It Won't Be Much of a Stimulus
According to the CNN poll above (click to enlarge), only 21% of the rebate will actually be spent, reducing the potential effectiveness of the fiscal stimulus by almost 80%.
CARPE DIEM
Professor Mark J. Perry's Blog for Economics and Finance
Thursday, March 27, 2008
About Me
- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
Previous Posts
- Housing Affordabilty Index Reaches 4-Year High
- Europe Shows Resilience in Face of U.S. Downturn
- What Tata Tells Us About Insourcing and FDI
- America Celebrates Tax Freedom Day on Apr. 23
- It Was a Tax Hike On The Rich, Not a Tax Cut
- Prices of Economics Textbooks
- India Rocks!
- Barack Obama's Tax Returns: He's Not Tithing
- Justice for Satellite
- Dr. John and Steve Tyrell
7 Comments:
A low percent of people will spend their money, but according to the Econ class I took, if people save the money it actually creates a much larger pool for banks to lend out to businesses etc. Perhaps this will lead businesses to expand and/or create new business.
Just send it to OPEC and bypass the middle man. The unintended result of this stimulus is more debt on top of our huge budget deficit and therefor a lower dollar which will only drive commodity prices higher as money flees a dying currency.
While have to agree that the stimulus is nonsensicus as per a prior post, the obituary notices for the U.S. economy are nothing if not premature.
U.S. Treasury Secretary Henry Paulson said on Friday that an economic stimulus program that will put $168 billion into consumers' hands this year and next could help create hundreds of thousands of new jobs.
"We know they're going to be helpful," Paulson said on CNN television. "These (tax rebate) checks should be a big part of adding 500,000 to 600,000 additional jobs this year."
http://www.reuters.com/article/bondsNews/idUSN2842769320080328
Berger flippers unite. This is only the first not the last the one's who will benefit will be the homeowners who are lucky enough to refinance which will be at least 300 a month. The welfare state is alive and well with all the inflation that goes with it.
georger is right. I am not a big fan of this deficit "stimulus", but saving (or investing, as stated in the question) the money probably doesn't mean stuffing it in a mattress. Money in the bank is invested by the bank, which helps everyone. Also, paying off debt is good, right? When a family pays off debt, it frees up other money to spend. There is no way to paint getting money as a bad thing, at least for the recipient.
Now if the government said they were paying for this stimulus with massive budget cuts, or by laying off half the federal workforce, I would be all for it!
Nonsense.
100% will be spent. Saving/investing is spending adjusted for time-preference. Paying bills is spending just as much as buying iPods and designer dog leashes is spending. And donations to charity is simply indirect spending. The only way to say this money won't be spent is if everyone cashes their check and buries the cash in a hole in the ground.
The Bush administration is finalizing a plan to rescue thousands of homeowners facing foreclosure by helping them refinance into more affordable loans, the Washington Post reported in its Saturday edition.
The proposal is aimed at assisting borrowers who owe their banks more than their homes are worth due to declining home prices, the Post reported, citing unnamed government officials.
If enacted, it would mark the first time the White House has committed federal dollars to help the most hard-pressed borrowers.
Under the plan, the Federal Housing Administration would encourage lenders to forgive a portion of these loans and issue new, smaller loans in exchange for the backing of the U.S. government, the Post said.
http://www.reuters.com/article/bondsNews/idUSN2829688820080329
The road to serfdom
Post a Comment
<< Home