Category : The Fiscal Stimulus Package of 2009

(LA Times) IMF warns U.S. not to scale back its Fiscal Stimulus Program too soon

Amid speculation that the Federal Reserve soon might start scaling back its stimulus efforts, the International Monetary Fund cautioned that a pullback before next year could hurt economies worldwide.

Highlighting its concern Friday, the IMF lowered its forecast for U.S. economic growth next year to 2.7% from an earlier projection of 3%.

The IMF also criticized U.S. fiscal policy, calling for the repeal of the automatic federal spending cuts, known as the sequester, and urging lawmakers to act promptly to raise the nation’s debt limit.

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Posted in * Economics, Politics, Budget, Consumer/consumer spending, Economy, House of Representatives, Labor/Labor Unions/Labor Market, Office of the President, Politics in General, President Barack Obama, Senate, Taxes, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The Fiscal Stimulus Package of 2009, The U.S. Government

'Europe is a mess,' economist David Rosenberg warns

Europe is a mess ”” politically, economically, fiscally, economist David Rosenberg said Monday.

“In less than two years, we are now up to a total of seven European leaders or ruling parties that have been forced out of office, courtesy of the spreading government debt crisis ”” tack on France now to Ireland, Portugal, Greece, Italy, Spain and the Netherlands. Even Germany’s coalition is looking shaky,” the Gluskin Sheff economist wrote in his note Monday.

“This is quite a potent brew ”” financial insolvency, economic fragility and political instability.”

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Canada, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The Fiscal Stimulus Package of 2009

Francois Hollande – New French President

Francois Hollande, the former leader of France’s Socialist Party, has been elected president of France, defeating incumbent Nicolas Sarkozy.

Despite being one of France’s best known politicians, the 57-year-old Hollande has never held a position in the national government.

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Posted in * Economics, Politics, * International News & Commentary, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, France, Politics in General, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The Fiscal Stimulus Package of 2009

S&P warns euro nations of possible credit downgrade

Standard and Poor’s has put Germany, France and 13 other eurozone countries on “credit watch” due to fears over the impact of the debt crisis.

S&P’s move means that countries with top AAA ratings would have a 50% chance of seeing their rating’s downgraded.

The news came as a surprise to investors and saw stocks fall back on early gains as the euro also fell.

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Stock Market, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The Fiscal Stimulus Package of 2009

CBO: Stimulus hurts economy in the long run

The Congressional Budget Office on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy.

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Posted in * Culture-Watch, * Economics, Politics, Credit Markets, Economy, Federal Reserve, Globalization, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, The Fiscal Stimulus Package of 2009, The National Deficit, The U.S. Government, The United States Currency (Dollar etc)

(Bloomberg) Roger Lowenstein–At MF Global, Corzine Forgot Long-Term Capital’s Lessons

The lesson of LTCM was that no trading operation is better than its ability to withstand losses. This lesson was proved in spades, in 2008, at highly leveraged banks such as Bear Stearns and Lehman Brothers.

A second lesson is that seemingly unlikely events may be more likely than market history suggests. Russia had not defaulted since 1917, but that didn’t stop it from happening in 1998.

And a further lesson of LTCM’s demise was that the widespread belief that liquidity offers safety is, in fact, an illusion, and a terribly dangerous one at that.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Economy, Euro, Europe, Psychology, Stock Market, The Banking System/Sector, The Fiscal Stimulus Package of 2009

Federal Reserve May Weigh More Stimulus on Flagging Recovery Signs

Federal Reserve policy makers may start weighing additional steps to prop up the recovery after growth fell below 1 percent in the first half of this year and economists began cutting second-half growth forecasts.

“At a minimum, the FOMC will have a serious debate about the policy options — what they should do, and what they expect to get from it,” said Roberto Perli, a former associate director in the Fed’s Division of Monetary Affairs, referring to the Federal Open Market Committee. “Growth in the first half was dangerously close to zero,” said Perli, director of policy research at International Strategy & Investment Group.

