Stimulus 101 »
Posted By engineer 9 months ago in Business & FinanceWith December's jobs numbers in the tank, the economy appears to be teetering on recession, if not already there. Since Keynes, it has been well established that when the private sector economic engine sputters, the public sector needs to provide a jump start.
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engineer
Hi My background is Biomedical engineering with an MBA As you know from all my comments where I almost stand politically. I have loads of ...
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engineer9 months ago
You get a much better bang-for-the-stimulative-buck from direct spending. A dollar spent shoring up Unemployment Insurance yields $1.73; a dollar spent on fiscal relief to the states yields $1.24. This last ideaâ;;ratcheting up state grants from the Fedsâ;;is particularly important right now, since many state and city coffers are coming up short due to the local revenue impacts of the housing meltdown.
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browntiger9 months ago
Everyone knows what is going on....
Services based economy is a lie. It will never work. Too many telecommunications jobs got offshored to china and India. Followed my manufacturing, followed with research and development, followed by IT, followed by accounting and now some medical and biotech.
Want stimulus package: close offshoring bank than finances cheaters, close offshore loopholes, impose FICA Fed tax on every offshored product and service. Heck just follow EU and add 22% VAT on every imported product.
Obama's idea is pretty good too. Offshore's get 0% tax break, and give them to small businesses.
Any trade deals should be looked at if there is something beneficial to US economy. No single-sided trade deals.
We know India imposes 25 % tax on us products. Time to pay back!
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engineer9 months ago
House Speaker Nancy Pelosi has directed a team of senior legislators to design a $100 billion jobs and investment plan that can be quickly implemented. That's less than a percent of GDP, but it sounds about right to me.
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Teech9 months ago
No, you guys have got it all wrong! Forget the $100 billion. Make it another trillion, but make it in tax cuts for the richest 1% of Americans. Add that to the national debt. Now, borrow another trillion and start a war with Iran. With the "trickle down" economy, we'll all be rolling in dough, the economy will soar, and happy days will be here again! Ask George Bush, he knows it will work.
Wasting it on Halliburton, Blackwater and other war profiteers? Hey, we gotta keep those poor starving folks in business. Where else can the Army go to buy a screwdriver for $375 or a gallon of diesel for $125? Where else can we "misplace" a couple of hundred million bucks? What else could we do with the money? Provide health care or education or improved infrastructure for working class Americans? Naaaaaaaahhh. Too damn expensive. Communistic, too!
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NelsonR9 months ago
It's to little to late.
For all these years where have our leading economist been while our representatives have squandered all that America once had. Just maybe this expensive war, outsourcing, unfair trade policies, Federal Reserve policy and other abysmal decisions could have been obliterated for sound reasoning.
Be thankful this is a recession that will get worse but the chances of a Depression are also on the table unless pragmatic leadership and decisions are restored.
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cowboygrandpa9 months ago
NelsonR:
You know it brother. But you know who went along with it? Just about most of the country because they kept electing the thieves who were doing it. I can honestly say I never voted for Reagan or either Bush. Now I have voted Reublican in the past when their lies were better sounding than the Democrats lies. But no more, I figured it out 25 yeas ago with stick it to 'em Reagan.
We need to give no tax breaks to any US company outsourcing their work. In fact we need to hit them with a tariff and encourage Americans to open up manufacturing companies in the US again. As far as the overseas investment no company shouldbe allowed to have most of their assets outside otf the US and be called an American company. They enjoy all the benefits while paing little of the cost. Make 'em pay their share. I'm pro America, anti global economy.
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BB649 months ago
We're not really in a recession. What we're in I'm not sure. I'm in heavy industry and power gen. I can't hire enough skilled people. Many of my clients are hiring people just to send them to school. Machinist, welders, tool makers. Granted these are skilled jobs but they're hiring and paying well.
As to the war, that's only 3-5% of our Fed budget. It's the mandated entitlements that eat up 45-50% of the budget. Get control of the handouts and we'll have a much better change of success. BTW-I don't mean people who really need the help. Seniors, the infirm and the like. I live in Milwaukee this month. I have three sides of ghetto surrounding me. Most refuse to work but they all have money. Drive around and almost every home has cable, Dish TV and everyone has a cell phone. It's rather annoying when you think about it.
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AnteUp9 months ago
Positively, engineer!
Surely everyone remembers the record-breaking haul that Exxon-Mobil* had last year -and they were NOT alone. Show me a middle class family who had a record-breaking year doing their regular job. Middle-class Americans are working just as hard - bringing home less and spending more on the necessities they must have to just get up the next day and do it all over again.
