Saturday, January 31, 2009

What if they are wrong?

The current number for the stimulus package is $900 billion. That is pretty close to a trillion, which it might be very soon. So lets call it a trillion. What's a billion between friends?
This trillion is supposed to save us from a disastrous recession by stimulating economic activity. The proponents have estimated that it will save many jobs (though the percentages are small they are persistent enough to add up). But what if they are wrong?
What if, as I and many others believe will happen, the stimulus package fails. Then this means that the trillion dollars will be a total waste. The recession will cause a lot of pain and impose losses. In the absence of the stimulus package, however, one wonders if these losses would add up to a trillion dollars. (This number dwarfs spending on the Iraq war). So if it does not work we must add the trillion dollars to the losses.
If it does work, will it save a trillion dollars worth of jobs?
Just wondering?
Wondering also why its proponents don't consider the probability that it will fail and the cost of that. And why aren't journalists asking these questions?


Anonymous said...

Your final question is a valid one. I don't think the media is professionally second guessing Obama enough.

Not only that, Obama is cleverly using the media to implore scare tactics. How many times has he came out since he got elected and said something along the lines of "it (the economy) is going to get a lot worse before it gets better...we need to approve this stimulus plan immediately"...or else. Scary. (i did a search for the past month on Google news for "Obama Economy Worse" and got over 55,000 hits)

Just like you, I wonder what the losses would be if no stimulus was passed? Would it be a trillion? Then I wondered what is the actual stimulus (i.e. money spent by fed, treasury, fdic, congress, etc.) to date including the impending 1 trillion? Any guesses? 2 Trill? 4 trill? maybe 5 trill? Try approximately $10,000,000,000,000! Ten Trillion dollars! Want proof. See this link ( This was put together before the Bank of America $120b guarantee and does not include the impending $1Tr stimulus. (So its really $9.6 Trillion but hey $10 trillion has more shock value) You know what you could buy for $10 trillion? The entire S&P 500. The market cap was $7.6 trillion as of Friday. That leaves $2.4 trillion for Dems to have for pork plans as well.

Oh and one final thing. You know who's unbiased opinion I value the most when it comes to judging washingtons great ideas? Mr. Market. What does he think? Well considering the Dow and S&P had the worst January on record, I would say Mr. Market suggest going back to the drawing board.

Anonymous said...

In case the link above does not work, paste this into your browser.

Anonymous said...

After reading what I wrote, I should clarify something. $10 trillion has been committed not spent. Almost $3.5 trillion has been spent. If US GDP was $14 trillion in 2008, a whole quarter's worth of GDP had been thrown into the fire so far.