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Posted in * Economics, Politics, Consumer/consumer spending, Corporations/Corporate Life, Economy, Federal Reserve, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Politics in General, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The Fiscal Stimulus Package of 2009, The U.S. Government

Sean O'Grady: Ageing Italians on the slow train to ruin

…everyone knows that Italy is on the slow train to ruin. Her public finances have been reasonably well run, but the economic fundamentals are skewed against her. Her poor demographic mean fewer workers ”“ and thus taxpayers and savers ”“ to fund the health and social costs of a greying populous. And, like Portugal and Greece, she is fundamentally uncompetitive, unable to match German levels of productivity and exports.

Il miracolo economico of the 1960s ”“ symbolised by millions of little Fiat 500s pouring out of bustling Turin ”“ was possible because a vast reservoir of underemployed agricultural workers could be lured into the cities. That cannot be repeated.

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Italy, Stock Market, The Fiscal Stimulus Package of 2009

Martin Feldstein–The Economy Is Worse Than You Think

Estimates of monthly GDP indicate that the only growth in the first quarter of 2011 was from February to March. After a temporary rise in March, the economy began sliding again in April, with declines in real wages, in durable-goods orders and manufacturing production, in existing home sales, and in real per-capita disposable incomes. It is not surprising that the index of leading indicators fell in April, only the second decline since it began to rise in the spring of 2009.

The data for May are beginning to arrive and are even worse than April’s. They are marked by a collapse in payroll-employment gains; a higher unemployment rate; manufacturers’ reports of slower orders and production; weak chain-store sales; and a sharp drop in consumer confidence.

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Posted in * Economics, Politics, Consumer/consumer spending, Corporations/Corporate Life, Economy, House of Representatives, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Office of the President, Politics in General, President Barack Obama, Senate, The 2009 Obama Administration Bank Bailout Plan, The 2009 Obama Administration Housing Amelioration Plan, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The Fiscal Stimulus Package of 2009, The Possibility of a Bailout for the U.S. Auto Industry, The U.S. Government

Homes at Risk, and No Help From Lawyers

In California, where foreclosures are more abundant than in any other state, homeowners trying to win a loan modification have always had a tough time.

Now they face yet another obstacle: hiring a lawyer.

Sharon Bell, a retiree who lives in Laguna Niguel, southeast of Los Angeles, needs a modification to keep her home. She says she is scared of her bank and its plentiful resources, so much so that she cannot even open its certified letters inquiring where her mortgage payments may be. Yet the half-dozen lawyers she has called have refused to represent her.

“They said they couldn’t help,” said Ms. Bell, 63. “But I’ve got to find help, because I’m dying every day.”

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Posted in * Culture-Watch, * Economics, Politics, Consumer/consumer spending, Economy, Housing/Real Estate Market, Law & Legal Issues, Politics in General, State Government, The Banking System/Sector, The Fiscal Stimulus Package of 2009

FT–Foreclosures spawn new attitude to ownership

Jeff Horton has a job, two cars and money in the bank. Yet, he stopped paying his mortgage a year ago. With shoddy documentation by mortgage lenders now delaying foreclosures across the US, Jeff thinks he will continue living for free for at least another six months, and probably longer.

The 33-year-old IT specialist is keen to put an end to his disastrous home purchase that will likely leave his bank with a loss of at least $100,000. Until the bank actually makes him leave, he will keep living in the Orlando house, and pocket the $2,200 he used to pay on his monthly mortgage. “I’m not stupid,” he says. “I will live for free until the bank takes over the house.”

Shasta Gaughen, an anthropologist living in California, stopped paying her mortgage in February. She has no idea when her home will actually be taken over. “I have been able to save significantly,” she says. “Every penny that was supposed to go to my mortgage went into savings, around $1,200 a month.”

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Posted in * Economics, Politics, Consumer/consumer spending, Economy, Ethics / Moral Theology, Housing/Real Estate Market, Personal Finance, Politics in General, The 2009 Obama Administration Housing Amelioration Plan, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The Fiscal Stimulus Package of 2009, The U.S. Government, Theology

(NPR) Why Another Stimulus Might Not Help Us Rebuild

“Stimulus” may be a dirty word in Washington these days, but don’t we need another boost to kick-start the economy?

Many economists say yes ”” even if it may not be politically feasible after the election. Economic historian Niall Ferguson, however, says a second round isn’t a good idea at all.