The idea that a family could experience a financial
meltdown if there were an emergency - if you needed to help Grandma & Grandpa with their heating bill, or your kid needed braces, or the car crapped out - Heck! Winter tires
to keep you safe through the snow could break the bank!
I agree the stimulus package should start with grants
to the states.We won't be waiting to see OUR "trickle-down" carrot show up in another nation!
*Wouldn't it be a hoot to find out what they actually paid in taxes after all the giveaways,loopholes and tax shelters offshore?
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bonaroo9 months ago
engineer
I know you've been following the US economic slide for a while, and you appear to be pretty knowledgeable about macro economics. Have you ever seen anything like Bernacke's auctions to European and other international banks before? I haven't. It's a dead giveaway that the money supply is tight. It appears that no one wants to buy our mortgage backed securities which has been funding our debt for a long time now. We've all watched as the value of the dollar has diminished. The double wammy of high inflation and a devaluing dollar are taking their toll, even if you have a good job and are invested for retirement.
On Dec. 8 th Iran announced that it has stopped trading Oil for dollars and will only except Euros and Yen. Iran has also developed there own oil bourse which will begin business at the beginning of February. What countries align with Iran's bourse will have serious implications for the dollar. China already has huge oil contracts with Iran. What will Russia do?
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NelsonR9 months ago
And the Fed under Bernake is already preparing another interest rate decline to satiate the ******s on Wall Street who put their bottom lines ahead of our country.
Watch Mad Money and Jim Cramer who talks daily of abasing the Fed for not lowering rates. Their portfolios are taking a hit and they are not happy campers.
Greenspan started this mess and like Bush in the future, he is enjoying his costly retirement pension at the taxpayers expense. Reminds me of CEO's who receive million even when they lead abysmally.
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bonaroo9 months ago
Exactly. The Fed's ability to raise interest rates is at it's end. In fact they will probably lower them again at the next meeting. The lower they go the less incentive foreign investors have to invest here and the less we earn in interest. People on fixed incomes with such low interest are going to be hurt by the rise in inflation.
Any economic stimulus is going to be with borrowed money, which leads back in to the dollar devaluation loop. I believe, that the answer is a political one, but impossible with our current administration. I think Bush's trip to the Middle east was to shore up the Saudi commitment to keep trading oil in dollars.
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texangelwings9 months ago
The only stimulus that would work, is to get all of our manufacturing high paying jobs back and temporarily stop importing workers, till American workers get back on track!
Put the American Workers back to work, earning wages that supported the Social Security system, medicare, Schools, roads, etc!
Thanks for the good comments above! Excellent points!
The mention of $500 stimulus to each American, would not help!
America can't survive on service industry jobs!
Thanks engineer!
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cowboygrandpa9 months ago
texangelwings:
I agree and am starting to wonder if the idea all along was to wreak havoc on America. I mean I'm no financial genius. But heck I had it figured out back in the '80's, that we couldn't continue to rob Peter to pay Paul and never pay Paul back. They have continued on a plan to destroy us financially and economically in order to bring about their one world government.
They are almost there. We are becoming less powerful. Shame on the GOP and Democrats for allowing this to happen.
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TheRealizer9 months ago
If we continue to gut out our economy by closing plants here and moving manufacturing offshore, we will continue down this slippery slope to oblivion.
Attempts will be made to stimulate the consumer, but if he has to depend on the equity in his home or his wages as a greeter at Wal Mart,that will fail miserably.
Rebuild our industrial base, and start to ressurect our own manufacturing.
Quit trying to make fuel out of food, there is not enough energy in corn to even replace the energy required to convert it to fuel.
This boondogle was started as payoffs to lobbiests in exchange for reelection funds.
It will hit those hardest who cannot afford to eat regularly now.....
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BB649 months ago
Your correct when it comes to the illegals. When they work for sub minimum wages it only drives labor costs down but increases the social costs. Hospitals can't charge them. We pay for their kids to attend school with free breakfast and lunch. We give them food stamps, welfare, rent assistance and heat assistance. I didn't include the crime rates that increase with this population. If people really add up what that cheap lawn service actually cost, they'd ask for a green card in the future.
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MaryLynn_9 months ago
Excellent article engineer. We have all been watching and seeing this roller coaster affect since the 70's. We are in a recession then we are out. But, this time they say this is the closest we have been (and don't rule it out yet) the great depression.
Thank you for sharing.
