Monday, March 09, 2009

just another $750 billion

On page 2 of a New York Times article about Obama reaching out to elements of the Taliban in Afghanistan:
Turning to domestic affairs, Mr. Obama indicated that the end was not in sight when it came to the economic crisis and suggested that he expected it could take another $750 billion to address the problem of weak and failing financial institutions beyond the $700 billion already approved.
I think they should have put that on page one of another article perhaps with the title: "Don't Panic"

From page 1 of the same article:
“I don’t think that people should be fearful about our future,” he said. “I don’t think that people should suddenly mistrust all of our financial institutions.” ... He struck a reassuring tone about the economy, saying he had no trouble sleeping at night.
I don't believe him


John Dougan said...

Or "The One" could just not understand the situation.

He taught at UChicago, but there is no indication he actually understands any of the economic theory they teach there. There is indication he fully understands the pragmatism of classical Chicago politics.

Andrés said...

Part of the problem, I think, is whether we the bulk of the population even desire to accept the truth --- even if is proven beyond reasonable doubt.

For example, by definition of fractional reserve, *every bank is insolvent*. Why in heck would you put your money in such places?

So. Let's say 10% people act on it. It will not even take 50% of the people to do that, because the reserves are not even 10%. Then what? How is that any better?

I still think we should not blame whoever happens to be the visible head at the moment. It is *us* and *our* behavior who are to blame.

Anonymous said...

Hi Bill.

"I don't believe him"

You and me, both. In a recent article in the UK Telegraph talking about PM Gordon Brown's visit to the U.S., Obama was described as "exhausted" from the work he's doing to deal with the financial crisis. It doesn't sound like he's sleeping well to me. Then again, people also said he's trying to do too much: deal with this, get universal health care going, reform education, and getting "green" projects going. What I've heard from past administration officials is that a president can really only deal with about 3 big issues during their terms in office. Some presidents try to do more than that, but it's counter-productive. It looks like Obama is one of them. He'll just have to learn his lesson that he needs to narrow his focus.

Re: the "stimulus" stuff

I don't think this would be such a problem if he had structured his $787 billion "stimulus" plan better. He could've made it smaller for one. Only about a third of the plan was actually stimulus, and most of it doesn't start until next year. What's the point? The disaster is going on now. The rest of the bill is profligate spending for the sake of "powering up" government programs, and it comes out in chunks from now until 2014. The legislative analysts I heard from called the bill a disaster.

I've heard rumors about another "stimulus" bill, though there's nothing definite, from what I understand.

What made my jaw drop was Obama's budget proposal for 2010: $3.6 trillion. I thought, "Are you kidding, me??" We don't have money for what we're spending now! We're borrowing it or printing it. The government is projecting budget deficits of at least $1 trillion for the next few years. And budget hawks used to complain that our budget deficit was $300 billion a year, saying it was too high. If the projections are correct Obama will have added the same amount of federal debt in 2 years that the Bush Admin. added in eight.

I don't see how we're going to do it. I think these plans are going to fall flat on their face. We can't spend money we don't have at this rate. It's a recipe for stagflation: slow growth, runaway inflation, and skyrocketing interest rates. No, I don't think Obama learned a thing from the "Chicago School" of economics.