuals, in contrast, are more inclined to save a substantial share of additional income they receive, because they do not need it to meet their immediate needs.

This distinction is crucial. The Congressional Budget Office (CBO) has stated that “the efficacy of fiscal stimulus depends critically on households’ tendency to spend the income placed in their hands.” The larger the share of income that a group of households spends, “the more powerful is the ultimate boost to demand” from stimulus measures that increase those households’ income.[1] Similarly, in a 2008 analysis, CBO stated that “Lower-income households are . . . more likely to be among those with the highest propensity to spend. Therefore, policies aimed at lower-income households tend to have greater stimulative effects.”[2]

No...this is a misdiagnoses of the problem.

If you are above the equilibrium it doesn't matter how much money you pump into the economy. The retracement cannot be stopped that way. In fact by decreasing flexibility you're just going to end up with stagnation.

Targeting low income families seems to have more of an effect, yes, because those families must spend the money. But you know...we are in this mess because it has become a global solvency issue. This is just driving the reset that much closer.

In the end, long run is only determined by supply. Period. Tax cuts, rebates, unemployment benefits, etc. as long as it targets consumption it doesn't matter. Excess capacity. Reflate and you'll just end up crashing again. Especially right now. Unemployment benefits will just demotivate people further. The point is to become more productive in order to fill the bubble with actual production. If the equilibrium does not move up the economy must move down to it.

And no short run is not only the thing that matters because in the long run we are all dead. When you tread too far from what is sustainable the correction will be forced upon you. It's like leveraging 50 times over when you're a bank. When times are good and people won't question the profits everything is fine, but once people begin to understand that there is no real wealth...it all comes crashing down. The vast majority of people and institutions are over-leveraged.

That being said I don't care if they want to play around with Keynesian theories if they're running a surplus or were by any calculation able to take responsibility for the debt. What else would be the threat to buy bonds in order to keep yields low be? This is ludicrous. The entire nation is insolvent, but they want to spend more anyway. What exactly does consumption create if there is a divergence between credit and the underlying production?

Summary: Wealth isn't going to rain from the sky because they need it to rain from the sky. Pianos on the other hand...

EDIT: Guess it would help if I asked what would happen once the checks pass through too. Didn't we have that some time last year? Hmm...I think something about unsustainable production levels goes here...

Sorry, I have a hard time keeping my thoughts straight.

[0utf0xZer0]

Clueless, do you mind explaining what you mean by equilibrium here? I think you're talking about supply being higher than demand, which should push prices down and trigger deflation, but the there's this:

Originally Posted by Clueless

Unemployment benefits will just demotivate people further. The point is to become more productive in order to fill the bubble with actual production. If the equilibrium does not move up the economy must move down to it.

If the problem is supply being higher than demand, doesn't supply have to come down? If so, then how come increasing productivity works? It seems to me like increasing productivity should increase supply, not decrease it.

[Cluelessly]

Originally Posted by 0utf0xZer0

Clueless, do you mind explaining what you mean by equilibrium here? I think you're talking about supply being higher than demand, which should push prices down and trigger deflation, but the there's this:

If the problem is supply being higher than demand, doesn't supply have to come down? If so, then how come increasing productivity works? It seems to me like increasing productivity should increase supply, not decrease it.

I think you're mistaking excess capacity for supply.

Equilibrium is really just what is sustainable.

Basically the credit bubble shifted demand up, and this shifted supply up too to a degree (overproducing at a price higher than what is really wanted). But the underlying equilibrium of what is sustainable never shifted. So the price settled at this higher level. Now it's reversing course. The natural adjustment should have prices fall down in line with the underlying production, but they're not allowing this to happen. The focus has been on keeping prices/wages at where they are, even though much of it was built on fake wealth facilitated by the credit bubble. When the bubble collapsed, the wealth disappeared.

I guess if you want to put it in terms of an economics class, we've been running on overtime, and the machine can't take it anymore.

EDIT: Okay, I should think longer before hitting the reply button. The more specific (but still general...) explanation would be to think of what happened in the financial/real estate/other speculative worlds as a giant ponzi scheme in which speculation, and not worth, drove prices up. As long as the ponzi is contained, the collapse shouldn't have effected anything outside of those areas. But the money that was made in this ponzi scheme found it's way into the real economy when it was spent by the speculators thereby pushing up prices to what we have now. Now, the money that was backing this rise in price/living standard is more or less suddenly gone, since the ponzi collapsed.

