The giacutter solution: Money cannons. Like the type used to launch clowns across circus tents.
Set up these money cannons at the tallest point of each municipality in the US and stuff in $100s and $20s. The amount of stimulus limited only by 1) the size of the cannon and 2) the denomination of bills.
Fire said cannons at a designated time of the day and voila........instant stimulus!
(You have to admit this is less stupid an idea than some of those already proferred).
My idea is a $100B fund to buy preferred stock of insolvent banks with a high interest rate.
The tax payers would get the benefit of the bailout at the expense of the banks shareholders (for once). And the worse off the banks were, the more they would need, and the higher the penalty.
Good banks would prosper, bad banks would wither, but it would avoid collapse of bank credit.
but these groups have been known to spend, and SPEND a LOT...
I say give it to them, again, and again...
they can spend it on G-v's, 5 acre islands in the caribean, and moe "positive carry" yachts
I'm sure some cutie patootie with a tramp stamp and hooker heals will be 'stimulated' by this spending.
The first problem with a stimulus package, is everyone has their own pet idea to put in to it. I don't know if we need a package - and I don't know the best package - but if we have one, I think each provision should be judged by how well it delivers money to people that are going to spend.
Personally I think they should send the entire $150 billion to me. I promise to spend it wisely.
Issue taxpayers a government credit card with a certain money limit reflective of a percentage of what they have paid in to Social Security over their career. Like WIC coupons, it could only be spent on commodities, or paying down debt.
If you give people $800 cash, they will spend it on an 8 ball.
I think any stimulus package should have long and short term goals. Short term to keep the recession from getting out of hand and a long term to educate Americans to compete in the global market.
I feel the short term stimulus package may not have much effect on the US economy since most of the manufacturing has moved out. We will be giving out free money to buy some plasma TV made in Taiwan or some place else. What do we get? few salespeople at Best Buy.
If you standing next to Senator Dudd, please tap on his head for me.
We need to resort to something like foodstamps but for health and gas. Maybe debit cards to prevent black markets. I'm a libertarian but the wealth divide would have been pretty massive by now if it wasn't for the money flowing from the housing bubble.
Anybody remember "The Plan" where every person would receive a check for $20k a year?
Bottle Bongwater under the name 'sWill'; include a cigarette butt in every bottle. Show Chuck Norris chugging a bottle and saying "Maan, that's some good stuff...Chill with sWill". All proceeds go to putting Bush on Mars with the dude that is already there.
let's see: monetary policy - no regard for inflation, fiscal policy - no regard for deficit spending and the resultant borrowing required. Seems like the government is doing everything it can to drive up long-term interest rates.
The government will reimburse everyone up to $10,000 who takes out a HELOC on their house in 2008. The feds will also allow you to use $10k for a down-payment reimbursement on a new home.
Voila--reinflation of zee bubble, and a kick re-start of the ponszi lending apparatus (snark).
Dumb ideas are everywhere in this economy, so dont be shocked by this trend; an example from CIT:
On January 15, 2008, CIT Group Inc. (CIT) implemented a retention program (the Retention Program) for Jeffrey M. Peek, Chairman and Chief Executive Officer, and an additional number of other executive officers and employees of CIT. No named executive officer of CIT other than Mr. Peek is eligible to participate in the Retention Program. The Compensation Committee (the Committee) and the full Board of Directors of CIT approved the Retention Program ....
I sometimes wish that voters would elect me to Congress instead of all those other stupid people. My plan is simple and would start putting money in people's hands tomorrow that would be spent.
The President goes on TV and says: "Whatever the bottom line of your 1040 says this year, knock $1,000 off it. If you don't pay that much in income tax this year, we'll send you the rest. And if you file your taxes before March 1, we'll give you an extra $200 and send your refund ASAP."
You may laugh, but the solution to the question posed is gift cards. Given the size of the proposed dole-out, I am sure that mastercard/visa/amex could share the "burden" and chug out a few hundred million gift cards, $800/$1600, with an expiry date of 30 days.
No lazy shit, God fearing American would take the time to wrangle the casah out of the card into a debt payoff.
The fastest and most effective stimulus would be for bush to release the strategic oil reserves.
This would drive down the price of oil below $60.00. It would be immediately felt at the oil pump. And be the equivalent of a $2,000 tax credit to each house ($1.00 a gallon reduction x 20 gallons a week x 2 cars per household = $40 x 52 weeks = $2,080.)
This would be real cash to the consumer. In addition the cost of heating oil and gas would reduce each households utility bill an additional $480 to $1,000 annual savings.
Add in the multiplier effect and the concomitant reduction in inflation on prices.
Have congress focus on a real alternate energy plan.
America has been divided on immigration from south of the border. The fact of the matter is that we are now witnessing our banking and financial system being bought up by the sovereign wealth funds of China and the Mid East. This is the true takeover of our country by foreigners. We should quit worrying about the people we rely on to work in the farms and recognize the transfer of wealth that is going to the Mid East and Far East.
Oil prices at $90.00 is an onerous tax on everyone. This tax is most regressive. A cut in oil prices in a significant tax reduction with no effect on the tax policy of the country.
I am not xenophobic. I believe our country needs to become less dependent on foreign oil not foreign individuals.
The government probably is coming to the realization that some banks and IB's might be too big to be allowed to fail. So float some goof-ball ideas like these to see if they fly. Their rationale, and can't say that I disagree with it, is that it will be cheaper in the long run.
And before I get flamed, please know I am not in favor of it at all. My opinion, let one or two fail/merge/reorganize. Might be the only way for them to learn something.
long term to educate Americans to compete in the global market.
I honestly think any meaningful education is necessarily going to be distressing. I don't see how you can get away from that.
Any such lesson is going to involve teaching people that competition is intrinsically hard and that there are serious economic and social consequences when people and businesses make promises they have no ability to keep.
People don't want to be taught that, and so far all the rhetoric seems to involve politically expedient fixes.
IMO any politician in office who was wasn't yelling and waving their hands about this stuff over the past 5 years needs to be tossed out -- they're either dishonest or have no clue as to how to manage an economy.
Where was Senator Dodd when we were giving half million dollar loans to people with no income?
These are fun times we live in, and the answers won't be easy. However, how some people let these idiotic ideas out of the brainstorming session I will never know. I have said some dumb things at work, but when everyone laughed I knew I probably shouldn't be repeating them in public.
Every child born gets $2000 put into a Social Security fund in their name. This stabilizes Social Security and gives people a real check when the hit retirement age.
Teach financial literacy in grade school.
Make sure kids start a savings account by the age of seven and learn how to save.
For everything you buy with your gifted government money, you save the receipt, spend an hour figuring out what they're not telling you in the rebate form, and send it all in and wait for 12 weeks or until you forget all about it...
The fastest and most effective stimulus would be for bush to release the strategic oil reserves.
Seriously...
It would be nice if the Government allowed 10% of the strategic reserve to be "borrowed" and sold on the spot market by traders.
Traders would pay for the privilege of buying a futures contract and selling the spot. It would keep hedge funds and others from playing games with spot oil prices and stabilize prices at the pump. And, the 10% you loan out would help offset the cost of the other 90% you're storing.
ok.. I'll break out of my nonsensical style and state plainly my stimulus package.
The federal government must create a program to buy off consumer credit card debt and student loan debt.
It's a given that a number of banks will fail or merge with others... but what will heal the economy is the removal of these lingering debt obligations..
If you just arbitrarily sprinkle money into the system.. you run the risk of people hording the cash. You have to forcibly wipe out a lot of revolving debt so that consumers will get jazzed about spending again.
Every child born gets $2000 put into a Social Security fund in their name. This stabilizes Social Security and gives people a real check when the hit retirement age.
Money is just paper.
How does that help anyone retire?
People require a surfeit of wealth in order to retire. That requires motivation, education, and cooperation focused on some productive goal.
Pieces of paper can be a tool in accomplishing that, but they certainly aren't a replacement for it.
Money has no intrinsic value. The idea that it does is, in a sense, the ultimate bubble.
how bout a cap on executive pay, no options awarded above exec level,
it increases competition , and innovation, beacuse you know that your not gonna make it BIG at the BIG firm...
YOu leave and create small biz, which creates jobs...
BIg biz loses, everyone else wins...
Dodd has always been in the pocket of the financial sector. I was starting to warm up to him after his FISA stance, but this crap pisses me off all over again.
There were 2 more points you are ignoring that went with Social Security. 1)Teach financial literacy in school; grades K through 12. 2) Teach children to save and understand the consequences of having enough skin in the game to play.
This might sound crazy but what about a a sales tax moratorium for a one month period in the states hardest hit by this crisis. Federal government should then compensate the states as long as they go along with said program.
Get rid of the payroll tax on incomes less than $30k.remove the $90k cap on social security.Make corporate persons subject to the death penalty (and the CEO,as well).And don't elect Hillary,we really do not need another republican president.
Wildcat Bankers
Blogging Bears
Hollow oaks - feline towers of ivory
Cheshire grins and golden parachutes
Hunger builds as bears shake trees
golden parachutes make good napkins
CR - your idea is a cruel one. Not only people will get nice paycheck for couple of weeks, they also will be surprised WTF happened and why am I not getting my money for few weeks after. Spending goal is achieved. Yet another way to screw up the little guy to which he and she does not hve yet immune response. Brilliant.
The only problem might be payroll deductions are made through a bunch of systems which might be hard to change and synchronized.
Frank is exactly right. Do whatever it takes to bring commodaties, especially oil down. Long term spending into alternative energy, tax rebates. End the F'ing war bring our boys and girls home to defend OUR borders!
And who says we have to bail out the banks, builders, and investors. Here's a big fuck that!
How about gift cards you can only use on hookers? Talk about guaranteed consumption.
Booze and cigarettes work, too.
Yeah, Stiglitz has good prescriptions. They're the old fashioned, common-sense ideas you're supposed to use in every recession: give money to the unemployed, who will spend every penny because they need to, and to states and municipalities, before they cut back spending and make it worse.
To be honest, part of me just wants to see Volcker return to hit Bernanke with a fry pan and raise rates to double-digits again. Sometimes, the system becomes so unstable, you just have to re-boot.
There were 2 more points you are ignoring that went with Social Security. 1)Teach financial literacy in school; grades K through 12. 2) Teach children to save and understand the consequences of having enough skin in the game to play.
I know the way it sounds, but from my own experience I would have to say that in order to learn these lessons you have to lose money (or wealth in any case) that you've worked hard for or really need to maintain your lifestyle.
Otherwise how do really ever learn to care about the consequences?
Any stimulus plan is stupid. We're already "stimulating" to the tune of several hundred billion dollars per year. Its called "deficit spending". I don't see why more is going to keep us out of a recession if it hundreds of billions per year hasn't already.
But if I was forced to spend $150B on something, I'd spend one half on Iraq vets who are getting shafted by the Bush administration, and the other half on railroad infrastructure upgrades, especially on the NorthEast Corridor. Just because that's what I want.
Send out a Mastercard/Visa type gift card with $500 to every tax payer, if they dont spend it in the next 8 weeks the card no longer works and they dont get the money.
Legalize pot. It's America's #1 cash crop, and has bee for some time. 100% tax at the point of sale and the street price will still go down. Income from sales is limited to $75K, or so, yearly.
Do the math. It'll work. Or we can continue to do truly stupid things.
Another idea would be to federally draft a large rebate company, and offer federally funded rebates for a large basket of goods purchased that would have the best tendency to stimulate the U.S. economy.
I know the way it sounds, but from my own experience I would have to say that in order to learn these lessons you have to lose money (or wealth in any case) that you've worked hard for or really need to maintain your lifestyle.
Otherwise how do really ever learn to care about the consequences?
BTW as the evidence for these long-term k-cycles seems to mount, I have to suspect that these cycles are fundamentally related to these "lessons" passing in and out of living memory and being cyclically learned forgotten and re-learned over the generations.
Legalize pot. It's America's #1 cash crop, and has bee for some time. 100% tax at the point of sale and the street price will still go down. Income from sales is limited to $75K, or so, yearly.
