02-10-2009, 11:29 AM | #1 | |||
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Japan’s Big-Works Stimulus Is Lesson ...
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Interesting read. |
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02-10-2009, 01:01 PM | #2 |
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I've also read a major criticism of the Japanese experience being they should have moved much more quickly to shore up the financial system, the effort should have been roughly double in size, and they also needed to let unhealthy banks fail.
The stimulus bill is designed to arrest the general economic spiral that could become significantly deflationary. Once deflation sets in, it will take *much* bigger spending to halt a negative feedback cycle that threatens to accelerate into a serious spiral, a hallmark of the GD. What nobody is talking about is the Fed will quietly keep buying up toxic securities to help the banking system recover, which is necessary, but, along with massive government spending, will lead to inflation as the economy is infused with money. The economy will crawl out of this, and we'll have some inflation. |
02-10-2009, 01:15 PM | #3 |
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Japan's banks also made massive loans, with no collateral, to crime syndicates.
http://www.amazon.com/Yakuza-Japans-...4275279&sr=1-1 |
02-10-2009, 04:52 PM | #4 | |
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My prediction is that Obama blew it with this bill and we will endure a lost Decade of our own thanks to Obama's miscalculations and waste bill. We needed stimulus if you believe in that sort of thing, not waste and mismanagement. How does spending on the GAO add a multiplier to the economy?
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02-11-2009, 10:39 AM | #5 | |
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The CBO and Mark Zandi agree the Senate compromise is less efficacious: http://www.americanprogress.org/issu...b_numbers.html I don't think anyone would argue that every item in the bills offers a 1+ multiplier, but considering the amount of tax cuts included, and that even suboptimal spending does *something* to get economic activity going, I think the bill is a decent beginning, certainly not the end of needed spending. Last edited by Ma'ake; 02-11-2009 at 10:59 AM. |
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02-18-2009, 10:18 PM | #6 | |
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Anyhow, I don't believe the stimulus would do much. Krugman has said that most economists who believe in a stimulus at all favor spending over tax cuts. That's meaningless because most republicans don't believe in a stimulus at all, so economists who do are overwhelmingly dems, so it's natural they say spending is better. Christy Romer, Obama's chief economist, on the other hand, did a study while at Berkeley that found that a $1 tax cut has a multiplier of 3. After getting in the White House, her new study found a multiplier of only 1 (cf. 1.6 for spending). Darn the politics. Overall, I'm pleased at how much Obama has listened to his economists. His centrist team convinced him to include more tax cuts and take out the "buy American" provision.
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02-18-2009, 10:23 PM | #7 | ||
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A DC temple presidency member, who is a Fed economist and a Republican, favors cutting the regressive payroll tax and increasing food stamps so the poor can sustain their spending. Quote:
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02-19-2009, 05:26 AM | #8 | |
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I will not articulate this correctly as I haven't ferreted it out completely, but intuitively I don't believe the poor spending on basic items is what has historically driven our economy. It's been the middle class spending on consumer items. Whether that's a great economic structure requires more complex analysis than I have energy to devote. But simply focusing upon multiplier effect without investigating what is multiplied should also be a concern. I wonder if studies have focused upon that aspect. It's also tied to consumer confidence.
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