[Irenicus]

Originally Posted by Cluelessly

Basically the credit bubble shifted demand up, and this shifted supply up too to a degree (overproducing at a price higher than what is really wanted). But the underlying equilibrium of what is sustainable never shifted. So the price settled at this higher level. Now it's reversing course. The natural adjustment should have prices fall down in line with the underlying production, but they're not allowing this to happen. The focus has been on keeping prices/wages at where they are, even though much of it was built on fake wealth facilitated by the credit bubble. When the bubble collapsed, the wealth disappeared.

Even if the US government overnight turns laissez-faire and strike down all price and wage controls in a revolutionary step, wages will still have a hard time going down. People don't like wages going down, it doesn't matter to anyone if the previous prosperity came from the bubble or from actual solid growth, so companies will instead lay off workers to keep themselves afloat, like what's already going on. And though in the economics graph this looks like a "sensible" return of demand level down to supply, in real life it's people being deprived of a living. In the end unless we want to return to the 19th century-style whatever happens happens kind of mentality, somebody's still going to end up feeding and housing them, and in the modern Western state we assume it's the Government's job.

So, instead of going down that path, and end up not only having to shoulder the burden of the downturn anyway, but also losing the productivity contributions of the laid-off workers and worsening the disparity further, it's much better to just prop up the economy long enough for real productivity to catch up. The "equilibrium" doesn't stand still. Once one thing falls apart, chances are something else's going to be affected. Quite frankly, in many cases demand and supply are the same thing depending on where you're looking from.

[Neki Ecko]

I know that American Recovery and Reinvestment Act would passed but I think that GOP is digging a grave right now, because I had a chance to read some of stuff that Stimulus will do, from Education to refixing roads and bridges(it really needs it alot) to Medicare and even some to middle and low class people. I think it is a start, also they are making a website so the American people can see how much money that Stimulus going into those programs http://www.recovery.gov/. If that Act works and get the economic started back up, then you wont be seeing GOP in power for a very very long time.

[typhonsentra]

Originally Posted by Vexx

You need to stop reading "somewhere" and find more specific real places to read information
Many of the congresspeople and the administration have specific detailed breakdowns of the Recovery Act and update it as it morphs through negotiations with various factions.

He got it from talk radio, most likely Hannity (He was spouting this yesterday).

[Cluelessly]

Originally Posted by Irenicus

Even if the US government overnight turns laissez-faire and strike down all price and wage controls in a revolutionary step, wages will still have a hard time going down. People don't like wages going down, it doesn't matter to anyone if the previous prosperity came from the bubble or from actual solid growth, so companies will instead lay off workers to keep themselves afloat, like what's already going on. And though in the economics graph this looks like a "sensible" return of demand level down to supply, in real life it's people being deprived of a living. In the end unless we want to return to the 19th century-style whatever happens happens kind of mentality, somebody's still going to end up feeding and housing them, and in the modern Western state we assume it's the Government's job.

So, instead of going down that path, and end up not only having to shoulder the burden of the downturn anyway, but also losing the productivity contributions of the laid-off workers and worsening the disparity further, it's much better to just prop up the economy long enough for real productivity to catch up. The "equilibrium" doesn't stand still. Once one thing falls apart, chances are something else's going to be affected. Quite frankly, in many cases demand and supply are the same thing depending on where you're looking from.

I wouldn't mind this being the answer if the government by any stretch of the imagination could pay for it.

Bond yields shot up as an answer to what they were planning earlier, and it's pretty obvious it won't just be a one time deal. A lot of the stimulus is going into long term projects, the increase in deficit will most likely stay. However as an adjustment to the credit bubble the trade surpluses of other countries will also start to shift, as that decreases the ability of foreigners to buy out debt decreases. This is also happening in time with other government's issuance of additional bonds to pay for their own deficit spending. If it is not paid for by others than it must be paid by ourselves through taxes, and that just negates the effects of stimulus in the first place. Notice how velocity has fallen through the floor and we've reached below 1 on the ROI of new money, meaning that no matter how much is pumped into the system less will be gotten out. This is the rotten balance sheet at work. If they don't allow the bad debts to default and pick up the pieces from there it is all a moot point anyway since we've broken the ratio.

