drieuxster (drieuxster) wrote,

But will it unclog the commerical paper?

Will the Obama deficit-spending plan work? Will throwing $800 billion—$500 billion in extra government spending, and $300 billion in tax cuts—at the economy produce a world in which production and employment are higher and unemployment lower than would otherwise have been the case?

The short answer is yes. The short reason is that spending works—eras in which some group or other gets excited about future prospects and starts madly spending money are eras in which production and employment are high and unemployment is low. And the government, in this respect, is just like any other group of starry-eyed optimists whose eagerness to spend pulls the economy into a high-employment, high-pressure boom.
Still, a boost to spending by the government should have the same effects as boosts to spending by luxury consumers and the defense department and homebuilders in the early 1980s, by the high-tech sector in the late 1990s, and by homebuilders in the mid-2000s. The government’s money, after all, is as good as anybody else’s.

So there is little question about the likely impact of the Obama deficit-spending program: production and employment are going to be higher than they would have been otherwise. As Greg Mankiw, the former chief economic adviser to George W. Bush, said back in 1983: “There is nothing novel about this. It is very conventional short-run stabilization policy: You can find it in all of the leading textbooks.”

But there is a relevant question outstanding: Will there be some sort of a hangover after this Obama spending binge—some debt-induced, groggy morning after? And if there is a hangover how bad will it be? For the answer to that, we will have to wait and see.

[ cf How Spending Stimulates ]
I was amused by the folks at KCBS last night, as they interviewed the republican fruitBat from Sacramento who was cool about essentially showing that Obama is the new Reagan... And that some how the New Reagan also wants to have the Private Sector solve the problem.

Which was more amusing this morning as a formerly money making Toyota Car Seller in Oakland is pulling out of Oakland, because they are not able to get the sort of financing from the private sector, to allow them to sell cars on credit....

Amongst the still unaddressed problems IS what to do with all of the bogus loans - those non-performing loans on houses, and hum... what if there were other forms of commercial paper that is also going bad?

Should american banks be able to carry on like the japanese banks did???

Or should there be a step forward that will require the SHOGUN to provide a 'sharing moment' with the Zai Bat Su! so that they can get their poop in a group or have it LOPPED OFF!!!

Or are we to expect that the 'private sector' will majikally grow a pair and act like they had them....

Hum... what if that IS a critical role of the Shogunate....
Tags: economics, republican_pron

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