Legalizing crack would be far more stimulating, I'd argue.
Well, legend has it Sean Connery once won $20,000 at a casino betting the same number 3 times in a row at a roulette wheel.
So here's my idea to get some stimulous...
Offer Connery a 20% cut of whatever he makes and give him $100 billion to hit the roulette wheel with. Send him to casinos in the Middle East first. Then after he breaks those, send him to Maccau with his now $20 trillion. Then after he returns home with $4 zillion, wipe the national debt from the books, provide free housing and healthcare for every resident for life, and buy every star in the Milky Way Galaxy.
My buddy from New Orleans got a card after Katrina. He lives outside of the city and he didn't suffer any losses, but he still got the cash. He spent it in a strip club and bet some on the ponies or a dog track, I forget which one.
Still, think of the multiplier effect of what happens when organized crime ends up with government gifts! Poetic.
Instead of trying so hard to figure out a way to make "Made in America" products more attractive through rebates, let's just raise tariffs on everything we import!
Damn, now why didn't anybody think of that before?
Run a lottery and give 10 lucky soles 15 billion each with the condition that they must spend half within 45 days.
Guaranteed to get a lot of wasteful spending going employing many thousands of others.
And just think, Hollywood could make a movie about the lucky 10 and their spending -- thus creating more spending (cost of filiming etc) and even employing writers (make it a condition of filming that they must employe striking writers at 2 x normal pay).
Two birds with one stone and we all can be happy when we watch fellow americans wastefully spend our tax dollars......(oh wait, I think I've seen that somewhere before.....)
Give ALL the money to the homeless. No bank accounts, no credit cards, and no mortgage. Sure, they might spend it on drugs and booze and cheap women, but that's what most people will do with it anyway.
Dubya was insisting the economy is fundamentally strong. What did he mean by that? How would he know? What's all the PPT panic all about and all the stimulus proposals? They will work like HopeNow & MLEC. Backfire.
I stand (firmly) behind my Mattress Stimulus proposal.
A free mattress for every tax payer. Joint filers can qualify for a queen or king size. 2/3 mattress for each dependent. Only US produced mattresses qualify!
yeah, its a silly idea, but less silly than some of the ones floating around in never-never land (aka the beltway).
I realize that 70% of the GDP is consumer spending, but why do we have to consume more than we earn? Isn't that why so many people are in trouble? Something is fundamentally wrong with our system that depends on consumers to get in over their head to keep the economy going.
We need to get back to saving, rather than spending every last dime.
This push for a stimulus to 'get money to people who will spend it'...is there a cap on the IQ of the person receiving this? Will it go for food or rent or more plastic crap from Wal-Mart? Seriously, if people DO use it to save or pay down debt, that's better in the long run than pissing it away.
As the othe poster said, give to the homeless....they will indeed spend it quickly on basic necessities, hopefully.
There are too many proposals being circulated to comment on them all. But I'm pretty sure this is one of the worst ideas:
From AP: Builders, Banks Could Get Tax Break (hat tip AH and JW)
U.S. homebuilders, lenders and other struggling companies could receive hefty one-time tax refunds this year and next under a provision of the economic stimulus plan percolating in Washington.</i>
CR - these people are clearly NOT farm state Midwesterners... we know EXACTLY what to do:
Pay them not to build.
Pretty simple, huh. If they don't build - we pay them... if they do then they can deal with the markets themselves.
If it pisses folks off we can call those massive half empty housing developments 'Suburban Conservation Reserves' and grow big fat shrub-fed deer on them. Might even get to claim 'carbon credits' if they quit mowing lawns.
Easy: spend it on invading Iran. Keyboard and cheetos sales will soar as the chickenhawk set gears up to fight teh libruls on the intertubez. Defense contractors will do ok, too. 100,000 dead Iranians is a small price to pay to keep Wall Street bonuses high.
That's it; if you've got a lot of capital lying around that you're sticking into passive investments for the return (above, say, $2 mill), guess what; the gov't's going to take away 5 percent a year and give it to the poor! On top of your income tax!
Your only way out: using that capital to fund new businesses or technologies that either employ American workers or directly increase American productivity and competitiveness (without importing cheap workers from overseas). And for doing this, you get big tax breaks above and beyond.
Not a chance in hell of this ever happening, but my, we'd see a lot of new jobs. And I just like the idea that has to work to serve the health of the greater economy. Or eventually, not be so wealthy.
Does Keynesism work? Why is it assumed that it does? If giving away everybody $800 is a good idea than why not $1 mil? If $800 is good than $1 mil must be better, needn't it?
Why are people so obsessed with consumption? With GDP growth? Let's pay a million people to dig a hole and the other million to fill it: instant GDP increase without any increase in wealth. And now we have 2 million people that forgot productive work and learned an unproductive one.
America consumes too much. Both the public sector and consumers are addicted to debt. Would getting them even more in debt solve anything?
What about letting the recession clear the unproductive parts of the economy so it can grow in a balanced way.
Keynes said that in long term we are all dead. But if you only care about short term for a long time, some day the "long term" will arrive. And the children and grandchildren of those who didn't care will unfortunately be still alive. I'm afraid this "long term" has just arrived.
NSA, selling Texas to Mexico is a start. Then sell Alaska back the Russians, or the highest bidder.
Seriously, once the unemployment jumps, we'll need a public works program to rebuild infrastructure, high speed trains, light rail in cities, and a Manhattan type project or something similar for alternative energy. Hey, we went from no space program to putting a man on the moon in 9 years.
cut taxes for hedge fund managers and IBs. these entities are the smartest people in the world, and will use the savings to invest in the smartest ideas in the world, and will make billions of dollars for themselves, which they will use on heretofore unknown goods and services provided by mass armies of doting americans.
best stimulus:
INVEST IN THE SCIENCES, BIOTECHNOLOGY AND EDUCATION. PROVIDE TAX BREAKS FOR COMPANIES INVESTING SIGNFICANTLY IN R&D. Damn. I hate to be the guy that yells, but all this short-term stimulus BS is a waste of time and money. MAKE AMERICA COMPETITIVE AGAIN IN THE GLOBAL ECONOMY.
There once was a Chairman named Ben
Who saved whole markets with only his pen
When asked to name his reward
He said "Oh nothing untoward...
Cash, most preferably Yen."
Why not just let the recession come, face up to it, and learn from it to be wiser. Pain is often needed to teach lessons to fools. BTW the people at Davos think BB is in the process of creating another asset bubble with his rate reductions. What I want to know is WHERE the bubble will occur. I want to be there ahead of time. LOL.
News from the coal mine:
Went out to dinner tonight at Outback in Chandler AZ near the high end mall, deader than closing time on a Sunday, maybe 5 tables @ 7pm. Next door was a shuttered Redfish and down the street was a shuttered TGIFriday's.
The chain Bahama Breeze had closed in AZ months ago, but I always thought that was due to a so-so concept in the wrong market. This is different, because they've got good traffic, easy access. None of the other shops in the development have closed.
Financial haiku:
The refund can't work
Fall's acorn saved by the squirrel
No Oak only shit
The fool Bernanke
Winter's wind howls between ears
Bubbles always burst
I saw one guess that the next asset bubble will be raw materials. That has a certain logic to it. What about farm land? Has it been going up a lot? What other commodities?
Formerly working for a homebuilder as a development manager, this is the most absurd idea ever. Having worked for some of these horribly inefficient companies; Dear God, they need to liquidate. These are some of the most poorly led, incompetent, and inefficient organizations imaginable.
With all this money sloshing around tell me again why there is a problem with social security. I want to prepare before I reach age 62 in seven short years.
We should absolutely watch all the "other stuff" included in any stimulus package, while the press and public concentrate on the size of the rebate checks.
Also wanted to share this gem of economic analysis from the New York Times story on Wednesday's market conditions:
The market has this out-of-control feeling, and until the market sees some semblance of stability, its going to continue to be very volatile, said Richard Sparks, senior equities analyst at Schaffers Investment Research.
Frost Bank sees record earnings (this is the ONLY large home grown Texas based bank that survived the 1980s crisis without being bought out, merged or messed up by the feds) Frost Bank sees record earnings - Dallas Business Journal:
Confucius-like wisdom from Cheng Siwei, vice-chairman of the National People's Congress of China, who identifies the problem at the root of the world economy as being that "Asians save today's money for tomorrow, while Americans spend tomorrow's money today". Quite so.
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Dallas Business Journal survey
"Where Will The Dow End The Year?"
More than 60% are at 11,000 to below 10,000 in the first month of 2008 and Texas for the most part is still booming compared to many other states. Dallas Business Journal: Dallas Business Pulse Surveys
The market has this out-of-control feeling, and until the market sees some semblance of stability, its going to continue to be very volatile, said Richard Sparks, senior equities analyst at Schaffers Investment Research.
I find your ideas intriguing, and I wish to subscribe to your newsletter.
CR, you wrote "Third, what happened to getting money to people that will spend it?"
Hey, I guess I'm not the only one who caught the charismatic director of CBO Peter Orzag's appearance before a senate finance committee on CSPAN! In one of the more dramatic exchanges of the hearing, Dr. Orszag pointed out that giving away money to consumers has a more immediate stimulative effect than, say, it on long-term infrastructure investment.
Brokeback,
i think wind energy is a great idea in small scale...
but the current scale is GE wind enrgy BOONDOGGLE..
It's a BLight on the landscape, to be simple
I'd a phuckin crying shame to be blunt...
you ever kitesurf? the wind is not a realible source , ever.
Both sides reached agreement to allow Fannie Mae and Freddie Mac -- government-sponsored companies that are the two biggest U.S. financers and guarantors of home loans -- to buy loans much larger than the current $417,000 limit, aides and lobbyists said. Frank said that lending cap might reach as high as $700,000 in areas with the highest home prices.
The unquestioned assumption is that we must try fiscal stimulus now, rather than save that considerable money to help ease the pain, after the onset of a recession.
I vote the latter; as many note, any stimulus attempt risks stimulating China or Korea at best, or being mis-timed and counterproductive at worst, sustaining the debt-fueled behavior that needs to be broken. In normal times, I would be a Keynesian, and want to moderate the economic cycle, but these are not normal times. Let the lessons begin.
Let us recess first, I say. Only then, let our compassion be shown with $150B that will then, and ONLY then, most certainly be spent for appropriately-needed consumption, and not just to gas-up the SUV to refill the cargo compartment with made-in-China crap from Big-Box Mart.
The much awaited bounce finally came today! Boy, did it look like some quant funds where part of the whipsaw. The horsemen whacked and anything that smelled like it had housing/mortgage were being short covered furiously.
IMO, none of this noise really matters - nothing has changed to make home prices get back up in a hurry and LBO pier loans get placed at par.
Imagine Dubya and Congress trying to make a fiscal stimulus package. Bridge to nowhere anyone. Crony capitalism at its best!
I remember vividly the last bubble - expansion & bursting. At that point it was a tech equity bubble and the basic economy was healthy and we did not have a serious inflation or dollar problem. Despite GreenScam taking rates down to 1% the Naz got creamed. Yahoo, Cisco, JDS, Nortel, et al where decimated 80-90%! Of course it did not happen in a day and there where furious rallies and plenty of cheerleaders buying all the way down.
IMO, this credit bubble unwind is going to be doozy since its impairing the heart of the credit creation mechanism. Securitization will never be the same. The last thread has the COF CEO getting religion. No matter what the interest rate, lending standards will become more stringent. That does not mean there will not be any credit. Credit will be lavished on those that just dont need or want it and will be declined to those most in need. YoY profits will be declining for several quarters and I am certain we will see P/E compression.
I am hoping that when we are done and the people find out that manipulation by the Greenspan Fed and the fundamental corruption of crony capitalism practiced by our government is the root cause for all the angst and pain - that we will see a change towards a more transparent interference by our "central planners".
I frankly don't think anything can or will stimulate the economy in the way politicians are touting. Rather, a correction needs to be allowed to happen. If it doesn't happen now, it will happen later and it will be much, much worse. How often will we need such one-off stimulus packages?