And anyway, I find it hard that government would be able to prop up 10-20 years of growth through deficit spending. When government intervenes it has no clue where to set it's limits. Forcing contractors to all pay union wages for jobs, etc. The quickest route is to force efficiency back into the system. Notice how government intervention in Japan just ended up in the stagnation of an entire decade. Government needs to be competent before trying to pull off these things.

On top of that, the route they are doing is kind of like paying for today's losses with tomorrow's productivity...so...

Well, I'm still ambivalent on whether or not government should spend all it can in a depression. If the downward spiral does break through the equilibrium it shouldn't be hard to overcome the momentum, and with enough investment it is possible to shift equilibrium up enough, but right now...there is no money. Everybody is insolvent. But they don't want a controlled reset, so the only way is to let the correction happen. Otherwise sooner rather than later (with the way bonds are looking) the bond market dislocation will occur. If Ben prints in order to buy his own debt...game over I suppose. Something like a currency crash if he prints, skyrocketing interest rates and a drop in purchasing power if he doesn't print, etc. This is what leads to wars.

To expand, the fake wealth accumulated was used in tandem with consumption through debt. Now the speculators and the ones who fueled much of their speculation are deeply in debt. Normally a shifting of the surplus/deficit of countries should be offset by the new savings of the deficit country, but these people are in debt and cannot save in order to restore balance. And yet they want to borrow even more now. I really can't see how this is supposed to be done. If it can't be covered by the savings, then it must be taxed, and yet the ROI is below 1 so what was the point of anything to even begin with???? It's like staring at a giant black hole...

Also, having to fill in the morning shift for department tutoring sucks.

EDIT: Well, also, the talk about striking down all wage/price controls is kind of talking my book. I do realize there are some things that seem to say it will kill the livability of people, but I think it will balance out. Government shouldn't be paying farmers to not plant crop and such. I think with higher efficiency there will be more harmony once the adjustment is made. Government will be there to set ground rules and I would like to see some sort of incentive for industries that attempt to move forward, but I don't think government should be there to directly interfere with a price in mind.

The other thing is I don't think it will be a rollback to the 19th century, if all the excess wealth is allowed to drain off we should be left with a level from the 90s. Living standards will have to lower and also account for the bigger population, but it's better than the alternative in which we engage in a trade war and end up going down the same path as before. Ex. Housing price levels. They are trying to manipulate it higher, but the housing market is a good few trillion to begin with. There is no velocity to speak of so...yeah. Credit market possible losses is in the tens of trillions. The shell game is already not working with the small amount that mortgages account for. They will have to cover the losses in everything in order to maintain yesterday's existence. That money isn't going to appear out of nowhere.

EDIT 2: Okay, I didn't mean for this to get so long. If you think about it, where does most money flow to at consumption's end? By keeping the prices where they are and backstopping bank losses in the background, the wealth of everyody is effectively used to protect the wealth of those that speculated.

EDIT 3: Because I forgot: Laying off workers does drive down prices in the end. This trails into the deflation/inflation argument. As long as people are unable to pay the price for an object the company must lower prices. Raw goods coming down in price drags everything else down if they would stop trying to mess with the prices. This is also why some choose to argue that even a direct print won't achieve the desired results as long as incomes do not rise along with the printing as the final price is determined by the balancing forces. I agree with the argument in it's strictest sense, but eh.

In the end living standards will fall anyway, only question is how the fall will be distributed.

[Cox]

Originally Posted by Neki Ecko

I know that American Recovery and Reinvestment Act would passed but I think that GOP is digging a grave right now, because I had a chance to read some of stuff that Stimulus will do, from Education to refixing roads and bridges(it really needs it alot) to Medicare and even some to middle and low class people. I think it is a start, also they are making a website so the American people can see how much money that Stimulus going into those programs http://www.recovery.gov/. If that Act works and get the economic started back up, then you wont be seeing GOP in power for a very very long time.

Right. So all the Pork that is in that bill is going to fix the country.

300Mil+ for AIDS research at CDC ATL
Millions to MN
Millions to FL
MIllions here and Millions there.

Why does this government fail to act. Democrats were voted in and this is there first weeks in POWER:
-Vote against the the BCS football bowl selection system. President approves the vote of distaste for it. I mean wth are they doing when this country needs stimulus.
-Discussion to use tax dollars to investigate Bush?!?! Hello yeah glad Obama stood up against that one.
-Oh lets pass a bill to help americans and every pet project around the country at once.

If you think Bush spent money Democrats will run this country into so much debt that my great great great grandkids will be paying it off. Republicans are far from gone and will probably be stronger in 4 years. BTW I am a Democrat but disgusted to say it right now.

