President George W Bush has called for a special package of measures worth billions of dollars to avoid a downturn in the world’s biggest economy.
He said the growth package would have to be big enough to make a difference to the “large and dynamic” US economy.
Mr Bush said it had to include tax incentives for US business and direct tax relief for the American people.
The package should total at least 1% of gross domestic product, or about $145bn (£74bn), the White House said.
‘Shot in arm’
President Bush said the package should be “a shot in the arm to keep a fundamentally strong economy healthy”.
“To keep our economy going and creating jobs, Congress and our administration need to work together to enact an economic growth package as soon as possible,” he said.
The President said he expected the economy to continue to grow, but at a slower rate than in previous years.
I would love to see this guys Credit Card Bill.
It doesn’t seem to matter what it is, or how much it costs. George WANTS IT, and George MUST HAVE IT.
Ben’s helicopters are getting lounder.
This is an attempt by Bush to buy the next election. Will probably work too.
Will probably work too.
Not so fast kemosabe, those pesky kids might stop Uncle Abner from getting away with it:
globaleconomicanalysis.blogspot. … -fail.html
…everyone is shouting about the demise of the dollar over Bernanke’s approval of stimulus instead of reading what he actually said. Bernanke wants the stimulus to be temporary, immediate in effect, and preclude an increase in the federal government’s structural budget deficit.
That latter point is interesting. Bernanke is showing concern over the falling dollar and/or concern over future liabilities that can be met only by raising taxes. Bernanke is also showing concern over the downstream effects of stimulus that comes too late or lingers too long. Greenspan never worried about such concerns.
How Much Stimulus Comes From $100 Billion?
$100 billion sounds like a lot. It is a lot. It is measurable. It is nowhere near enough to matter.
Look at this another way. Banks such as Citigroup (C), Bank of America (BAC), and Washington Mutual (WM), and Brokers like Merrill Lynch (MER), Lehman (LEH), Bear Stearns (BSC), and Goldman Sachs (GS) have written off over $100 billion in capital.
Remember this is capital we are discussing, not spending stimulus. Because of fractional reserve lending, most banks are leveraged 10 to 1. A destruction of $100 billion in bank capital will result in reduced lending power of $1 trillion.
Ambac and MBIA Alone Affect $200 Billion In Losses
Ambac (ABK) and MBIA (MBI) appear headed for bankruptcy. Ambac Odds of Default are 73%, and MBIA 71%.
Losing the AAA stamp would cripple the bond insurers and throw doubt on the ratings of $2.4 trillion of debt the industry guarantees, causing as much as $200 billion in losses.
Think about California for a second. Look how asymmetric the Bush proposal is. Everyone gets $800. Whoop to do. Double that. It’s double whoop to do. Does an extra $133.33 a month constitute stimulus? For who?
It is very helpful for those at the very bottom of the socioeconomic ladder that need income to buy food and gas. But that will not “stimulate” anything. It may mean the difference for some small set of people being able to buy pork chops instead of pork steaks and perhaps go out to dinner once a month on the side. For others it will pay a fraction of a credit card bill.
It will not do much for anyone reasonably well off. Nor will it do anything for anyone in California (or anywhere else) that is about to lose their job in state spending cutbacks, financial cutbacks, retail cutbacks, or any other kind of cutbacks.
Here is the key question: What does a onetime payment of $1,600 mean to someone who just lost a $45,000 job? The correct answer is not much.
We have still not accounted for waves of commercial real estate defaults, rising unemployment, rising credit card defaults, and rising foreclosures on Pay Option ARMs. Furthermore, I still expect a mammoth cascade of collapsing CDS dominoes at some point. There are $500 trillion in derivatives out there. What if 10% of them default? Heck, what if a mere 1% of them default? This is uncharted territory.
In the grand scheme of things, $100-$150 billion spread evenly is irrelevant. Such “stimulus” is doomed from the start.
So will this help the american workforce earn a bit more where its reputed that the average wage has stalled in the last few years?
Or is it just a shot in the arm for the super rich to pay lower taxes?
Err, George, give more disposable income to the average joe soap that still has a job and they’ll start buying things again!!
It’s enough to help buy an election – keep the masses on your side, like. And besides, it’s not party money, it’s ‘the government’s money’. I.e. money that these people paid in taxes! So, “1 over infinity tends to zero, we’re going to the wall anyways, and we may as well do it properly and win the next election while we’re at it”… Or so it goes…
So, why not just lower taxes? Oh wait, we can’t do that because we need to service a national debt of monstrous size… Eh…
Don’t underestimate the stupidity of your average consumer – most people are too busy working 10 hour days, raising a family and fitting in the next episode of ‘Lost’ to even begin to comprehend the shady world of economics and politics. Even if average Joe did try to understand what’s
really going on the world he wouldn’t be able to because he’s outside of the loop by virtue of his social standing, is probably too uneducated, and has more immediate worries like: putting a roof over his head, feeding his family and paying the bills (not to mention his desire for things like shiny televisions and collecting Hollywood DVDs).
"The Bush “Stimulus Package” is the biggest and most obscene hyper-inflationary swindle ever perpetrated on the American people. It’s a $100 billion, taxpayer-funded, bailout that is being slapped together at breakneck speed to forestall a collapse in consumer spending, an exodus of foreign capital, and a painful slide into recession. And, guess what? Both political parties are on board. It is an act of utter desperation designed to address the catastrophe that was created by the Federal Reserve. Greenspan’s subprime boondoggle is now in full crisis mode and threatening to deliver a knockout punch to the global economy. That’s why the lights are blinking red at 1600 Pennsylvania Ave. And, that’s why the whole 535-member army of lacquer-haired political jacklegs who run the Congress are racing around in circles trying to find solutions.
The emergency bailout scheme is spearheaded by Goldman Sach’s former head honcho and current Treasury secretary, Hank Paulson. Paulson warns that the economy is slumping “rather materially” and needs a massive jolt of capital to keep from sinking altogether."
Now there’s a ‘surprise’. The American VIs simply fund both parties. It doesn’t really matter who’s in power.
America is just a jaded crack whore who doesn’t realise that the solution to their problems might be to get off the crack for a while, but unfortunately their answer always involves smoking even more crack.
Just substitute crack for debt. I guess it works fine as long as your dealers keep doling out the fixes.
He isn’t going for election again! In fact, he can’t!
But it doesn’t matter who the puppet it!