Instead, the government should save money by pulling out of its wars, then redistribute that money back into the economy in the form of infrastructure projects and research into clean, alternative fuels to replace oil. Oil will one day run out and we need to be prepared.
But alas, the government will get its shot in the arm, like an athlete who gets several cortisone shots rather than allowing a wound to heal.
Let's save that rebate money and use it to provide useful public jobs to the construction workers who are going to be needing them this time next year. Isn't that more sensible than universal handouts?
"We should not bailout lenders, investors, banks or builders under the guise of stimulus"
True colors!
Keep it simple. A flat 2.5% tax cut for all taxpayers. Nothing fancy. Nothing conveluted. Just a simple straight forward tax cut. Sure some will save. some will reduce debt; but, we can all enjoy some relief
I changed my minds on the Starbucks gift cards. I want to see Bush's face on Mount Rushmore. It will be there someday anyway, once history is properly revised. We might as well carve it out now.
Robert Reich (from FFDIC's link)- "So we're going to go through weeks of posturing about stimulus packages of one sort or another, and then see enacted the big fat bonanza of a temporary tax break that will likely have little effect. That, perhaps along with a few more rate cuts by the Fed. The presidential candidates will be asked what should be done about the worsening economy, and they'll give vague answers. None will likely admit the truth: We're going to need the rest of the world to bail us out."
Did anyone ever read a short story by T.C. Boyle called the New Moon Party? A party gains dominance by promising to build a new metal moon. Brilliant story. Not sure why all this reminded me of it.
Hey, the Chicago Board of Trade link to the DOW futures is down "indefinitely" due to technical problems. Hardware, software, or unpleasant truthiness?
We should spend the money on ways to limit our use of oil. The money we are spending on high oil prices is much larger than a $150 billion stimulus package and it will just continue to be a huge drain on our economy year after year. In contrast, any money we spend now to increase our energy efficiency/develop alternative energy will pay off year after year. We should spend $150 billion on home energy audits, insulating houses, subsidizing the purchase of hybrid vehicles and solar panels, better windows, and energy efficient appliances. These things will stimulate the economy now and in the future.
I would like to believe that there is a difference between the political parties, and that there are meaningful differences between the best and the worst people in Congress. I hate being a defeatist cynic.
But really the only way to answer CR's question is with another question:
Isn't every day in Congress a worst ideas competition?
I did hear one great idea today - Bob Moriarty from 321Gold referred to the Bush administration as the "Axis of Weasels." I think I am going to dedicate myself to perpetuating that nomenclature, since the intertubes are the most powerful tool at my disposal and it doesn't seem possible to accomplish much else.
Not only is this pissing into the wind, this is shotgunning six beers and whipping it out into a hurricane. Sound fiscal policy does not include printing more money to spend now on stuff we don't need - especially when no one can say how bad it will be when its over and what steps may be necessary to get out from the bottom. But then again, the voters rejected sound fiscal policy.
I'd say use the money to fund a free Vegas weekend for everyone, complete with airfare, gambling and hooker gift certificates. Everyone can live like a Wall Street banker for 36 hours, and the ex-bankers can live it up one more time.
"The bank discovered last weekend that a trader in Paris had secretly set up positions that will cost the company 4.9 billion euros before tax, Societe Generale said"
DUDE!!!! HANG OUT!!! The visitor count is back! Rock on!
But on a serious note, let's consider the possibility that every dollar shipped out to consumers is spent. Let's further imagine it comes to consumers in Q2, after q1 negative GDP growth comes through (a likely result.) So, we manage to push a big chunka change into consumer spending, and since it's 70% of GDP still, we get a positive GDP quarter. Yay, recession averted. However, funny thing is, not one single persons financial situation is any different now. They just have some stuff they need or want, since not one person saved the money. Some bought shate, some paid their credit card bill, some paid the mortgage, etc.
So how many people out there are now saved from the problems they faced before this? Hmm. Hard to imagine it is a large number.
And business, they see business tick up slightly, due to that spending that will go away just as fast as it came. How exactly will this make them decide it's time to invest for the future?
Basically, this is yet another psychology ploy. We'll have a negative quarter of GDP, then a positive, and the gubmint will say, ALL IS WELL. But it aint. This money wont get people to start buying houses, and meanwhile, all the housing bust related job losses will keep piling up, and peeps will see unemployment rising, and they will be scared, because no matter what else they see in the economy, they see that. They also see the stock market. Does a temporary one time blip up in earnings due to unexpected spending of consumers from a cash giveaway by the gubmint change the guidance they will give for the following quarter? Nope. Not going to help the stock market either, the other thing that people watch as the value of their home sinks.
All this stimulus isn't worth the bits of bandwidth talking about here uses up.
As a renter and non-borrorwer (debt-free) I feel like the government and the Fed is giving me the carrot-and-stick treatment, only without the carrot.
Quite literally, the Fed is trying to get people to NOT save. This at a time when boomers will want to retire soon and savings rates have been low or negative for years. To that they say "spend it now, son, or lose it".
yes, inflation is greater than US savings rates, so saving is stoopid. real interest rates are negative...again! take some currency risk and park yer $ in a different country, thats what the fed wants...
so let's create an entity... which would buy distressed mortgages... let's call it "DODDIE MAC"!... and let's create and entity... which would elect me as a president!!!
PARIS -- France's Societe Generale Thursday said fraud related to a trader will result in a 4.9 billion ($7.16 billion) loss and that it will write down an additional 2.05 billion in assets related to subprime exposure. The bank plans to raise 5.5 billion in capital in "the following weeks."
It should all go into providing more efficient infrastructure... for lobbying! New IT systems for Lobbyists. Pay people to set up eBay accounts for Congress members. Some kind of escrow system. Don't want to drop a couple hundred Gs of quid pro quo and then have the vote switched. Also, some countryside retreats for lobbying offsites (with enough supplies and security forces to ride out a bird flu epidemic). We can also build The Great Fence of Texas with hand-welded mesh wire fencing. Something really inspiring -- artisan quality.
It'll probably end up being given out as a no bid contract for washing the sidewalks in front of the White House. My futile bid would include high-powered pressure washers and a stencil to etch in the sidewalk a mural of The Mighty Bush's Wonderous Victory Over Evil.
Or how about they just make some
Whip Deflation Now!
buttons? I still need that one for my collection.
Whatever the plan, it needs to be a whole lot of money in exchange for a whole lot of nothing.
Makes me feel good that Mulally has his finger on the "pulse", gee, ya think Alan???-
2008 OUTLOOK
"Although our Automotive operations are improving on a year-over-year basis, the U.S. economy is slowing and the outlook for the auto industry remains challenging," said Mulally.
I think we should issue credit cards to the needy in each country thats doing badly with this, the worse off the needy are the bigger the benefit. then we will sell this stuff in big lumps so that the risk of lending to all these needy will minimise the risk of anyone of them not being able to pay it back should we have a recession or they lose their job. The beauty of this systems is that if it goes bad all we have to do to fix it is rebundle into a bigger fund, lend some more and make interest rates lower until it all gets better again. If you get worried that this might be a bit precarious, then just insure it for a few points with someone that does just that for a living. this way nobody needs to save and we can keep it going for ever, I am sure there will be plenty of people offered this will say "yes please let me have some, i will spend and become indebted for my country it is my duty"
cant think why none of you have thought of this yourselves call yourselves economists
/satire off
btw what is actually wrong with getting the rot out of the economies, paying up our bills, etc. sure we are going to have to bite on the leather but the sooner we get on with this the sooner I will take my liquidated position back into the market. I want some transparency for my investments not the doublespeak and spin in every balance sheet i see
This is a tragic addiction to funny money that nobody wants to say we screwed up now its payback time. If this was drugs the government would have you on a programme.
Interesting to see both had super high backorders during the peak. (Same with other home builders, if you check out other charts at Housing Bubble Bust -- see it on right column under Home Builder Sales.)
"Make sure kids start a savings account by the age of seven and learn how to save."
NSA | 01.23.08 - 10:56 pm | #
I was a young school kid in Australia in the 60's. We all were made to start savings accounts at the "biggest" bank in Aussie and once a month took a bus there to deposit our ill gotten gains. I still have the old pasport somewhere, but I dont bank there any more.
The point is, the idea that saving is proper and right as well as plain old commonsense is now largely lost, sneered at even. We are conditioned to the free ride of revolving credit and govt handouts to feed excessive consumption. That is ending , we are coming full circle and the savers will be the new kings- that means SWF's as well.
The questions are, how do you steer spending wisely and encourage savings at the same time?
Some maybes:
Increase the tax credits / incentives programs for solar / wind /geothermal electricity for individual homeowners - to the point that it becomes seriously affordable.
Subsidize (via credit cards with discounts , yeah even coupons - spending on food and gas (with more of a discount for "greener" choices - locally grown food, biofuel etc)
Maybe, just maybe consider giving money to lenders who vow to get out of the investment biz, lower their customer-service fees, offer free savings educations programs in schools, high-interest-rate savings incentives, and adopt some old-fashioned underwriting rules for loans they dole out. In otherwords, make the banks work very hard for their money --
Do not give money to builders, unless you are giving money for them to get out of the house building biz and into the infrastructure repair (roads bridges etc) biz.
The $230 billion backlog of high- risk, high-yield debt that banks planned to sell has stopped shrinking, and probably will hinder lending to new borrowers, Bank of America Corp. said in a report.
25% or thereabouts of all us mortgages are variable rate. Thats about 2.5trillion dollars worth. Fed funds is down 1.75 basis points since the summer, so for just this segment of the market that is an annual rebate of near 45 billion dollars a year. Given where long rates are now I have to believe there is going to be a tsunami of refi for the fixed rate borrowers. If on average they knock off 100 basis points that would add another 75 billion into the hands of these consumers, for a total of about 120 billion dollars a year. toss in another 120 billion in fiscal stimulus and the consumer is going to be getting a 20 billion dollar a month cash injection. combine this with a jobfull recession (as opposed to the jobless recovery) and well maybe we aren't all going to be hunting deer for out next bottle of wine.
Q: What happens when you tax income MUCH more than consumption?
A: You get a nation full of over-consumers.
========================================
Q: What happens when you under tax the rich, over tax the middle class?
A: The rich end up with more money, and the middle class becomes the working poor.
=========================================
Q: What happens when a nation cuts taxes, and increases spending?
A: Deficits.
=========================================
Cause and effect is not exactly a new concept to the human consciousness yet some how when the precursory suggestions of movement towards actions with these negative consequences are brought forward for a vote...they are ratified.
Either we as nation of VOTERS or either easily distracted or willfully ignorant. Both are choices, not laws of physics.
Turn off the TV, educate yourself, become a participant in your life as opposed to being merely a passenger.
The way the politicians handle this will be serious litmus test for me as to just how bought and sold our Federal representatives are.
And though I'm angered about so much of the stupidity, I take heart in the fact that the pain (and hopefully the realization) is inevitable for the middle class. The government will simply not be able to replace the ten or twenty THOUSAND dollars that households have been spending annually that they don't earn.
The above was the biggest bait and switch of my lifetime certainly. It allowed a vast shift and concentration of wealth without arousing even a whisper of distress in the citizenry.
25% or thereabouts of all us mortgages are variable rate. Thats about 2.5trillion dollars worth. Fed funds is down 1.75 basis points since the summer, so for just this segment of the market that is an annual rebate of near 45 billion dollars a year. Given where long rates are now I have to believe there is going to be a tsunami of refi for the fixed rate borrowers. If on average they knock off 100 basis points that would add another 75 billion into the hands of these consumers, for a total of about 120 billion dollars a year.
You seem to be making some overly optimistic assumptions.
First off, of that $2.5T in ARM's, how many are (a) still in the fixed-rate intro period, (b) in the midst of jumping (instead of falling) from a teaser rate, or (c) based on an index that hasn't seen these kinds of drops (e.g. LIBOR)? I'd wager 1/2 to 2/3 of that $2.5T falls into one of those three buckets - so scratch say $25B off that $45B.
