How will the economy respond to the stimulus?

[MaxPowers]

I hear we will get a yes or no on the stimulus Tuesday? What affect would it being passed have on the economy?
What do you think the bank stocks are going to do and why?

[GREENBACK]

I'm not confident about this package doing much but I think the economy will recover one way or the other. They can't even say if Paulson's bailout has had the desired effects so who knows.

[disneysteve]

I don't think the stimulus package will do anything substantive. I think it is all about public perception and making people think progress is being made. I liken it to all the post-9/11 security measures that didn't actually make us any safer but made lots of people think they are safer (even though they aren't).

[kork13]

I forget which famous economist proposed it, but the going idea (at least that I've heard) is that any single action takes 1-2 years to have its effect realized. Yes, this package will have an impact. Its significance.... well, I expect it to be less than desired. But I'm with Greenback, the economy will recover one way or other. What I'm not looking forward to is the inflation snap-back that this much spending will eventually bring on...

[Scanner]

I am actually a contrarian (as usual) on this. . . as many know, I am not a brainwashed free marketist by any means. In fact, I wouldn't be opposed to having Obama come in, toss the CEO's out on their ears, sit at their desks, and smoke their Cuban cigars (nationalize the banks). In fact, I'd rather see him do that than borrow money, print it and flood into leaky banks.

That being said, I think the government has forgotten that the Reaganomic Ship has sailed and sunk.

The whole goal of the stimulus is to "get banks lending again." WHen I delve deeper, what they really mean is they want to get the banks to be making risky loans again.

That ain't happening.

I know from Reagan to Bush, that's how our economy operated but no amount of government printing money will get banks to loan money to people who are unqualified. If you notice, you can still get a loan - you just have to have 20% down, maybe 10% in the case of a car (a car is more easily repo'ed). So, it's not unreasonable to ask, when you buy a 30K minivan, to be asked to put 3-6K down. The days of "zero down, zero percent" financing are over.

What we had as a country was an illusion. All this building of houses and 2 30K cars in the driveway with $800 shiney grills on the $10,000 decks. . .it wasn't really supposed to happen.

We can't continue to "stimulate" this unnatural state of being.

I'm still staying 30% in silver though, guessing we will continue to print money without backing it up.

[Pitman]

FDR & The New Deal

[GREENBACK]

FDR & The New Deal

It's the newer deal. Didn't work but WWII bought us out of the great depression. They're reinventing a crooked wheel.

[Goldy1]

I read the paper everyday and I really do not know how I feel on the stimulus. I am at least glad they are "scaling it back" but it makes me wonder what happens later, just another stimulus? I feel bad for everyone out of work. It is truly sad. It's not just professional jobs anymore. It seems like even traditional "stop gap" jobs like retail are drying up!
The comment on "30K cars in the driveway" etc. is so true. I never used my home as a cash cow. I still got screwed b/c the value went down and so did my retirement b/c of the actions of others. Then I am not moving and hopefully stock swill go back up over decades. However, as we stated before, the economy can't function if everyone was as frugal as me ie. saving up cash to buy a gently used car, and forgoing granite countertops. lol.

[disneysteve]

stock swill

I know this was a typo but it just struck me as funny.

[wincrasher]

I'm also in the same boat - it will do little to nothing.

I think the fundamentals are poor and hard to overcome.

Real wages have been stagnant for years. There just aren't that many high paying jobs anymore to fuel the middle class.

Growth has been sustained over the last 20 years by gimmicks - gov't borrowing, mortgage/home equity borrowing and finally high risk lending.

People aren't spending either for fear of layoff or at their debt limit.

You can't escape thru bankruptcy either.

I see no return to "normal". The economy must be rebuilt from the ground up.

[Scanner]

Goldy1,

No, I know we have to have a balance. As DS once said. . .lending and saving are the flip side of the same coin. I couldn't have "coined it" better myself.

It's just that production of $800 shiney grills, 30K minivans, and $400,000 McMansions will have to be scaled back. Instead of Chevy making 1 million Silverado's/year, it will have to make 500,000. This raw overconsumption of "things/matter" whatever you want to call it is gone, to never come back.

It's an economic shift that can't be "stimulated" back to the Reagonomic years.

My opinion - nationalize the banks and forget stimuating the economy and just figure out what the future holds, instead of trying to cling to the past.

Al Quaida may have indeed won because this was one of their strategic goals - to place America right where we are sitting today. They knew they could never win in a head on head confrontation so just like we bankrupted the USSR, they figured they would just let us go bankrupt.

[GREENBACK]

I am actually a contrarian (as usual) on this. . . as many know, I am not a brainwashed free marketist by any means. In fact, I wouldn't be opposed to having Obama come in, toss the CEO's out on their ears, sit at their desks, and smoke their Cuban cigars (nationalize the banks). In fact, I'd rather see him do that than borrow money, print it and flood into leaky banks.

I understand what you're saying but show me a time or place in history where nationalizing anything has worked(oh yeah, there's Cuba, Russia, China,South Korea,Iraq...beautiful examples!). A history professor of mine once said that the system in the U.S. sucks but can anyone show me a better model.

[Scanner]

We nationalized our railroads and our airport security (on 9/11) and to our amazement, we weren't all of the sudden calling each other Komrade.

[EEinNJ]

If anyone knows the answer of "if the stimulus will work", they should be working for Obama. I think the reality is they just don't know, other than if they do too little (like Bush's $600 checks) it won't help. The underlying problem, as others have noted, is debt. Debt used to puff up consumption, sold to foreign countries. We've in effect been financing double digit growth in China. The bubble has burst, and now the government is trying to blow it up again with more debt. I'm all for clean power and transportation and health care reform, but the government doesn't have a good track record for running things (Post Office, Amtrak, Pentagon procurement, etc. )

[GREENBACK]

"nationalized"