Hugs Mary
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doppich9 months ago
The economy has been under constant "stimulus" ever since Bush emptied the national treasury with his tax cuts and his war. It would be helpful, though, if the administration were as willing to spend money on America's infrastructure as it is on Iraq's. Maybe they could drop a few of those $9B pallets of money on America's cities.
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bonaroo9 months ago
doppich
I think Bush HAS been dropping pallets of money on US infrastructure. Its called
"Defense Spending". That sector is as fat as I've ever seen it. The problem is accounting for all of the money congress has appropriated. Billions have just disappeared.
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NelsonR9 months ago
The government says the inflation is now at a little over 4 percent. Can anybody explain to me how their numbers are always skewed on the low side, well unless you think energy, basic commodities and all other costs of living are within that parameter.
Myself seeing what is, it's closer to and between 15% to 25% for the past year. Enlighten me if I'm wrong.
We all can agree during this time wages are stagnant except for CEOs and our upper crust.
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BB649 months ago
The government numbers are a least 6 months behind to start with. They use trending formulas mainly. As to commodities and cost increases, it's fuel costs. Take corn. Some nut in Wisconsin figured it would be tree huggingly friendly to add ethanol to our fuel. Even though it takes 5 gallons of gas to make one gallon of ethanol, we're forced to use it. We're forcing prices up on corn. Corn oil, corn syrup, ethanol, animal feeds, etc. Corn based products are everywhere.
Another concern is the US dollar's strength over other currencies. 100 years ago, it was $2.00 to the Pound. That's where it is today. I think we're just dealing with corrections in the markets. Again, I think. As the Euro, I see some scary things in the way the do things. France and Germany for several years printed more Euro than they were supposed to. It will catch up to them one of these years.
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Centinel9 months ago
The numbers are skewed low through simple math. Take and sum up everything and divide the total by the number of everythings that were summed up. All the cheap stuff brings down the average of the expensive necessities. The more cheap stuff the lower the rate.
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BB649 months ago
This isn't going to work. By simply giving people back $250 isn't a good solution. If $ 250 is a huge bonus to you, you're not the person we need to stimulate. It's like buying a vote from poor people. I see people attacking business but that's the group you need to motivate. Business, whether it's a garbage hauler, car builder or high tech engineering house, we need to help them. Reduce some of the old laws concerning labor. My firm looked at putting a plant in Michigan. by the time we added up the labor costs, we went to Ohio. Union contractors, forced union work force , no open shops etc. The clean air laws need work. We looked at Wisconsin. Even with all of the breweries, tanneries, smelters and foundries closed, we couldn't risk Milwaukee. They really need the jobs but the tree hugging lefties make success there very costly. Why do you think Harley is building the museum in Milwaukee and 2 new plants in China. We need clean air but jobs would really be good too.
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Centinel9 months ago
Helping them will do little to help this "depression". "Trickle down" is a failure. Why? Because the fat cats learned that they do not have to let it trickle down. Instead they hoard it at the top while the average worker gets insultingly low raises that do not keep up with inflation, they find cheap off shore alternatives so they can reduce cost yet further while closing down American facilities, and last but not least they maintain an unlawful de facto government of fat cats.
Most politicians, at the federal level, are obscenely wealthy and are insulated from recessions and depression. We will probably get the stimulus package that best fills their pockets rather than one that will help the economy. Just like most humans, they will embrace what is most beneficial to themselves.
Be ready for the lying positive spin they will put on their package and then bend over and wait for the shaft.
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BB649 months ago
First, we're not in a depression. Our energy sales, mining equipment and other heavy industries are going through the roof. Folks like P&H Mining, Bucyrus International and Joy Global can't build stuff fast enough. In fact all are hiring people and sending them to school. There are shortages of machinists, welders, heavy construction workers in the USA. Why, because our public schools told kids the way to succeed is college, forgetting you still need skilled workers to build.
You sound like a typical liberal. You attack big business, CEO's and "fat cats" but you never mention what lawyers make. A good CEO controls the lives of hundred or thousands because of his actions. A lawyer works hard at taking other people's money. I'm not saying we should do away with lawyers, we need them but I think the huge cash settlements need to be reduced.
As to bending over, you're talking about getting a Lewinski right?
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simonsez9 months ago
I have to agree with BB on this one. Many complaints about this being a service economy, but manufacturing has been made nearly impossible due to environmental requirements. It is much more than just labor costs. Most manufacturing can no longer hope to survive in this country.
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Centinel9 months ago
simonsez,
I disagree. If the engineers were given the opportunity we would overcome the obstacles.But that is not going to happen while the manufacturing goes overseas.