Now to the $7.5T in fixed-rates - are you assuming every FRM holder in America will refi?! Maybe a quarter of us will - maybe. Many will be happy with 50-75 bp and IMO very few will see >100bp. And BTW, only conforming loans are seeing rates fall, so anyone over $417K (for now) is out - which generally includes the states where most of that $7.5T worth is held! When it's all said and done, FRM holders as a group will be lucky to see 10-15% of the savings figure you quoted.
And 20 + 11 = $31B ain't gonna get the sand out of this economy's gears anytime soon, I'm afraid.
I think the stimulus package should be gift cards to certain stores, but ONLY usable if you buy more than you can afford and agree to not pay off the debt so the credit card companies can make more money. That way, we're all "consumers now!"
This is all for show. That $600 check you are going to get is a drop in the bucket compared to all the money government has taken from you. The extra cash is going to drive prices up that much more, which means that in the end, you will not actually get anything extra, just a slightly larger number on the bottom of next year's tax form, and based on the rebates of 2004, you will be asked to return the money next year anyway.
Let's do some math. The rebates cap at $75,000. Depending on your deductions, that means you pay about $9000 in Federal Income Tax every year. (You actually pay far more in hidden excises and fees in the products and services you buy, but for the purpose of this thought experiment, let's just take the income tax.) Let us say that you have held the same earnings level for the last 20 years. That's $180,000 you have paid in taxes. And now that the government has taxed you to the very edge of collapse, they want to loan you a fast $600 to get you through so they can extract another $180,000 from you over the next 20 years.
And in exchange for this $600 scrap from their table, the government expects that in your gratitude, you will forget about all the lies used to take that money from you in the first place, all the lies used to trick us into a war, all the rigged elections, all the loss of our freedoms and civil rights.
I don't know about you, but my soul is not for sale for $600. And neither should yours be.
Move the decimal point on our currency two clicks to the right. Thus, one dollar will become $100, and $10,000 will become $1,000,000.
Suddenly feeling very rich, the nation's giant new crop of millionaires will go out and spend like crazy, reviving the feelgood economy.
Or just read this limmerick aloud every morning before breakfast:
There once was a Fed board from Mars
That put five-buck gas in their cars
And then got so panicky
That their chief, Paul Bernacke,
Dropped interest rates every three hours.
Correction. My friend Buce at Underbelly this morning sent me a frantic e-mail to tell me that the name of the chief of the fed is BEN Bernacke, not PAUL Bernacke.
Sheesh! What is Buce, President and Chief Stickler of the Society for S For Accuracy in Limmericks and Doggerel?
Okay, okay, I stand corrected. Here it is again:
There once was a Fed board from Mars
That put five-buck gas in their cars
And then got so panicky
That their chief, Ben Bernacke,
Dropped interest rates every three hours.
A good stimulus package would include impeachment.
5 years? We are looking at potentially $1 Trillion of refunds simply on what is known. What about the deficit, devaluation of the dollar, inflation?
Let's allocate more corn to gas, that'll help.
So in addition to the FDIC, Fannie, and Freddie we're going to have FBIC (bonds), FHBIC (home builders), etc.?
Soon... Geico will be integrated into the DMV I predict.
Privatizing Social Security! Yeah, that's the ticket!
I would like to encourage everyone to express their outrage using poetic verse. Also.. sprinkle in exclamation points!!!
Thanks!!!!!!
Helicopters are overdone and use valuable oil.
The giacutter solution: Money cannons. Like the type used to launch clowns across circus tents.
Set up these money cannons at the tallest point of each municipality in the US and stuff in $100s and $20s. The amount of stimulus limited only by 1) the size of the cannon and 2) the denomination of bills.
Fire said cannons at a designated time of the day and voila........instant stimulus!
(You have to admit this is less stupid an idea than some of those already proferred).
Charts for the Big Bounce bounce that's developing: (Blogger: Page not found
washington is full of idiots, but we elected them. What are we to do?
My idea is a $100B fund to buy preferred stock of insolvent banks with a high interest rate.
The tax payers would get the benefit of the bailout at the expense of the banks shareholders (for once). And the worse off the banks were, the more they would need, and the higher the penalty.
Good banks would prosper, bad banks would wither, but it would avoid collapse of bank credit.
Of course, it buys no votes.
Haiku:
The Dow plunges deep,
Like a whale in springtime;
Krill swim everywhere.
lenders, investors, banks or builders
but these groups have been known to spend, and SPEND a LOT...
I say give it to them, again, and again...
they can spend it on G-v's, 5 acre islands in the caribean, and moe "positive carry" yachts
I'm sure some cutie patootie with a tramp stamp and hooker heals will be 'stimulated' by this spending.
Sorry for the snark. My pension fund has turned into an oxymoron.
we are all screwed, make fun of them?
The first problem with a stimulus package, is everyone has their own pet idea to put in to it. I don't know if we need a package - and I don't know the best package - but if we have one, I think each provision should be judged by how well it delivers money to people that are going to spend.
Personally I think they should send the entire $150 billion to me. I promise to spend it wisely.
Best to all.
Hey, the "visitors Online" number is back! Cool. We needed that Monday night ...
Best Wishes.
A program to "buy distressed mortgages at deep discounts" sounds great.
Can I stop paying mine and then offer to buy it for 50 cents on the dollar?
Give ten billion to the homeless in America, it will be gone in less than a month, but it will provide stimulus.
Nothing like a stimulus package of free money to get everyone to put their hands out.
Helicopters are beginning to warmup, but the market is acting like they have hit.
Someday this war's gonna end...
Issue taxpayers a government credit card with a certain money limit reflective of a percentage of what they have paid in to Social Security over their career. Like WIC coupons, it could only be spent on commodities, or paying down debt.
If you give people $800 cash, they will spend it on an 8 ball.
How about just giving everyone an iPhone? The goverment can pay for it by going long on $200 OTM Apple Calls. See that was easy.
I think any stimulus package should have long and short term goals. Short term to keep the recession from getting out of hand and a long term to educate Americans to compete in the global market.
I feel the short term stimulus package may not have much effect on the US economy since most of the manufacturing has moved out. We will be giving out free money to buy some plasma TV made in Taiwan or some place else. What do we get? few salespeople at Best Buy.
If you standing next to Senator Dudd, please tap on his head for me.
We need to resort to something like foodstamps but for health and gas. Maybe debit cards to prevent black markets. I'm a libertarian but the wealth divide would have been pretty massive by now if it wasn't for the money flowing from the housing bubble.
Anybody remember "The Plan" where every person would receive a check for $20k a year?
The goverment can pay for it by going long on $200 OTM Apple Calls
And the rebate is applicable only if you use Citi credit cards. The rebate checks get mailed to your credit card companies.
Coupons, an assortment of food, clothing, restaurants, electronics, gas...
A coupon book?
kirk, without mortgomachine, the divide would have compressed...
they don't make money(the wealthy) unless the system operates at a positive rate
Bottle Bongwater under the name 'sWill'; include a cigarette butt in every bottle. Show Chuck Norris chugging a bottle and saying "Maan, that's some good stuff...Chill with sWill". All proceeds go to putting Bush on Mars with the dude that is already there.
let's see: monetary policy - no regard for inflation, fiscal policy - no regard for deficit spending and the resultant borrowing required. Seems like the government is doing everything it can to drive up long-term interest rates.
Yes, definately an alcohol coupon.
If you give people $800 cash, they will spend it on an 8 ball.
We'll get a nation full of day traders and hedge fund managers that way.
LOL, ac.
Here's a plan:
The government will reimburse everyone up to $10,000 who takes out a HELOC on their house in 2008. The feds will also allow you to use $10k for a down-payment reimbursement on a new home.
Voila--reinflation of zee bubble, and a kick re-start of the ponszi lending apparatus (snark).
Stiglitz has some darn good ideas about what a stimulus package should contain (no, he says nothing about sending the $150 billion to CR:-)):
OP-ED CONTRIBUTOR; How to Stop the Downturn - NY Times
Any "infrastructure spending" is stupid. Not the most stupid, but still pretty dumb.
How about changing the name of the dollar to 'yuan'. Like are yuan time?
Here's a radical idea...how about creating a new government agency that:
And whose primary job is to flatten housing developments with low vacancy and highways and create new rights of way for mass transit systems.
So many birds, so little time..
Instant citizenship for anyone who buys a house in the US. We can then put the $800 in some lockbox.
How about having the gub'mint sell Entertainment books with $5 off of the price allocated to a slush fund for the PPT?
Or else I'm in for giacutter's money cannon. I love confetti.
Give away borrowed money for clueless underwater idiots to spend?
Great plan.
Where does the free money line start?
Containment Books
Dumb ideas are everywhere in this economy, so dont be shocked by this trend; an example from CIT:
On January 15, 2008, CIT Group Inc. (CIT) implemented a retention program (the Retention Program) for Jeffrey M. Peek, Chairman and Chief Executive Officer, and an additional number of other executive officers and employees of CIT. No named executive officer of CIT other than Mr. Peek is eligible to participate in the Retention Program. The Compensation Committee (the Committee) and the full Board of Directors of CIT approved the Retention Program ....
The Compensation Committee (the Committee) and the full Board of Directors of CIT approved the Anal Retention Program ....
Flicked your tango.
I sometimes wish that voters would elect me to Congress instead of all those other stupid people. My plan is simple and would start putting money in people's hands tomorrow that would be spent.
The President goes on TV and says: "Whatever the bottom line of your 1040 says this year, knock $1,000 off it. If you don't pay that much in income tax this year, we'll send you the rest. And if you file your taxes before March 1, we'll give you an extra $200 and send your refund ASAP."
You may laugh, but the solution to the question posed is gift cards. Given the size of the proposed dole-out, I am sure that mastercard/visa/amex could share the "burden" and chug out a few hundred million gift cards, $800/$1600, with an expiry date of 30 days.
No lazy shit, God fearing American would take the time to wrangle the casah out of the card into a debt payoff.
Negative Income Tax for below the line folks. Rescind the tax cuts, too.
How about we spend the money to build prisons for the crooks that caused this mess, they should be ready by the time the trials are over.
Haiku:
The Dow plunges deep,
Like a whale in springtime;
Krill swim everywhere.
NSA | 01.23.08 - 10:26 pm | #
That's awesome! Thanks.
No tax cuts, we can't afford em!
The fastest and most effective stimulus would be for bush to release the strategic oil reserves.
This would drive down the price of oil below $60.00. It would be immediately felt at the oil pump. And be the equivalent of a $2,000 tax credit to each house ($1.00 a gallon reduction x 20 gallons a week x 2 cars per household = $40 x 52 weeks = $2,080.)
This would be real cash to the consumer. In addition the cost of heating oil and gas would reduce each households utility bill an additional $480 to $1,000 annual savings.
Add in the multiplier effect and the concomitant reduction in inflation on prices.
Have congress focus on a real alternate energy plan.
America has been divided on immigration from south of the border. The fact of the matter is that we are now witnessing our banking and financial system being bought up by the sovereign wealth funds of China and the Mid East. This is the true takeover of our country by foreigners. We should quit worrying about the people we rely on to work in the farms and recognize the transfer of wealth that is going to the Mid East and Far East.
Oil prices at $90.00 is an onerous tax on everyone. This tax is most regressive. A cut in oil prices in a significant tax reduction with no effect on the tax policy of the country.
I am not xenophobic. I believe our country needs to become less dependent on foreign oil not foreign individuals.
The government probably is coming to the realization that some banks and IB's might be too big to be allowed to fail. So float some goof-ball ideas like these to see if they fly. Their rationale, and can't say that I disagree with it, is that it will be cheaper in the long run.
And before I get flamed, please know I am not in favor of it at all. My opinion, let one or two fail/merge/reorganize. Might be the only way for them to learn something.
long term to educate Americans to compete in the global market.
I honestly think any meaningful education is necessarily going to be distressing. I don't see how you can get away from that.
