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Thread: Where Did the Stimulus Go?

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    Re: Where Did the Stimulus Go?

    Quote Originally Posted by Catawba View Post
    The tarp funds and the stimulus while being called different names were both government spending to stimulate the economy, so there would be no need to separate them for analysis I would think.
    Need to disagree. The two acts were passed months apart and were for materially different reasons. TARP was established to bail out banks that had too many toxic assets and refused to loan. This got a bit off track when some of it was used on autos, but for the most part it went to banks and has been mostly paid back.

    Stimulus was a multi year spending and tax cut plan to put more money in the hands of consumers.

    These two acts should have been seperated.

    Let's remember that Zandi works for Moody's. These rating agencies should have been taken over the coals for the poor job they did which proved to be an enabler of lousy home loans. Moody's got off lightly and Zandi became a supporter of administration actions - smell anything?

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    Re: Where Did the Stimulus Go?

    Quote Originally Posted by washunut View Post
    Need to disagree. The two acts were passed months apart and were for materially different reasons. TARP was established to bail out banks that had too many toxic assets and refused to loan. This got a bit off track when some of it was used on autos, but for the most part it went to banks and has been mostly paid back.

    Stimulus was a multi year spending and tax cut plan to put more money in the hands of consumers.

    These two acts should have been seperated.

    Let's remember that Zandi works for Moody's. These rating agencies should have been taken over the coals for the poor job they did which proved to be an enabler of lousy home loans. Moody's got off lightly and Zandi became a supporter of administration actions - smell anything?
    And the CBO?
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    Re: Where Did the Stimulus Go?

    Quote Originally Posted by Catawba View Post
    And the CBO?
    If I remember correctly the report was by Blinder and Zandi, not CBO

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    Re: Where Did the Stimulus Go?

    Quote Originally Posted by washnut
    but for the most part it went to banks and has been mostly paid back.
    I would like to point something out about this. It's correct, but doesn't necessarily mean what most people think. We are on a fractional reserve system. In respect to M2, M3, and to some extent M1, banks have some latitude to just make up money where none previously existed. This is especially true of M3. So the payback wasn't necessarily accomplished through any fiscal discipline; we don't know the details, but it's much more likely that it was accomplished through a complex network of repo agreements and other derivative instruments traded on private exchanges among the big institutions...most of whom had been recipients of TARP funds. Of course, not all of it could have been. But its important to recognize that there's a real difference between how a person pays a loan back and how a bank does.

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    Re: Where Did the Stimulus Go?

    Quote Originally Posted by washunut View Post
    If I remember correctly the report was by Blinder and Zandi, not CBO
    There was also a separate report by the CBO:

    "President Obama's much-maligned economic stimulus package added as many as 3.3 million jobs to the economy during the second quarter of this year, and may have prevented the nation from lapsing back into recession, according to a report released Tuesday by the non-partisan Congressional Budget Office.

    In its latest quarterly assessment of the act, the CBO said the stimulus lowered the unemployment rate by between 0.7 and 1.8 percentage points during the quarter ending in June and increased the number of people employed by between 1.4 million and 3.3 million. The higher figure would come close to making good on Obama's pledge that the act would save or create as many as 3.5 million jobs by the end of this year."
    Political Economy - CBO says stimulus may have added 3.3 million jobs
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    Re: Where Did the Stimulus Go?

    Quote Originally Posted by Catawba View Post
    There was also a separate report by the CBO:

    "President Obama's much-maligned economic stimulus package added as many as 3.3 million jobs to the economy during the second quarter of this year, and may have prevented the nation from lapsing back into recession, according to a report released Tuesday by the non-partisan Congressional Budget Office.

    In its latest quarterly assessment of the act, the CBO said the stimulus lowered the unemployment rate by between 0.7 and 1.8 percentage points during the quarter ending in June and increased the number of people employed by between 1.4 million and 3.3 million. The higher figure would come close to making good on Obama's pledge that the act would save or create as many as 3.5 million jobs by the end of this year."
    Political Economy - CBO says stimulus may have added 3.3 million jobs
    You are correct the CBO talked about the adding or saving of jobs. I was talking about the report saying we were kept out of a depression.

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    Re: Where Did the Stimulus Go?

    Quote Originally Posted by ashurbanipal View Post
    I would like to point something out about this. It's correct, but doesn't necessarily mean what most people think. We are on a fractional reserve system. In respect to M2, M3, and to some extent M1, banks have some latitude to just make up money where none previously existed. This is especially true of M3. So the payback wasn't necessarily accomplished through any fiscal discipline; we don't know the details, but it's much more likely that it was accomplished through a complex network of repo agreements and other derivative instruments traded on private exchanges among the big institutions...most of whom had been recipients of TARP funds. Of course, not all of it could have been. But its important to recognize that there's a real difference between how a person pays a loan back and how a bank does.
    What you are talking about does not increase capital. The banks had to show an increase in their capital base to be allowed to pay back TARP. Most banks sold shares of additional common stock and have had increasing profits.

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    Re: Where Did the Stimulus Go?

    Quote Originally Posted by washunut View Post
    You are correct the CBO talked about the adding or saving of jobs. I was talking about the report saying we were kept out of a depression.
    You are right, the language they used was, "may have prevented the nation from lapsing back into recession." That is a good thing isn't it?
    Treat the earth well: it was not given to you by your parents, it was loaned to you by your children. We do not inherit the Earth from our Ancestors, we borrow it from our Children. ~ Ancient American Indian Proverb

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    Re: Where Did the Stimulus Go?

    Quote Originally Posted by Catawba View Post
    You are right, the language they used was, "may have prevented the nation from lapsing back into recession." That is a good thing isn't it?
    Sure it is a good thing. A fair question though was that the best way to accomplish it. Also was the money spent in such a way as to provide a long term as well as short term benefit.

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    Re: Where Did the Stimulus Go?

    Quote Originally Posted by ashurbanipal View Post
    Anyway, the point is that we get the government we deserve. Government is really just a product of our social interactions. It is not some monolithic and starkly separate entity.
    Hmmm. Many would argue conversely, that our "social interactions" are a byproduct of government. There are those who would point out that US public policy over the past half-century has helped to create a "welfare state" if you will.
    Last edited by FluffyNinja; 02-05-11 at 01:48 AM.
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