The engineers and scientists did it repeatedly in the past. This time they were not given the opportunity.
Bring the manufacturing back by using the power of the tariff and give us the opportunity.
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BB649 months ago
Centinel, I'm not sure what you're smoking but you're not sharing.
It's clear you have no concepts of the American buyer. We will complain how Sam's Club, Wal-Mart, Target or Penny's will treat us badly. Screw they're employees. Steal from the marketplace. Yet everyday their parking lots are full.
As to engineers, you're wrong there too. We're a free market economy. When people buy products, most only look at price. When you engineer something more than your competitor does, that drives your costs up and makes you less competitive. Another problem many on your side forget, science can only do so much.
As to tariffs, that would be very bad for us right now. Our dollar is way down, that's why we're seeing big ticket manufactured items being ordered. We're shipping to the EU, China, India and Malaysia. We charge tariffs so will they. Make gasoline out of coal. Remove the middle east from our economy and we're good again.
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Justice4All9 months ago
Engineering used to be a respectable profession and American engineers were the best. But now it is looked down on. Everyone want's to work in finance or marketing or be an advertising executive or anything glamorus that does not require math science or hard work.
In Japan engineering is a respected profession. And just look at all the Japenese car's on the road. 90% of the world's commercial airplanes were made in the US, now it's 50%.
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NelsonR9 months ago
Simon, I also disagree. It's the larger bottom that matters not Americas future. Case in point, Bill Gates. This abomination had the audacity to tell Congress that more visas were necessary since Americans could not be found to fill the jobs. The liar, two separate college studies debunked this fallacy with many Americans unable to find work in that field. Why you ask, Bill could hire cheap foreign labor and have that larger bottom line.
The despicable jerk. My only consolation is that I am using a computer he assisted in promoting to belittle the jerk.
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BB649 months ago
Nelson, you're both right sort of. In industry we're getting about 80% of our code writing done in India. It's not the costs, it's that they do the very best job on the planet. They never miss. What Bill didn't mention is that they will never create the next generation of computer codes or language. That's where America comes in. We will come up with the next generation or two. After that who knows but on the development side, we're still in the lead.
As to ripping on Bill remember, To ere is human, to really screw stuff up requires Microsoft....
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Centinel9 months ago
A stimulus package will only provide a temporary respite like it has always done. They create a bubble and the bubble breaks .
What we need is a return to the de jure government that is severely limited in its ability to regulate domestic commerce. This all started with the income tax. It provided a means for both state and federal governments to take from the mouth of labor the bread it has earned. Take away that seemingly unlimited source of revenue and our economy will heal itself.
Robin Hood economics does not work over the long term.
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BB649 months ago
Now you're saying something I can agree with, right after I took a shot or two at you. We need to reduce government spending big time, I agree. Everyone targets the War on Terror but that isn't where most of the money gets lost. It's the entitlements, over 45% of our entire budget. I'm not attacking Social Security or Medicare, I'm attacking the money we blow for illegal aliens, welfare for people who won't work and the "War on Poverty". The social spending is crazy too. While public art is fine, in Wisconsin, we force 10-20% of a public works budget for art. Come to Milwaukee and see our "wonderful" Sunburst. It's made of a half dozen blaze orange iron beams. It looks like a corner of a building someone forgot to finish. That crap cost us $2,000,000. I would have sooner used the savings to repair roads, schools or reduced taxes.
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NelsonR9 months ago
I agree with centinel but you bring up the war as an anomaly that doesn't fit into the equation, poppycock.
Factor in our intrusions and meddling, foreign aid, our military in foreign lands decades on end and meanwhile our infrastructure is getting old and outdated. War you say means squat and I say quit espousing nonsense. I would love to see that trillion dollars spent and squandered in Iraq having been used on our countries problem.
I am shaking my head in disbelief concerning your comment but it explains where America is today, flushing down the toilet speedily. You elite conservatives go to church and pray to a god and then you commit the same sins while espousing righteousness on yourself and the world. Quite abysmal. How would you like to have America occupied with death, misery and forced exile a norm? Idiots all.
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hamy9 months ago
But the Bush supporters told me that the economy has never looked brighter? Why would they lie?
If the economy is in the toilet, shouldn't someone, say the president of the United States of America, come up with a plan to fix the problems? Oh wait, when it comes to failures he is NOT the decider but when it comes to my rights as a human being, he is.
OK. I get it now.
What a complete and total bag of B.S.
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