Any such lesson is going to involve teaching people that competition is intrinsically hard and that there are serious economic and social consequences when people and businesses make promises they have no ability to keep.
People don't want to be taught that, and so far all the rhetoric seems to involve politically expedient fixes.
IMO any politician in office who was wasn't yelling and waving their hands about this stuff over the past 5 years needs to be tossed out -- they're either dishonest or have no clue as to how to manage an economy.
Where was Senator Dodd when we were giving half million dollar loans to people with no income?
He has no right to suggest anything.
CR,
I am laughing, or are those tears.
These are fun times we live in, and the answers won't be easy. However, how some people let these idiotic ideas out of the brainstorming session I will never know. I have said some dumb things at work, but when everyone laughed I knew I probably shouldn't be repeating them in public.
So we need to be creative.
does anybody have the number for the guy who invented crystal pepsi?
Instant citizenship for anyone who buys a house in the US. We can then put the $800 in some lockbox.
REBear
that's known as Amnesty...
we've covered that ground in the senate
Long term recovery package:
Every child born gets $2000 put into a Social Security fund in their name. This stabilizes Social Security and gives people a real check when the hit retirement age.
Teach financial literacy in grade school.
Make sure kids start a savings account by the age of seven and learn how to save.
This from the generation who sat in my MBA Marketing class and stated definitively that a great example of an innovative product was the Pet Rock.
And that's why I quit the MBA program.
No s**t.
does anybody have the number for the guy who invented crystal pepsi?
bacodream,
Crystal Pep..
..see our salvation?!
New Coke...
..knew it was no use!
Credit Card Debt Relief!
That! Is! Our! Stimulus...
...Package!
A yellow brown envelope,
My giftcard arrived;
Bigscreen.
MLM:
I hope that the Koreans enjoy the money.
CR,
Money is fungible. People will just save the other money and spend the rebates/coupons/gift checks.
oh, wait.. why would they save when the fed fund rate is 0. I guess that answers my question?
Put Chimpy McFlightsuit in a dunking stall. Charge $1 a throw. $2.5 trill in no time.
BTW, I'm willing to house-sit one of those vacant properties for a few years if the government pays me a small fee.
The injection of that fee into the economy would be quite stimulating, I believe.
evermind, i found him. he was working in the CDO group at bear stearns. apparently he also invented the CDO squared...
off-thread comment to mp.
I'm sorry that I asked the other night about what might move Conjure Bag's clock more than a few seconds at a time.
I take it back please.
Rebates!!!
For everything you buy with your gifted government money, you save the receipt, spend an hour figuring out what they're not telling you in the rebate form, and send it all in and wait for 12 weeks or until you forget all about it...
Thanks CR, this is therapeutic.
The fastest and most effective stimulus would be for bush to release the strategic oil reserves.
Seriously...
It would be nice if the Government allowed 10% of the strategic reserve to be "borrowed" and sold on the spot market by traders.
Traders would pay for the privilege of buying a futures contract and selling the spot. It would keep hedge funds and others from playing games with spot oil prices and stabilize prices at the pump. And, the 10% you loan out would help offset the cost of the other 90% you're storing.
Starbucks gift cards?
Lewis Black has his own idea on how to stimulate the economy:
YouTube - Lewis Black - How to stimulate the economy
ok.. I'll break out of my nonsensical style and state plainly my stimulus package.
The federal government must create a program to buy off consumer credit card debt and student loan debt.
It's a given that a number of banks will fail or merge with others... but what will heal the economy is the removal of these lingering debt obligations..
If you just arbitrarily sprinkle money into the system.. you run the risk of people hording the cash. You have to forcibly wipe out a lot of revolving debt so that consumers will get jazzed about spending again.
..bring on the outrage.
The End.
I hope that the Koreans enjoy the money.
homedad, you may have uncovered the flaw in many of these proposals...
Every child born gets $2000 put into a Social Security fund in their name. This stabilizes Social Security and gives people a real check when the hit retirement age.
Money is just paper.
How does that help anyone retire?
People require a surfeit of wealth in order to retire. That requires motivation, education, and cooperation focused on some productive goal.
Pieces of paper can be a tool in accomplishing that, but they certainly aren't a replacement for it.
Money has no intrinsic value. The idea that it does is, in a sense, the ultimate bubble.
how bout a cap on executive pay, no options awarded above exec level,
it increases competition , and innovation, beacuse you know that your not gonna make it BIG at the BIG firm...
YOu leave and create small biz, which creates jobs...
BIg biz loses, everyone else wins...
Money is just paper.
How does that help anyone retire?
Yeah, you're right. Hey listen, I'm starting a recycling program over here. Why don't you send me your excess "paper" and I'll recycle. Thanks!
o more eisner billionaires off another mans idea/s
no more welch's
no more chainsaw al
no more 400mm tillerson's.
How can you stimulate something by eating seed corn.
Just curious.
Increase interest rates. Wash out the excesses. Take the pain. Move on.
Cheers,
does anybody have the number for the guy who invented crystal pepsi?
i LOLed! +1
Dodd has always been in the pocket of the financial sector. I was starting to warm up to him after his FISA stance, but this crap pisses me off all over again.
ac,
There were 2 more points you are ignoring that went with Social Security. 1)Teach financial literacy in school; grades K through 12. 2) Teach children to save and understand the consequences of having enough skin in the game to play.
Right now, its monopoly money.
Unfortunately, I am young enough that I will probably be around to have to pay back any rebate check I receive today.
So, since rebate checks are essentially a government mandated long term loan at 5% interest.
Personally, I'm going to STICK-IT-TO-THE-MAN and put the money in a ROTH IRA! WHAT YOU GOING TO DO NOW PIG!
Whoa, GenX'ers are one crazy bunch.
This might sound crazy but what about a a sales tax moratorium for a one month period in the states hardest hit by this crisis. Federal government should then compensate the states as long as they go along with said program.
Get rid of the payroll tax on incomes less than $30k.remove the $90k cap on social security.Make corporate persons subject to the death penalty (and the CEO,as well).And don't elect Hillary,we really do not need another republican president.
Hey, you can get a cash advance online? Sounds like easy money.
Wildcat Bankers
Blogging Bears
Hollow oaks - feline towers of ivory
Cheshire grins and golden parachutes
Hunger builds as bears shake trees
golden parachutes make good napkins
Personally, I'm going to STICK-IT-TO-THE-MAN and put the money in a ROTH IRA! WHAT YOU GOING TO DO NOW PIG!
Kicker,
hehe.. the Man will just retroactively declare your Roth savings taxable unless you take the money out immediately and purchase gewgaws.
CR - your idea is a cruel one. Not only people will get nice paycheck for couple of weeks, they also will be surprised WTF happened and why am I not getting my money for few weeks after. Spending goal is achieved. Yet another way to screw up the little guy to which he and she does not hve yet immune response. Brilliant.
The only problem might be payroll deductions are made through a bunch of systems which might be hard to change and synchronized.
Make subprime a verb.
Frank is exactly right. Do whatever it takes to bring commodaties, especially oil down. Long term spending into alternative energy, tax rebates. End the F'ing war bring our boys and girls home to defend OUR borders!
And who says we have to bail out the banks, builders, and investors. Here's a big fuck that!
Sorry CR/Tanta, I couldn't say it any other way?
How about gift cards you can only use on hookers? Talk about guaranteed consumption.
Booze and cigarettes work, too.
Yeah, Stiglitz has good prescriptions. They're the old fashioned, common-sense ideas you're supposed to use in every recession: give money to the unemployed, who will spend every penny because they need to, and to states and municipalities, before they cut back spending and make it worse.
To be honest, part of me just wants to see Volcker return to hit Bernanke with a fry pan and raise rates to double-digits again. Sometimes, the system becomes so unstable, you just have to re-boot.
ac,
There were 2 more points you are ignoring that went with Social Security. 1)Teach financial literacy in school; grades K through 12. 2) Teach children to save and understand the consequences of having enough skin in the game to play.
I know the way it sounds, but from my own experience I would have to say that in order to learn these lessons you have to lose money (or wealth in any case) that you've worked hard for or really need to maintain your lifestyle.
Otherwise how do really ever learn to care about the consequences?
Nice poem, KirkH. Rings of truth.
Any stimulus plan is stupid. We're already "stimulating" to the tune of several hundred billion dollars per year. Its called "deficit spending". I don't see why more is going to keep us out of a recession if it hundreds of billions per year hasn't already.
But if I was forced to spend $150B on something, I'd spend one half on Iraq vets who are getting shafted by the Bush administration, and the other half on railroad infrastructure upgrades, especially on the NorthEast Corridor. Just because that's what I want.
You have to have it to lose it, first. If you never have it, then there is no lesson to learn.
Send out a Mastercard/Visa type gift card with $500 to every tax payer, if they dont spend it in the next 8 weeks the card no longer works and they dont get the money.
Instant stimulus.
How can you stimulate something by eating seed corn.
You just get poorer after you are done.
Legalize pot. It's America's #1 cash crop, and has bee for some time. 100% tax at the point of sale and the street price will still go down. Income from sales is limited to $75K, or so, yearly.
Do the math. It'll work. Or we can continue to do truly stupid things.
But if I was forced to spend $150B on something, I'd spend one half on Iraq vets who are getting shafted by the Bush administration.
I'd vote for that...
Cribbing from Buffet's 'selling pieces of the farm" analogy:
Auction parts of the western US to cash-enhanced but aggression-challenged nations.
Settle Singapore in the St. George, Utah area. U.A.E. to SE Arizona.
We need money.
They need the warm protective umbrella provided by F-15's and carrier strike groups.
As a bonus, locate the Palestinians on Cheney's Wyoming ranch.
Another idea would be to federally draft a large rebate company, and offer federally funded rebates for a large basket of goods purchased that would have the best tendency to stimulate the U.S. economy.
How can you stimulate something by eating seed corn.
You just get poorer after you are done.
tg |
However, the texture of your turds are impressive.
I know the way it sounds, but from my own experience I would have to say that in order to learn these lessons you have to lose money (or wealth in any case) that you've worked hard for or really need to maintain your lifestyle.
Otherwise how do really ever learn to care about the consequences?
BTW as the evidence for these long-term k-cycles seems to mount, I have to suspect that these cycles are fundamentally related to these "lessons" passing in and out of living memory and being cyclically learned forgotten and re-learned over the generations.
Legalize pot. It's America's #1 cash crop, and has bee for some time. 100% tax at the point of sale and the street price will still go down. Income from sales is limited to $75K, or so, yearly.
Legalizing crack would be far more stimulating, I'd argue.
Sell Texas to Mexico. It will raise the IQ of both nations by 10 points.
Okay...forget the pot idea...
Let's have a bake sale!
Frank is NOT exactly right...
Alt energy is sideshow...
Growth is what the Banker's need...not the single mother, young family, or retiring boomer
our economy should be strong and viable at any trend rate close to population growth...+/- 4%
Okay...forget the pot idea...
Let's have a bake sale!
Marcus Aurelius | 01.23.08 - 11:29 pm | #
But don't you need the pot to have the bake sale?
A five million dollar tax on bicycle tires to be used for private jet subsidies.
Well, legend has it Sean Connery once won $20,000 at a casino betting the same number 3 times in a row at a roulette wheel.
So here's my idea to get some stimulous...
Offer Connery a 20% cut of whatever he makes and give him $100 billion to hit the roulette wheel with. Send him to casinos in the Middle East first. Then after he breaks those, send him to Maccau with his now $20 trillion. Then after he returns home with $4 zillion, wipe the national debt from the books, provide free housing and healthcare for every resident for life, and buy every star in the Milky Way Galaxy.
My buddy from New Orleans got a card after Katrina. He lives outside of the city and he didn't suffer any losses, but he still got the cash. He spent it in a strip club and bet some on the ponies or a dog track, I forget which one.
Still, think of the multiplier effect of what happens when organized crime ends up with government gifts! Poetic.
