We needed a Stimulus of $1.6T. We got 1/2, so we're stuck with a lame Economy

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Sunday July 31, 2011 · 8:23 AM PDT

2011/07/31 · 08:23

The GDP numbers from the great recession were recently revised downwards, by a huge amount.

In December of 2008, I said we would need at least $1T of spending and perhaps as much as $1.6T of spending to keep our economy on track.

At the time, I was widely derided here at Daily Kos - at least until Paul Krugman came out a few weeks later saying the same thing, using the same method.

The revised GDP numbers show that we needed far more stimulus to make our economy work.

The debate over the debt ceiling is important. But don't lose sight of why our economy stinks. We didn't do enough when it mattered.

Bailing Out Banks but not People, Bailing out the people would be cheaper bailout the banks too.

mickslam

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Tuesday March 17, 2009 · 3:23 PM PDT

2009/03/17 · 15:23

We are spending a few hundred billion making sure banks and their bondholders are solvent.

Oddly enough, there are not two groups who need to be made solvent, but three!

Our economic system probably would have crashed if we had not given the banks billions.

However, the reason the banks were in such bad shape was that there were and are many millions of people who can no longer afford to pay their mortgages. Because these individuals do not pay their mortgages, the banks faced and are facing huge losses.

The bailout system we created...

mickslam

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Tuesday March 10, 2009 · 2:15 PM PDT

2009/03/10 · 14:15

Few months ago, I wrote a series of posts saying the stimulus was too small.

The stimulus passed was based on a year long unemployment average of 8.1%. As we reached this level in February and will probably surpass it in March, the stimulus as passed is too small to stop the free fall that is our economy.

Finally, major news outlets are beginning to notice the need for a larger stimulus.

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Do we want congress to pass second stimulus package?

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Do we want congress to pass second stimulus package?

No. I like seeing people unemployed and struggling

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Our Money to AIG bailed out Wall Street - now they want less oversight

mickslam

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Wednesday February 11, 2009 · 8:58 AM PST

2009/02/11 · 08:58

It is amazing to see the sheer ability of Wall Street types to lie in action. The banks were bailed out in many ways, but a major way was the $144,000,000,000 given to AIG. This money went primarily to the largest banks in the U.S., like Goldman, Morgan Stanley.

From Talking Points Memo

Goldman CFO David Viniar tells the Times:

"We just think that operating our business without the government capital would be an easier thing to do. We'd be under less scrutiny, and under less pressure. Not that we'd be out of the public eye; we're still going to be in the public eye."

To be clear:

The money we gave to AIG went directly to Wall Street banks. The Wall Street banks made unsecured trades in an unregulated market that should have resulted in massive losses for the Wall Street banks due to their lack of due diligence. We bailed them out with over 100 billion dollars cash money, not counting TARP, a series of rate cuts, and other money given to them

mickslam

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Tuesday February 10, 2009 · 12:57 PM PST

2009/02/10 · 12:57

There was lots of discussion about charts comparing job losses in the current recessions to other recessions since WWII. Either chart you look at tells the same story - this recession is already very long.

These charts are from Calculated Risk and The Big Picture. The Big Picture also has the same data indexed to 100, which shows the severity of the current loss of jobs. When viewed as indexed to 100 (which by the way is the the most informative way to look at this data, you can clearly see that this is a horrible recession for job destruction.

Percent Job Losses

Absolute Job Losses

mickslam

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Saturday February 07, 2009 · 4:11 PM PST

2009/02/07 · 16:11

The Stimulus bill is simply too small. All reasonable economists think we will have a demand shortfall approaching $2T over the next two years. It may be much larger. At around $800B, the bill only makes up 30% of the shortfall, and about 50% of it is buried in longer term projects.

We can expect massive job losses to continue over the next few months to continue. What happens if we see another 6 to 8 months of job losses at 500K a month?

The unemployment rate reaches 10-11%+, not 9% as expected.

The demand shortfall will approach $3T over the next two years.

The U.S. has a political debate about additional stimulus

We see the payroll tax holiday implemented.

We are in a horrible financial situation right now. We are loosing a million jobs every 6 weeks.

The only stimulus that is both large enough and fast enough to stop the job losses is a payroll tax holiday.

