Brookings Institute: Vice President, Economic Studies William Gale about the Stimulus Package

Brookings Institute: Vice President, Economic Studies William Gale
Gale says that the stimulus package should give the economy the jolt that it needs but adds that it generates a few far reaching concerns.
As President Obama signs the much anticipated stimulus package into law, William Gale, vice president and director of Economic Studies at Brookings, says the economy will likely respond as anticipated. But, Gale says, one of the critical elements for the nation’s economic solvency is to ensure that there’s an end in sight for this unprecedented spending bill.


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"The stimulus package is really only the first component of an overall recovery package. I see four components overall. The stimulus package, housing fix, a finance fix, and some sort of global coordination with other countries. I think the administration, now that it has passed the first of those it’s focused on the second and third, but we cannot forget that we are part of the global economy. If the global economy doesn’t recover that will not be good news for us, so we need to work with other countries on some sort of integrated package."

"...One of the issues that is always a topic of conversation in Washington is who gains and who loses? The stimulus package has a huge number of provisions that effect particular groups, but I think this is a case where the overall impact is gonna dominate any specific group impact. If the fiscal package, the stimulus, can turn the economy around, get people back to work, get businesses hiring again, consumers spending that is going to have a much larger impact on families than any particular $400 tax cut."

Trekken aan een dood paard

Trekken aan een dood paard
Aan een dood paard trekken.(Je inspannen voor iets, dat tot mislukken gedoemd is)

Ik bedoel hier niet mee de voortdurende schommelingen op de beurs en de (misschien tè) hooggespannen verwachtingen over het Obama Stimulus Plan.
Gisteren, 10 Februari 2009, mocht Timothy Geithner het meer dan 800 miljoen dollar plan presenteren. De verwachting is dat het uiteindelijk benodigde plan rond de 2 biljoen dollar (2000 miljard) zal gaan kosten en dat het nog maar het eerste is in een reeks plannen om de Amerikaanse Economie te herstellen. De Amerikaanse beurzen reageerden teleurgesteld met dalingen van 4 tot ruim 5 procent.
Belasting voordeeltjes, Keynesiaanse infrastuctuur investerings voorstellen, etc, het mocht de beurs allemaal niet echt bekoren.

Vandaag is er weer de hoop dat de verdere onderhandelingen over het reddingplan nieuwe impulsen kunnen geven.
Dat noemen wij 'trekken aan een dood paard', de beurs reageert nu al maanden op de bailout plannen, eerst van de vorige regering en nu van de nieuwe regering. Idem met de bailout plannen voor de auto-industrie.
Bij gebrek aan fundamenteel goed nieuws grijpt de beurs elk nieuwtje aan.
Maar er is weinig goed nieuws, de cijfers worden steeds slechter, was er eerst sprake van het creeëren van 3 miljoen nieuwe banen, nu wordt 4 miljoen gehoord, binnen een half jaar 5 miljoen waarschijnlijk.

De bankiers met de volvette bonussen worden geschoren, zitten doodstil en geven deemoedig toe dat ze fouten gemaakt hebben.
Er is een incidenteel wat hap snap beleid met de vraag om BTW verlagingen (de in recordtempo onderuitgaande auto branche in Nederland), terwijl op globaal niveau de gebakken luchtballonnetjes opgaan met gedachten aan protectionisme en meer nationalisme.
Maar iets nieuws op het gebied van de 21ste Eeuwse Economie zien we nog niet.
Misschien moet dat van theoretici en moderne holistisch denkende economen of toekomstige Nobel Prijswinnaars komen of gewoon van onderop, de doeners van de 'grass-roots'.
Reageren op kleine stijgingen in de Dow, NASDAQ of S&P 500 is aan een dood paard trekken.

Wall St. pans bank bailout plan

Wall St. pans bank bailout plan
(02:04) Reuters Video Report

Feb. 10 - The Treasury's new bank rescue strategy was dead on arrival, as far as Wall Street was concerned, with investors still unclear if the plan will work.

Critics say Treasury Secretary Timothy Geithner's $2 trillion plan provides little detail on how banks will get rid of toxic assets and start lending again, while at the same time, opening up banks to new scrutiny by the American taxpayer. US stocks closed sharply lower. Conway Gittens reports from New York. SOUNDBITES:
# Treasury Secretary Timothy Geithner
# Milton Ezrati, market strategist and chief economist, Lord Abbett
# Michael Henry, senior executive of financial industry strategy, Accenture

The early January effect.

(Jan 6th 2009)
It is quite early in the month and in the year to give a judgement about the ' January effect' in the markets and trading volumes are rather thin. January is usually the month big institutional buyers and Pension Funds step in the market and begin buying in volume. Pension Funds are especially pressed to get better results this year.
After last year's fall and losses there are plenty of bargains to get and the money is available. The currency market is still a bit shaky and could turn out to be an extra volatility factor.

The dollar rose on news of the Obama Stimulus Plan and tax breaks for the general workforce. The recent rise of the American Dollar is a signal of a return in confidence in the USA. Gold went south by a rising dollar
Germany is coming up with a 50 Billion dollar economic stimulus plan, although Prime Minister Angela Merkel is still negotiating about the fiscal stimulus measures.

Auto sales in December were particularly bad, with in the U.S. for the first time the Big Three's (Ford, GM and Chrysler) share sinking below 50%.
Worldwide the auto industry looked like already in depression with Toyota closing up plants for January and part of February (even some days in March), only the French brands seem to do a bit better. In the Netherlands the auto sales for 2008 were only 1.1% lower than in 2007.
With the diplomatic flurry in the Middle East and the growing rage about the humanitarian situation in Gaza, Israël is expected to end its campaign within the next two weeks.
The wintercold days in Europe are ending and the yearly ritual of the Russia/Ukraine gas conflict become less important, and the only important question remains; "Who is lying the best?".
European markets were between 1% and 2% higher this morning with the DAX (+ 1.3%) strong and Volkswagen shares up 6%, Porsche owns over 50% o of VW and has to do something with Scania. U.S. market futures point to a higher opening. Retail figures from the UK were better than expected. The overall market sentiment is cautious but positive with renewed discussions between 'bulls and bears' flaring up.

More details emerge of the SEC's handling of the Madoff affair, and voices for a reorganisation of the Securities and Exchange Commission and better regulation sound louder. Bernie Madoff is accused of violating his bail terms.

Tip: It is certainly worth looking at Japan, the Japanese economy and the stock market, how they did over last 12 years and in their deflationary period in the beginning of this century, and learn lessons from it. Do not be over optimistic!

Worldwide there is a danger of expecting too much, too fast and too soon from the U.S. and the new President.

President-elect Obama sketched out the headlines for his economic stimulus plan.

Saturday in his weekly radio address President-elect Obama sketched out the headlines for his economic stimulus plan.

The main goal of his plan: to create 3 million new jobs. Most would come from the private sector, he said.

* double renewable energy production and make public buildings more energy efficient;
* rebuild crumbling roads, bridges and schools;
* computerize the health care system
* modernize classrooms, labs and libraries;
* and provide tax breaks to American workers.
(Source: CNN Money.)