Instead of trying so hard to figure out a way to make "Made in America" products more attractive through rebates, let's just raise tariffs on everything we import!
Damn, now why didn't anybody think of that before?
Run a lottery and give 10 lucky soles 15 billion each with the condition that they must spend half within 45 days.
Guaranteed to get a lot of wasteful spending going employing many thousands of others.
And just think, Hollywood could make a movie about the lucky 10 and their spending -- thus creating more spending (cost of filiming etc) and even employing writers (make it a condition of filming that they must employe striking writers at 2 x normal pay).
Two birds with one stone and we all can be happy when we watch fellow americans wastefully spend our tax dollars......(oh wait, I think I've seen that somewhere before.....)
Give ALL the money to the homeless. No bank accounts, no credit cards, and no mortgage. Sure, they might spend it on drugs and booze and cheap women, but that's what most people will do with it anyway.
Wasn't Dodd proposing something that would allow bankruptcy judges to change mortgage terms?
A "renter's bill of rights" would be nice.
Dubya was insisting the economy is fundamentally strong. What did he mean by that? How would he know? What's all the PPT panic all about and all the stimulus proposals? They will work like HopeNow & MLEC. Backfire.
We can make the Iraqis pay us reparations.
Oy.
k-cycle?
what's Britney Spears got to do with any of this?
I stand (firmly) behind my Mattress Stimulus proposal.
A free mattress for every tax payer. Joint filers can qualify for a queen or king size. 2/3 mattress for each dependent. Only US produced mattresses qualify!
yeah, its a silly idea, but less silly than some of the ones floating around in never-never land (aka the beltway).
I realize that 70% of the GDP is consumer spending, but why do we have to consume more than we earn? Isn't that why so many people are in trouble? Something is fundamentally wrong with our system that depends on consumers to get in over their head to keep the economy going.
We need to get back to saving, rather than spending every last dime.
This push for a stimulus to 'get money to people who will spend it'...is there a cap on the IQ of the person receiving this? Will it go for food or rent or more plastic crap from Wal-Mart? Seriously, if people DO use it to save or pay down debt, that's better in the long run than pissing it away.
As the othe poster said, give to the homeless....they will indeed spend it quickly on basic necessities, hopefully.
There are too many proposals being circulated to comment on them all. But I'm pretty sure this is one of the worst ideas:
From AP: Builders, Banks Could Get Tax Break (hat tip AH and JW)
U.S. homebuilders, lenders and other struggling companies could receive hefty one-time tax refunds this year and next under a provision of the economic stimulus plan percolating in Washington.</i>
CR - these people are clearly NOT farm state Midwesterners... we know EXACTLY what to do:
Pay them not to build.
Pretty simple, huh. If they don't build - we pay them... if they do then they can deal with the markets themselves.
If it pisses folks off we can call those massive half empty housing developments 'Suburban Conservation Reserves' and grow big fat shrub-fed deer on them. Might even get to claim 'carbon credits' if they quit mowing lawns.
I really need to send my resume to Washington...
Ah, I forgot this is a worst idea competition.
Easy: spend it on invading Iran. Keyboard and cheetos sales will soar as the chickenhawk set gears up to fight teh libruls on the intertubez. Defense contractors will do ok, too. 100,000 dead Iranians is a small price to pay to keep Wall Street bonuses high.
I have run out of ideas, so I am correcting English:
"Bailout" is a noun.
"Bail out" is a verb (phrase)
Pay them not to build...
Damn, that's brilliant and they'd love it, coming out of the FDR playbook. Pretty soon, we'd have huge vast tracts of...open spaces and farmland.
Whodathunk?
I've got a great idea: a tax on capital!
That's it; if you've got a lot of capital lying around that you're sticking into passive investments for the return (above, say, $2 mill), guess what; the gov't's going to take away 5 percent a year and give it to the poor! On top of your income tax!
Your only way out: using that capital to fund new businesses or technologies that either employ American workers or directly increase American productivity and competitiveness (without importing cheap workers from overseas). And for doing this, you get big tax breaks above and beyond.
Not a chance in hell of this ever happening, but my, we'd see a lot of new jobs. And I just like the idea that has to work to serve the health of the greater economy. Or eventually, not be so wealthy.
Angry Bloggers Everywhere
Commenting On A Stimulus Gibberish
So This Thread I Skip To The Bottom
My Comment I Append By Clicking Publish
money should go to banks with negative interest rates designated for loans to build new strip clubs. this will encourage new construction.
crack on the other hand should be subsidized on consumer side in form of buy-one-get-one-free.
tariffs should be imposed on all imported cocaine to encourage domestic production and mitigate rise of commodity prices.
"life is good" campaign to be launched immediately on all major tv networks fully funded by government.
temporary program needs to be created to monitor comments on blogs which touch topics of national security.
$1 Trillion dollar here $1 Trillion there and pretty soon we will be talking about real money.
Oil Eq,
the Al Gore alt energy is a side show.
The alt energy underground is not, trust me on this. I have friends that are going grid free on simple combinations of air, wind, and water.
Debt free and totally independent. It's off the hamster wheel for me very soon.
Good luck with that Banker thing though.
Personally they can kiss my sweet ass!
That's like a small donkey CR, really, my 7 year old told me so!
Does Keynesism work? Why is it assumed that it does? If giving away everybody $800 is a good idea than why not $1 mil? If $800 is good than $1 mil must be better, needn't it?
Why are people so obsessed with consumption? With GDP growth? Let's pay a million people to dig a hole and the other million to fill it: instant GDP increase without any increase in wealth. And now we have 2 million people that forgot productive work and learned an unproductive one.
America consumes too much. Both the public sector and consumers are addicted to debt. Would getting them even more in debt solve anything?
What about letting the recession clear the unproductive parts of the economy so it can grow in a balanced way.
Keynes said that in long term we are all dead. But if you only care about short term for a long time, some day the "long term" will arrive. And the children and grandchildren of those who didn't care will unfortunately be still alive. I'm afraid this "long term" has just arrived.
NSA, selling Texas to Mexico is a start. Then sell Alaska back the Russians, or the highest bidder.
Seriously, once the unemployment jumps, we'll need a public works program to rebuild infrastructure, high speed trains, light rail in cities, and a Manhattan type project or something similar for alternative energy. Hey, we went from no space program to putting a man on the moon in 9 years.
worst stimulus:
cut taxes for hedge fund managers and IBs. these entities are the smartest people in the world, and will use the savings to invest in the smartest ideas in the world, and will make billions of dollars for themselves, which they will use on heretofore unknown goods and services provided by mass armies of doting americans.
best stimulus:
INVEST IN THE SCIENCES, BIOTECHNOLOGY AND EDUCATION. PROVIDE TAX BREAKS FOR COMPANIES INVESTING SIGNFICANTLY IN R&D. Damn. I hate to be the guy that yells, but all this short-term stimulus BS is a waste of time and money. MAKE AMERICA COMPETITIVE AGAIN IN THE GLOBAL ECONOMY.
Give congress $1 billion each not to do anything.
There once was a Chairman named Ben
Who saved whole markets with only his pen
When asked to name his reward
He said "Oh nothing untoward...
Cash, most preferably Yen."
Rock on Dunham!
Why not just let the recession come, face up to it, and learn from it to be wiser. Pain is often needed to teach lessons to fools. BTW the people at Davos think BB is in the process of creating another asset bubble with his rate reductions. What I want to know is WHERE the bubble will occur. I want to be there ahead of time. LOL.
The govt already releases oil from the SPR, they just do it prior to that quarter's sampling date for spot oil to queer out the CPI #.
News from the coal mine:
Went out to dinner tonight at Outback in Chandler AZ near the high end mall, deader than closing time on a Sunday, maybe 5 tables @ 7pm. Next door was a shuttered Redfish and down the street was a shuttered TGIFriday's.
The chain Bahama Breeze had closed in AZ months ago, but I always thought that was due to a so-so concept in the wrong market. This is different, because they've got good traffic, easy access. None of the other shops in the development have closed.
Financial haiku:
The refund can't work
Fall's acorn saved by the squirrel
No Oak only shit
The fool Bernanke
Winter's wind howls between ears
Bubbles always burst
Not sure if anyone else has posted this, but:
404 - Resource not found
I used to think the idea of Bloomberg running for POTUS would be a good idea. Now I'm not so sure:
Overhaul immigration laws to bring more workers in, not keep workers out.
Offer financial counseling, modified loans and, in some cases, subsidized loans to homeowners who find themselves unable to afford their mortgages.
I saw one guess that the next asset bubble will be raw materials. That has a certain logic to it. What about farm land? Has it been going up a lot? What other commodities?
Formerly working for a homebuilder as a development manager, this is the most absurd idea ever. Having worked for some of these horribly inefficient companies; Dear God, they need to liquidate. These are some of the most poorly led, incompetent, and inefficient organizations imaginable.
With all this money sloshing around tell me again why there is a problem with social security. I want to prepare before I reach age 62 in seven short years.
We should absolutely watch all the "other stuff" included in any stimulus package, while the press and public concentrate on the size of the rebate checks.
Also wanted to share this gem of economic analysis from the New York Times story on Wednesday's market conditions:
The market has this out-of-control feeling, and until the market sees some semblance of stability, its going to continue to be very volatile, said Richard Sparks, senior equities analyst at Schaffers Investment Research.
cover the treasury, FRB building and capitol offices in a 900 foot tall concrete jesus statue. prevent the idiots from hurting us all down the road.
"The fastest and most effective stimulus would be for bush to release the strategic oil reserves.
This would drive down the price of oil below $60.00...."
We would find out pretty fast how much speculation is in the system. I would not even be surprised by a 4 handle as the hedge funds run for the exits.
Frost Bank sees record earnings (this is the ONLY large home grown Texas based bank that survived the 1980s crisis without being bought out, merged or messed up by the feds)
Frost Bank sees record earnings - Dallas Business Journal:
Confucius say:
Confucius-like wisdom from Cheng Siwei, vice-chairman of the National People's Congress of China, who identifies the problem at the root of the world economy as being that "Asians save today's money for tomorrow, while Americans spend tomorrow's money today". Quite so.
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Dallas Business Journal survey
"Where Will The Dow End The Year?"
More than 60% are at 11,000 to below 10,000 in the first month of 2008 and Texas for the most part is still booming compared to many other states.
Dallas Business Journal: Dallas Business Pulse Surveys
5 years? We are looking at potentially $1 Trillion of refunds simply on what is known. What about the deficit, devaluation of the dollar, inflation?
Haven't you heard? There is no inflation.
Instant citizenship for anyone who buys a house in the US. We can then put the $800 in some lockbox.
REBear | 01.23.08 - 10:46 pm |
Can I do it in american way, 0 down, 100% financing? Pleaaaaase
sorry for the repeat post @10:46 ...
i would suggest that any stimulus package shall have a new amendament to constitution, any president candidate needs to pass IQ test.
The market has this out-of-control feeling, and until the market sees some semblance of stability, its going to continue to be very volatile, said Richard Sparks, senior equities analyst at Schaffers Investment Research.
I find your ideas intriguing, and I wish to subscribe to your newsletter.
Calculated Risk: We should not bailout lenders, investors, banks or builders under the guise of stimulus.
Will Rogers: When the chickens are hungry, they feed the horses. Were sick of horseshit.
CR, you wrote "Third, what happened to getting money to people that will spend it?"
Hey, I guess I'm not the only one who caught the charismatic director of CBO Peter Orzag's appearance before a senate finance committee on CSPAN! In one of the more dramatic exchanges of the hearing, Dr. Orszag pointed out that giving away money to consumers has a more immediate stimulative effect than, say, it on long-term infrastructure investment.
Bernanke and Orszag. Princeton rules!
Brokeback,
i think wind energy is a great idea in small scale...
but the current scale is GE wind enrgy BOONDOGGLE..
It's a BLight on the landscape, to be simple
I'd a phuckin crying shame to be blunt...
you ever kitesurf? the wind is not a realible source , ever.
$150 Billion?
Put it all into planning and construction of The Bush Library.