The Harvard historian tells NPR’s Guy Raz that while it might have some impact on unemployment figures, another stimulus also carries with it a tremendous risk.

“The risk is that you finally stretch the credulity of financial markets to the breaking point, and investors ”” not only in the U.S., but abroad ”” say, ‘You know what? U.S. fiscal policy really is out of control,’ ” Ferguson says.

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Posted in * Culture-Watch, * Economics, Politics, Economy, History, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The Fiscal Stimulus Package of 2009, The U.S. Government

The Economist–The President needs to change his reputation for being hostile to business

Winston Churchill once moaned about the long, dishonourable tradition in politics that sees commerce as a cow to be milked or a dangerous tiger to be shot. Businesses are the generators of the wealth on which incomes, taxation and all else depends; “the strong horse that pulls the whole cart”, as Churchill put it. No sane leader of a country would want businesspeople to think that he was against them, especially at a time when confidence is essential for the recovery.

From this perspective, Barack Obama already has a lot to answer for. A president who does so little to counter the idea that he dislikes business is, self-evidently, a worryingly negligent chief executive. No matter that other Western politicians have publicly played with populism more dangerously, from France’s “laissez-faire is dead” president, Nicolas Sarkozy, to Britain’s “capitalism kills competition” business secretary, Vince Cable (see article); no matter that talk on the American right about Mr Obama being a socialist is rot; no matter that Wall Street’s woes are largely of its own making. The evidence that American business thinks the president does not understand Main Street is mounting

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Posted in * Economics, Politics, Corporations/Corporate Life, Economy, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Office of the President, Politics in General, President Barack Obama, Taxes, The 2009 Obama Administration Bank Bailout Plan, The 2009 Obama Administration Housing Amelioration Plan, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The Fiscal Stimulus Package of 2009, The Possibility of a Bailout for the U.S. Auto Industry, The U.S. Government

Job Loss Looms as Part of Stimulus Act Expires

Tens of thousands of people will lose their jobs within weeks unless Congress extends one of the more effective job-creating programs in the $787 billion stimulus act: a $1 billion New Deal-style program that directly paid the salaries of unemployed people so they could get jobs in government, at nonprofit organizations and at many small businesses.

In rural Perry County, Tenn., the program helped pay for roughly 400 new jobs in the public and private sectors. But in a county of 7,600 people, those jobs had a big impact: they reduced Perry County’s unemployment rate to less than 14 percent this August, from the Depression-like levels of more than 25 percent that it hit last year after its biggest employer, an auto parts factory, moved to Mexico.

If the stimulus program ends on schedule next week, Perry County officials said, an estimated 300 people there will lose their jobs ”” the equivalent of another factory closing.

“It’s very scary, because there’s just no work,” said Brian Davis, a 36-year-old father of four, who got a stimulus-subsidized job with the City of Lobelville after he lost his job of 17 years at an auto parts plant that shed hundreds of jobs. Now he faces the prospect of unemployment again.

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Posted in * Economics, Politics, Corporations/Corporate Life, Economy, Labor/Labor Unions/Labor Market, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The Fiscal Stimulus Package of 2009

Gregg Easterbrook (Reuters)–It’s time for Obama to stop declaring new Economic Recovery Plans

Pundits are restless, an election looms ”“ so this week, President Barack Obama is proposing yet another round of special favors, aimed at improving the economy. Prominent columnist Paul Krugman wants the plans to be “bold” and to involve huge amounts of money. Here’s a contrasting view: government should stop declaring recovery plans, bold or otherwise.

Maybe the constant announcing of new plans ”“ especially plans backed by borrowing or tax cuts ”“ is, itself, an impediment to economic growth.

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Posted in * Economics, Politics, Budget, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Economy, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Office of the President, Politics in General, President Barack Obama, The 2009 Obama Administration Bank Bailout Plan, The 2009 Obama Administration Housing Amelioration Plan, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The Fiscal Stimulus Package of 2009, The National Deficit, The Possibility of a Bailout for the U.S. Auto Industry, The September 2008 Proposed Henry Paulson 700 Billion Bailout Package, The U.S. Government, Treasury Secretary Timothy Geithner