[Shadow Kira01]

Has anybody ever thought of where all the money had went in the first place? The recession had occurred and most nations around the world are currently lacking funds, yet nobody has ever mentioned where the original funds had went. It didn't just vanished into thin air. If it's just the US, people can assume that it went into the pockets of greedy executives, but the same financial recession had occurred in many countries, so that isn't the case. Is it possible that the all the funds had been transported through another dimension into some other nations' national banks? Some nations are starting to have a drastic increase in national bank savings, while some other nations are now suffering a period of the infamous "economic depression" in which many workers are losing their jobs by the hour. Strangely, nobody seems to care...

[0utf0xZer0]

Originally Posted by Shadow Minato

Has anybody ever thought of where all the money had went in the first place? The recession had occurred and most nations around the world are currently lacking funds, yet nobody has ever mentioned where the original funds had went. It didn't just vanished into thin air. If it's just the US, people can assume that it went into the pockets of greedy executives, but the same financial recession had occurred in many countries, so that isn't the case. Is it possible that the all the funds had been transported through another dimension into some other nations' national banks? Some nations are starting to have a drastic increase in national bank savings, while some other nations are now suffering a period of the infamous "economic depression" in which many workers are losing their jobs by the hour. Strangely, nobody seems to care...

I'm not sure you realize how much wealth in the modern economy is "on paper". Wealth isn't just cash on hand, it's also how much your assets are worth on the market. If people aren't willing to pay for the asset, the assessed value of the asset will plummet, if they are willing to pay more for it, the assessed value will rise. So it is literally possible for wealth to be created and destroyed on paper.

Furthermore, most banks loans aren't backed by the bank's cash reserves - they're backed by what creditors owe to the bank. If the creditors default, the bank is now on the hook. Now, this has been going on since the early days of banking, but what makes this crisis particularly bad is that many banks have been lending out like 30 times what they have on hand on this basis - far higher than anyone really considers safe. The way I understand it, the high number of defaults literally mean that banks don't have money to lend out anymore, even on relatively safe projects.

I think an important thing to realize here is that banks only keep a small amount of actual cash on hand - most money they lend out is backed by what creditors owe the bank. In fact, in many cases banks

[Mystique]

O.o?!?!
Woah woah, huh?
First black man to lead the republicans in America?
(I'm I reading this wrong?)
http://news.bbc.co.uk/2/hi/americas/7862158.stm
more story:
http://news.bbc.co.uk/2/hi/americas/7862239.stm

For one, if I heard his name, I'd never have questioned his ethnicity as that of a minority
Two:

As chairman of the Republican National Committee, Mr Steele will be in charge of overseeing the party's campaigning efforts nationwide.

Is he head of just campaigns or other politicians or can he try for mayor/governor/president etc?
(So many states and levels of positions and power, it's confusing)

Can anyone give me a quick 101 on who he is, what power he's just gained by winning and what he'll be doing/representing for the red team, or if his win makes any difference at all.

[sa547]

Originally Posted by Mystique

O.o?!?!
Woah woah, huh?
First black man to lead the republicans in America?
(I'm I reading this wrong?)
http://news.bbc.co.uk/2/hi/americas/7862158.stm
more story:
http://news.bbc.co.uk/2/hi/americas/7862239.stm

For one, if I heard his name, I'd never have questioned his ethnicity as that of a minority
Two:

Is he head of just campaigns or other politicians or can he try for mayor/governor/president etc?
(So many states and levels of positions and power, it's confusing)

Can anyone give me a quick 101 on who he is, what power he's just gained by winning and what he'll be doing/representing for the red team, or if his win makes any difference at all.

I was surprised that the Obama Effect has just kicked in there, too.

http://news.yahoo.com/s/ap/20090130/...UpVPruWr2yFz4D

The short version:

Steele, an attorney, is a conservative, but he was considered the most moderate of the five candidates running.

He was also considered an outsider because he's not a member of the Republican National Committee. But the 168-member RNC clearly signaled it wanted a change after eight years of Bush largely dictating its every move as the party's standard-bearer.

Steele became the first black candidate elected to statewide office in Maryland in 2003, and he made an unsuccessful Senate run in 2006. Currently, he serves as chairman of GOPAC, an organization that recruits and trains Republican political candidates, and in that role he has been a frequent presence on the talk show circuit.