Not only do I not support tax breaks for builders and banks, but I'd like to see them pay extra taxes to pay for the stimulus package.
I'm sure somebody posted this already, but here's Dodd's "contributor" list:
404
This pretty much speaks for itself who Dodd's true constituency is.
Personally I think they should send the entire $150 billion to me. I promise to spend it wisely.
Best to all.
CalculatedRisk | Homepage | 01.23.08 - 10:28 pm | #
Wisely? That's not going to get it done.
They should give it all to me. I'll spend it sending ice cream to every man, woman, and child in Iraq.
This article indicates they agreed to raise the conforming loan limit to $700k
Expired
Both sides reached agreement to allow Fannie Mae and Freddie Mac -- government-sponsored companies that are the two biggest U.S. financers and guarantors of home loans -- to buy loans much larger than the current $417,000 limit, aides and lobbyists said. Frank said that lending cap might reach as high as $700,000 in areas with the highest home prices.
Why don't we let the Afghans grow poppy and split the profit?
The unquestioned assumption is that we must try fiscal stimulus now, rather than save that considerable money to help ease the pain, after the onset of a recession.
I vote the latter; as many note, any stimulus attempt risks stimulating China or Korea at best, or being mis-timed and counterproductive at worst, sustaining the debt-fueled behavior that needs to be broken. In normal times, I would be a Keynesian, and want to moderate the economic cycle, but these are not normal times. Let the lessons begin.
Let us recess first, I say. Only then, let our compassion be shown with $150B that will then, and ONLY then, most certainly be spent for appropriately-needed consumption, and not just to gas-up the SUV to refill the cargo compartment with made-in-China crap from Big-Box Mart.
The much awaited bounce finally came today! Boy, did it look like some quant funds where part of the whipsaw. The horsemen whacked and anything that smelled like it had housing/mortgage were being short covered furiously.
IMO, none of this noise really matters - nothing has changed to make home prices get back up in a hurry and LBO pier loans get placed at par.
Imagine Dubya and Congress trying to make a fiscal stimulus package. Bridge to nowhere anyone. Crony capitalism at its best!
I remember vividly the last bubble - expansion & bursting. At that point it was a tech equity bubble and the basic economy was healthy and we did not have a serious inflation or dollar problem. Despite GreenScam taking rates down to 1% the Naz got creamed. Yahoo, Cisco, JDS, Nortel, et al where decimated 80-90%! Of course it did not happen in a day and there where furious rallies and plenty of cheerleaders buying all the way down.
IMO, this credit bubble unwind is going to be doozy since its impairing the heart of the credit creation mechanism. Securitization will never be the same. The last thread has the COF CEO getting religion. No matter what the interest rate, lending standards will become more stringent. That does not mean there will not be any credit. Credit will be lavished on those that just dont need or want it and will be declined to those most in need. YoY profits will be declining for several quarters and I am certain we will see P/E compression.
I am hoping that when we are done and the people find out that manipulation by the Greenspan Fed and the fundamental corruption of crony capitalism practiced by our government is the root cause for all the angst and pain - that we will see a change towards a more transparent interference by our "central planners".
I frankly don't think anything can or will stimulate the economy in the way politicians are touting. Rather, a correction needs to be allowed to happen. If it doesn't happen now, it will happen later and it will be much, much worse. How often will we need such one-off stimulus packages?
Instead, the government should save money by pulling out of its wars, then redistribute that money back into the economy in the form of infrastructure projects and research into clean, alternative fuels to replace oil. Oil will one day run out and we need to be prepared.
But alas, the government will get its shot in the arm, like an athlete who gets several cortisone shots rather than allowing a wound to heal.
Let's save that rebate money and use it to provide useful public jobs to the construction workers who are going to be needing them this time next year. Isn't that more sensible than universal handouts?
Moratorium on federal fuel tax.
Federal government reimburses states for state tax revenues lost.
But, that won't happen. The builders and lenders will probably get the money.
Robert Reich's Blog
The Politics of an Economic Nightmare
Robert Reich's Blog: The Politics of an Economic Nightmare
Stimulus will cause a double dip recession.
Did you notice that Reich used the "d" word--Depression???
Pass the prozac.
"We should not bailout lenders, investors, banks or builders under the guise of stimulus"
True colors!
Keep it simple. A flat 2.5% tax cut for all taxpayers. Nothing fancy. Nothing conveluted. Just a simple straight forward tax cut. Sure some will save. some will reduce debt; but, we can all enjoy some relief
Americans are tapped out. Even without declining home prices, too many had
Bank of America Cuts 25% of Stock Analysts, Ex-Employees Say
The company plans to cut an undisclosed number of support jobs in the investment banking unit
Bank of America Cuts 25% of Stock Analysts, Ex-Employees Say - Bloomberg.com
"The Dow plunges deep,
Like a whale in springtime;
Krill swim everywhere"
I'm not sure why but this made me burst into laughter in the middle of a restaurant.
I changed my minds on the Starbucks gift cards. I want to see Bush's face on Mount Rushmore. It will be there someday anyway, once history is properly revised. We might as well carve it out now.
Robert Reich (from FFDIC's link)- "So we're going to go through weeks of posturing about stimulus packages of one sort or another, and then see enacted the big fat bonanza of a temporary tax break that will likely have little effect. That, perhaps along with a few more rate cuts by the Fed. The presidential candidates will be asked what should be done about the worsening economy, and they'll give vague answers. None will likely admit the truth: We're going to need the rest of the world to bail us out."
Conjure says, "Bingo. Bye, Bye, Dollar. Hello Euro. Yeah."
Chuck Prince out the door
Fall leaves like Citi's share price
But no more dancing
Emergency cut
Winter ain't even started
Panic what panic
Another on Citi:
Write downs don't mean much
Winter blast ain't all she wrote
Pier loans are a bitch.
Did anyone ever read a short story by T.C. Boyle called the New Moon Party? A party gains dominance by promising to build a new metal moon. Brilliant story. Not sure why all this reminded me of it.
Greenspan is to blame
ARM's are not your friend
Don't spike the punch bowl
It's buy low sell high
Except if you're Merrill Lynch
Can I haz money?
Hedge funds must unwind
In Greenwich CT
Homeless sleep in Jag
What hath Dubya wrought
Seven years of stimuli
I just wanted peace
Like Yakov Smirnoff
In Russia the house own you
I go Branson now
Emergency rate
cut in stock market values
panic, what panic
(modified from Alec's original)
If the goal of a good stimulus package is to give money to people who are going to spend it, a cut in the sales tax makes the most sense.
The confessional opens in Europe - Societe Generale Falls on Concern About Writedowns
"the necessary writedown appears in the region of 2 billion to 5 billion euros"
How about a Federal Reserve cash back card? The more you spend, the more you earn.
Hey, the Chicago Board of Trade link to the DOW futures is down "indefinitely" due to technical problems. Hardware, software, or unpleasant truthiness?
Giacutter's money cannon plan makes a lot more sense than the hogwash offered up by Senator Dud or bailing out homebuilders. Are those guys for real?
We should spend the money on ways to limit our use of oil. The money we are spending on high oil prices is much larger than a $150 billion stimulus package and it will just continue to be a huge drain on our economy year after year. In contrast, any money we spend now to increase our energy efficiency/develop alternative energy will pay off year after year. We should spend $150 billion on home energy audits, insulating houses, subsidizing the purchase of hybrid vehicles and solar panels, better windows, and energy efficient appliances. These things will stimulate the economy now and in the future.
Société Générale uncovers 4.9bn fraud
FT.com / Financials - SocGen uncovers €5bn fraud
I would like to believe that there is a difference between the political parties, and that there are meaningful differences between the best and the worst people in Congress. I hate being a defeatist cynic.
But really the only way to answer CR's question is with another question:
Isn't every day in Congress a worst ideas competition?
I did hear one great idea today - Bob Moriarty from 321Gold referred to the Bush administration as the "Axis of Weasels." I think I am going to dedicate myself to perpetuating that nomenclature, since the intertubes are the most powerful tool at my disposal and it doesn't seem possible to accomplish much else.
Not only is this pissing into the wind, this is shotgunning six beers and whipping it out into a hurricane. Sound fiscal policy does not include printing more money to spend now on stuff we don't need - especially when no one can say how bad it will be when its over and what steps may be necessary to get out from the bottom. But then again, the voters rejected sound fiscal policy.
I'd say use the money to fund a free Vegas weekend for everyone, complete with airfare, gambling and hooker gift certificates. Everyone can live like a Wall Street banker for 36 hours, and the ex-bankers can live it up one more time.
damn rogue traders!
"The bank discovered last weekend that a trader in Paris had secretly set up positions that will cost the company 4.9 billion euros before tax, Societe Generale said"
yeah right
DUDE!!!! HANG OUT!!! The visitor count is back! Rock on!
But on a serious note, let's consider the possibility that every dollar shipped out to consumers is spent. Let's further imagine it comes to consumers in Q2, after q1 negative GDP growth comes through (a likely result.) So, we manage to push a big chunka change into consumer spending, and since it's 70% of GDP still, we get a positive GDP quarter. Yay, recession averted. However, funny thing is, not one single persons financial situation is any different now. They just have some stuff they need or want, since not one person saved the money. Some bought shate, some paid their credit card bill, some paid the mortgage, etc.
So how many people out there are now saved from the problems they faced before this? Hmm. Hard to imagine it is a large number.
And business, they see business tick up slightly, due to that spending that will go away just as fast as it came. How exactly will this make them decide it's time to invest for the future?
Basically, this is yet another psychology ploy. We'll have a negative quarter of GDP, then a positive, and the gubmint will say, ALL IS WELL. But it aint. This money wont get people to start buying houses, and meanwhile, all the housing bust related job losses will keep piling up, and peeps will see unemployment rising, and they will be scared, because no matter what else they see in the economy, they see that. They also see the stock market. Does a temporary one time blip up in earnings due to unexpected spending of consumers from a cash giveaway by the gubmint change the guidance they will give for the following quarter? Nope. Not going to help the stock market either, the other thing that people watch as the value of their home sinks.
All this stimulus isn't worth the bits of bandwidth talking about here uses up.
Pathetic.
I think I just saw Goldilocks getting raped by three bears behind the toolshed.
Sensex seems to be having a bit of a hiccup. hic!
As a renter and non-borrorwer (debt-free) I feel like the government and the Fed is giving me the carrot-and-stick treatment, only without the carrot.
Quite literally, the Fed is trying to get people to NOT save. This at a time when boomers will want to retire soon and savings rates have been low or negative for years. To that they say "spend it now, son, or lose it".
yes, inflation is greater than US savings rates, so saving is stoopid. real interest rates are negative...again! take some currency risk and park yer $ in a different country, thats what the fed wants...
Balance sheet Oopss for soc gen
Societe Generale reports $7.1 bln trading loss from "fraud" - MarketWatch
they are selling the one gunman theory
Looks like someone is going to lose their parking spot by the elevator and will have to park in the uncovered lot for the next month.
so let's create an entity... which would buy distressed mortgages... let's call it "DODDIE MAC"!... and let's create and entity... which would elect me as a president!!!
Looks like Société Générale is going to have a 99.999% drop in earnings. At least they'll still be profitable!
BofA: -95%
Wachovia: -98%
Suntrust: -98%
Société Générale: -99.999%
Who's next?
PARIS -- France's Societe Generale Thursday said fraud related to a trader will result in a 4.9 billion ($7.16 billion) loss and that it will write down an additional 2.05 billion in assets related to subprime exposure. The bank plans to raise 5.5 billion in capital in "the following weeks."
French Bank Rocked by Rogue Trader - WSJ.com
Re: Looks like Société Générale is going to have a 99.999% drop in earnings. At least they'll still be profitable!
BofA: -95%
Wachovia: -98%
Suntrust: -98%
Société Générale: -99.999%
This is why its so retarded that people are thinking this is an opportunity for future value!