Since we did not get it now...

mickslam

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Friday January 30, 2009 · 7:47 PM PST

2009/01/30 · 19:47

If you have been following the credit crisis, you may have been struck by a simple fact: We seem to be simply giving billions of dollars to banks, no questions asked.

Even with almost $250,000,000,000.00 given to the banks, the banks are not lending. The banks are lying about helping home owners restructure their mortgages. (Why is this on Good Morning America? I guess it takes crack GMA reporters rather than someone like CNBC or the Wall Street journal to uncover this? I am glad the news is getting out to the people, but we also need to get it to the Obama administration.)

It is long past the time for playing with bad incentives.

Nationalize the banks now

mickslam

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Friday January 23, 2009 · 4:01 PM PST

2009/01/23 · 16:01

Why are Tyler Cowen, and Greg Mankiw, linking to every possible critic of the stimulus?

Why did Robert Barro write a piece that even non-economists can see is flawed due to a basic logical mistake?

Why did Nobel Prize winning economist Eugene Fama revive an argument that was discredited 70 years ago in an attempt to debunk the effectiveness of the stimulus?

Because if the stimulus is successful, one of the basic assumptions of classical economics will be proven wrong. This will call much of classical economic thinking into question. A success of the stimulus will seriously question economic theory that supports libertarianism

More below...

mickslam

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Wednesday January 21, 2009 · 12:47 PM PST

2009/01/21 · 12:47

Amazing that this has not hit the MSM yet, but the banks themselves are saying they need between 3 and 4 trillion to remain solvent.

Despite this, we are starting to hear about government waste in conjunction with the stimulus.

mickslam

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Monday January 12, 2009 · 6:45 PM PST

2009/01/12 · 18:45

Did anyone see this Richard Pryor/John Candy movie, Brewser's Millions? Pryor has to spend lots of money in a short amount of time. If he is able to spend this money quickly, he gets even more money! Of course, spending lots of money is very difficult to do in a short amount of time.

I estimate we need to spend somewhere around $1.5T

1,500,000,000,000.00 is a lot of money. We need to spend it fast. But if we do, we will have a world class economy and avoid huge amounts of working class sorrow.

mickslam

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Sunday January 11, 2009 · 10:25 AM PST

2009/01/11 · 10:25

Finally, we are getting somewhere! The great debate about the size of the stimulus has begun!

I posted back on December 5th the size of the stimulus must at least $1.0T, and should probably be much larger. Boy, did I catch hell in the comments for attempting to quantify how much money needs to be spent because I did not know what I was doing. Lucky for me, Paul Krugman used the exact same methodology a several weeks later to estimate the size of the stimulus. Stop copping my riffs, Krugman!

I then posted that Obama's stimulus plan is probably too small to save the economy.

We finally have a debate starting and the initial consensus is: Obama's stimulus plan is too small! Take a look at the luminaries who are talking about the plan being too small.

mickslam

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Thursday January 08, 2009 · 5:50 PM PST

2009/01/08 · 17:50

Quick - how is Japan's lost decade like the current U.S. crisis?

They both began with a few years of budgetary surpluses!

When you look back at what happened in Japan right before their horrible times began, you notice similarities with the U.S. Of course, we all know about two large similarities:

Huge stock market bubble

Huge real estate bubble

But have you heard about this third similarity?

3. Large government budget surplus

If budget surpluses are so good, why did they precede a lost 15 years for Japan, an economy that previously had an uninterrupted 40 years of growth, and also immediately precede the slowest expansion in U.S. history, with a lost decade for U.S. workers wages?

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We needed a Stimulus of $1.6T. We got 1/2, so we're stuck with a lame Economy

Bailing Out Banks but not People, Bailing out the people would be cheaper bailout the banks too.

Finally the beltway notices - the Stimulus passed was too small

Our Money to AIG bailed out Wall Street - now they want less oversight

Already a long recession if you look at job losses

Stimulus plan is far too small, so expect a payroll tax holiday in June or July

Nationalizing the banks: Now is the time

Panic among the libertarian economists: Success with the stimulus will prove their theories wrong

Bank need trillions to remain solvent, but economists are concerned about government waste

Stimulus and Brewster's Trillions

"Stimulus plan too Small!" says Everyone with a mind

Budget Surpluses cause Depressions and Recessions