The Hang Seng index closed down 550.9 points or 2.29 pct at 23,539.27, off a low of 23,478.87 and high of 24,966.17.
all these quick fix ideas wont help the economy they are just there wasting space.That is why I came up with this idea Lively Money: Why making money on the Internet will save America!
It should all go into providing more efficient infrastructure... for lobbying! New IT systems for Lobbyists. Pay people to set up eBay accounts for Congress members. Some kind of escrow system. Don't want to drop a couple hundred Gs of quid pro quo and then have the vote switched. Also, some countryside retreats for lobbying offsites (with enough supplies and security forces to ride out a bird flu epidemic). We can also build The Great Fence of Texas with hand-welded mesh wire fencing. Something really inspiring -- artisan quality.
It'll probably end up being given out as a no bid contract for washing the sidewalks in front of the White House. My futile bid would include high-powered pressure washers and a stencil to etch in the sidewalk a mural of The Mighty Bush's Wonderous Victory Over Evil.
Or how about they just make some
Whip Deflation Now!
buttons? I still need that one for my collection.
Whatever the plan, it needs to be a whole lot of money in exchange for a whole lot of nothing.
"The package should give money to people that are going to spend it."
Give it to me so I can buy some more gold, I promise I'll spend it.
The world needs to come to the realization that something is severely !@##$ed up when your counterparty is a massively leveraged hedge fund.
Banks move to guard against counterparty failures
| Funds
| Reuters
LEN dumps as well - dropped -$7.93/share (or similar, clipped crawl clipped by edge of TV lol)
Makes me feel good that Mulally has his finger on the "pulse", gee, ya think Alan???-
2008 OUTLOOK
"Although our Automotive operations are improving on a year-over-year basis, the U.S. economy is slowing and the outlook for the auto industry remains challenging," said Mulally.
Expired
I think we should issue credit cards to the needy in each country thats doing badly with this, the worse off the needy are the bigger the benefit. then we will sell this stuff in big lumps so that the risk of lending to all these needy will minimise the risk of anyone of them not being able to pay it back should we have a recession or they lose their job. The beauty of this systems is that if it goes bad all we have to do to fix it is rebundle into a bigger fund, lend some more and make interest rates lower until it all gets better again. If you get worried that this might be a bit precarious, then just insure it for a few points with someone that does just that for a living. this way nobody needs to save and we can keep it going for ever, I am sure there will be plenty of people offered this will say "yes please let me have some, i will spend and become indebted for my country it is my duty"
cant think why none of you have thought of this yourselves call yourselves economists
/satire off
btw what is actually wrong with getting the rot out of the economies, paying up our bills, etc. sure we are going to have to bite on the leather but the sooner we get on with this the sooner I will take my liquidated position back into the market. I want some transparency for my investments not the doublespeak and spin in every balance sheet i see
This is a tragic addiction to funny money that nobody wants to say we screwed up now its payback time. If this was drugs the government would have you on a programme.
I think I'm going to take my $800, convert it to Euros, and put it into a depositary account in France ... errrr ... the UK ... errrrr ummmmm
cd
LEN quarterly sales in graph:
Lennar Quarterly Sales
RYL, too, updated from yesterday's announcement:
Ryland Quarterly Sales
Interesting to see both had super high backorders during the peak. (Same with other home builders, if you check out other charts at Housing Bubble Bust -- see it on right column under Home Builder Sales.)
"fraud related to a trader will result in a 4.9 billion ($7.16 billion) loss"
ONE trader wipes out two years of profit at a 120,000 man company?!
At Bear Sterns it took a whole trading desk to do that kind of damage.
"Axis of Weasels."
Thank you albrt. You have brightened a cold, cloudy and not very promising day considerably
"Make sure kids start a savings account by the age of seven and learn how to save."
NSA | 01.23.08 - 10:56 pm | #
I was a young school kid in Australia in the 60's. We all were made to start savings accounts at the "biggest" bank in Aussie and once a month took a bus there to deposit our ill gotten gains. I still have the old pasport somewhere, but I dont bank there any more.
The point is, the idea that saving is proper and right as well as plain old commonsense is now largely lost, sneered at even. We are conditioned to the free ride of revolving credit and govt handouts to feed excessive consumption. That is ending , we are coming full circle and the savers will be the new kings- that means SWF's as well.
The questions are, how do you steer spending wisely and encourage savings at the same time?
Some maybes:
"Axis of Weasels."
One of two things that's gotten me to laugh this morning. The other being in the comments of the Robert Reich article that a poster linked above:
"An aside: I'm listening to Joe Scarborough interviewing that bastion of Martian economic theory, Larry Kudlow."
I just scanned through the article on Dodd's bailout proposal. I almost can't believe even that prostitute would propose that.
This isn't good either. Kelly Services slumping:
Kelly Services profit slips; U.S. staffing market weak - MarketWatch
Claims at 301, big drop in continuing claims...the recession may have begun in December and ended in January.
[bad] Debt Backlog Isn't Shrinking, Bank of America Says
Banks' $230 Billion Backlog of Debt Isn't Shrinking (Update3) - Bloomberg.com
The $230 billion backlog of high- risk, high-yield debt that banks planned to sell has stopped shrinking, and probably will hinder lending to new borrowers, Bank of America Corp. said in a report.
Hedge Fund Rumors: Liquidation From Quant Fund In Boston - Dealbreaker - A Wall Street Tabloid - Business News Headlines and Financial Gossip
NEWS ANALYSIS; A Fear That the Cure Could Be Poison - NY Times
25% or thereabouts of all us mortgages are variable rate. Thats about 2.5trillion dollars worth. Fed funds is down 1.75 basis points since the summer, so for just this segment of the market that is an annual rebate of near 45 billion dollars a year. Given where long rates are now I have to believe there is going to be a tsunami of refi for the fixed rate borrowers. If on average they knock off 100 basis points that would add another 75 billion into the hands of these consumers, for a total of about 120 billion dollars a year. toss in another 120 billion in fiscal stimulus and the consumer is going to be getting a 20 billion dollar a month cash injection. combine this with a jobfull recession (as opposed to the jobless recovery) and well maybe we aren't all going to be hunting deer for out next bottle of wine.
What does this mean?
Freddie Mac Thursday said the aggregate unpaid principal balance of its retained portfolio rose to $720.8 billion as of Dec. 31.
Freddie Mac's unpaid principal balance rises - MarketWatch
(Sung by the Economy to the tune of My Bonnie Lies Under the Ocean)
My body lies under the bubble
My body lies under the sea
Please pass out the checks very quickly
To pump the life back into me
EE CON O ME
EE CON O ME
We'll never see subprime again, again
EE CON O ME
EE CON O ME
Done in by the like of Helicopter Ben!
""fraud related to a trader will result in a 4.9 billion ($7.16 billion) loss"
ONE trader wipes out two years of profit at a 120,000 man company?!
At Bear Sterns it took a whole trading desk to do that kind of damage.
Jack Staub | 01.24.08 - 7:48 am "
That's simply an example of how much more efficient the French are...
Q: What happens when you tax income MUCH more than consumption?
A: You get a nation full of over-consumers.
========================================
Q: What happens when you under tax the rich, over tax the middle class?
A: The rich end up with more money, and the middle class becomes the working poor.
=========================================
Q: What happens when a nation cuts taxes, and increases spending?
A: Deficits.
=========================================
Cause and effect is not exactly a new concept to the human consciousness yet some how when the precursory suggestions of movement towards actions with these negative consequences are brought forward for a vote...they are ratified.
Either we as nation of VOTERS or either easily distracted or willfully ignorant. Both are choices, not laws of physics.
Turn off the TV, educate yourself, become a participant in your life as opposed to being merely a passenger.
The way the politicians handle this will be serious litmus test for me as to just how bought and sold our Federal representatives are.
And though I'm angered about so much of the stupidity, I take heart in the fact that the pain (and hopefully the realization) is inevitable for the middle class. The government will simply not be able to replace the ten or twenty THOUSAND dollars that households have been spending annually that they don't earn.
The above was the biggest bait and switch of my lifetime certainly. It allowed a vast shift and concentration of wealth without arousing even a whisper of distress in the citizenry.
25% or thereabouts of all us mortgages are variable rate. Thats about 2.5trillion dollars worth. Fed funds is down 1.75 basis points since the summer, so for just this segment of the market that is an annual rebate of near 45 billion dollars a year. Given where long rates are now I have to believe there is going to be a tsunami of refi for the fixed rate borrowers. If on average they knock off 100 basis points that would add another 75 billion into the hands of these consumers, for a total of about 120 billion dollars a year.
You seem to be making some overly optimistic assumptions.
First off, of that $2.5T in ARM's, how many are (a) still in the fixed-rate intro period, (b) in the midst of jumping (instead of falling) from a teaser rate, or (c) based on an index that hasn't seen these kinds of drops (e.g. LIBOR)? I'd wager 1/2 to 2/3 of that $2.5T falls into one of those three buckets - so scratch say $25B off that $45B.
Now to the $7.5T in fixed-rates - are you assuming every FRM holder in America will refi?! Maybe a quarter of us will - maybe. Many will be happy with 50-75 bp and IMO very few will see >100bp. And BTW, only conforming loans are seeing rates fall, so anyone over $417K (for now) is out - which generally includes the states where most of that $7.5T worth is held! When it's all said and done, FRM holders as a group will be lucky to see 10-15% of the savings figure you quoted.
And 20 + 11 = $31B ain't gonna get the sand out of this economy's gears anytime soon, I'm afraid.
I think the stimulus package should be gift cards to certain stores, but ONLY usable if you buy more than you can afford and agree to not pay off the debt so the credit card companies can make more money. That way, we're all "consumers now!"
(sarcasm off)
channels Ogden Nash
If you want economic stimulus assurance
Enhance benefits coming from unemployment insurance.
If you want more wealth creation
Enhance grants that spur alternative energy innovation.
!!!
Yeah, bail out the assholes who made the mess... it figures.
This is all for show. That $600 check you are going to get is a drop in the bucket compared to all the money government has taken from you. The extra cash is going to drive prices up that much more, which means that in the end, you will not actually get anything extra, just a slightly larger number on the bottom of next year's tax form, and based on the rebates of 2004, you will be asked to return the money next year anyway.
Let's do some math. The rebates cap at $75,000. Depending on your deductions, that means you pay about $9000 in Federal Income Tax every year. (You actually pay far more in hidden excises and fees in the products and services you buy, but for the purpose of this thought experiment, let's just take the income tax.) Let us say that you have held the same earnings level for the last 20 years. That's $180,000 you have paid in taxes. And now that the government has taxed you to the very edge of collapse, they want to loan you a fast $600 to get you through so they can extract another $180,000 from you over the next 20 years.
And in exchange for this $600 scrap from their table, the government expects that in your gratitude, you will forget about all the lies used to take that money from you in the first place, all the lies used to trick us into a war, all the rigged elections, all the loss of our freedoms and civil rights.
I don't know about you, but my soul is not for sale for $600. And neither should yours be.
Move the decimal point on our currency two clicks to the right. Thus, one dollar will become $100, and $10,000 will become $1,000,000.
Suddenly feeling very rich, the nation's giant new crop of millionaires will go out and spend like crazy, reviving the feelgood economy.
Or just read this limmerick aloud every morning before breakfast:
There once was a Fed board from Mars
That put five-buck gas in their cars
And then got so panicky
That their chief, Paul Bernacke,
Dropped interest rates every three hours.
Yours very crankily,
The New York Crank
Correction. My friend Buce at Underbelly this morning sent me a frantic e-mail to tell me that the name of the chief of the fed is BEN Bernacke, not PAUL Bernacke.
Sheesh! What is Buce, President and Chief Stickler of the Society for S For Accuracy in Limmericks and Doggerel?
Okay, okay, I stand corrected. Here it is again:
There once was a Fed board from Mars
That put five-buck gas in their cars
And then got so panicky
That their chief, Ben Bernacke,
Dropped interest rates every three hours.
There! Now that changes everything!
Yours Crankily,
BTW the people at Davos think BB is in the process of creating another asset bubble with his rate reductions.
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