If and when do you think this stimulus plan will work?

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Obama will be signing the Stimulus Plan that congress just approved. However, the 64-thousand dollar question remains; "when will this stimulus plan begin to work - if ever?" Will it reverse the loss of jobs and homes, or will it stabilize it?

How will this plan affect the stock market? Will we see the reversal of huge bear markets in the future? Will it begin to stabilize the market, or will we continue to see the yo-yo effects of the past 18-months?

How much (percentage wise) did you lose in your investments and home value from 52-weeks ago and YTD? Do you anticipate more losses? Have you sold or traded some or all of your investments?

What do you think is the best strategy going forward?

All opinions welcomed.

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Type: Discussion • Score: 11 • Views: 10,676 • Replies: 207

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it will act as a shock absorber in the near term but shift the costs of medicating the symptoms to the follow on generations, which is a moral outrage. It will not cure the disease. In order to treat the illness we first will need to nationalize the banks, then work with the global community to birth a new global economic system.

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Ain't gonna work!

Not even gonna come close.

We are in a much deeper hole than anyone wants to admit...and one much to deep to get out easily. This package...is trying to do the damn near impossible on the cheap!

We deserve what we are getting.

We put the incompetent bastard in office...and then even after he showed how incompetent he was, we put him back in for another four years.

He and his miscreant henchmen had eight years to screw up our country...and setting it back on tracks is gonna take much, much, much more than this package.

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@Frank Apisa,

I agree with both of you! Conservatives created this mess, and they don't want to give their "yes vote" on any stimulus plan. On the other hand, the stimulus plan has too much social programs embedded in it to choke off future growth.

But doing nothing is not an option at this stage of our economy as we lose over a half million jobs every month.

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@cicerone imposter,

Quote:

we lose over a half million jobs every month

as I recall the numbers are going up, prelim was 600,ooo last month, and a great many more are getting their hours (pay) drastically cut. The unemployment number under reports the problem.

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@hawkeye10,

You're right; most people under-estimate the problems for varied reasons.

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one small example of what is wrong with this package: the electric transmission system has been under funded since the dawn of deregulation, to the tune of about $100 billion. This bill pushes $10 billion at the problem, which is no where near enough to do the job, and it also bastardizes the free markets and energy economics because now those who use the resource are no longer the ones paying the tab. We are skewing the markets all over the place, which will make it very difficult to ever get back to rational and productive free market transactions. We are nationalizing the entire economy but no one wants to talk about nationalization, nor admit that we are doing it. when individuals behave in such a way that it appears that they have lost their mental facilities we either lock them up as criminals or else we treat them for mental illness. We as a nation however can be schizophrenic in the extreme and we hear not a peep of concern.

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@cicerone imposter,

Couldn't agree more with the "doing nothing is not an option."

And I think this is a decent step. It's just that the magnitude of the problem is so enormous...even this decent step is futile.

The thing that pisses me most of all...is that I do not see a solution in the making. I just don't think we are going to come out of this mess for a very long time. (I see one of the British PM's advisors told him 15 + years to a recovery!)

And I see the people who actually got us here mocking the attempts Obama is making to straighten things out...and my bet is, when these attempts fall short (which I think they will) they will claim the problem is with Obama.

Horrible situation...made even worse my these obstuctionists who are playing political games because they see just how bad the problem is...and trying to disassociate themselves with a solution they realize is not up to the job. Not that they have a better plan...and in fact, not that they have a plan that even matches Obama's.

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@Frank Apisa,

Quote:

The thing that pisses me most of all...is that I do not see a solution in the making. I just don't think we are going to come out of this mess for a very long time. (I see one of the British PM's advisors told him 15 + years to a recovery!)

the longer the disease goes untreated the more difficult the recovery will be. We have not even begun to THINK about fixing the problems, much less applying possible solutions. One of the main problems, and perhaps THE main problem is we have a adults generations that have been universally badly educated (education being total life education...home/school/social). They have a hard time telling truth from fiction, and a very hard time thinking for themselves. We have known about the education problem for a long time, and instead of fixing the problem we pandered to the idiots amongst us so as to protect their FEELINGS!. We have been fools, and now we get our payback. Solving the collapse of the global economic order could very easily take a generation... 20-30 years.

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I don't think the stimulus plan will bring back happy days, but it may well stem the bleeding a bit, and the rate at which jobs are being cut right now would be catastrophic if it continues.

So I guess I'm saying my take on it is that it has a decent chance of slowing our descent. And if there's any question that the job loss numbers are potentially catastrophic then have a look at this graph:

http://img254.imageshack.us/img254/3944/81825764ct2.jpg

If the stimulus slows that drop it will be worth it, but don't expect it to reverse the trend on its own. But at this point even slowing the fall is a worthy aim. If jobs keep being cut at these rates we are months away from the worst financial crisis in history. Even if the stimulus creates only 25% of the 4 million jobs Obama hopes it will create it will make this recession's line look a lot more like the 2001 recession, and something like the 2001 recession is looking mighty attractive right now.

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@cicerone imposter,

The stimulus plan will start working in a few months, and continue to work over a few years. But it will not reverse or even stabilize the loss of jobs and homes, because a 800 billion dollar plan cannot plug a 2000+ billion dollar hole. Over the next one to two years, unemployment will increase less than it would without a plan, but it will increase. In 2010, Republican candidates for Congress will ask the nation: Are you better or worse off than you were two years ago? And the truthful answer will be "no". All because Obama is hell-bent to be a uniter, not a divider, and because Democratic centrists in Congress won't let their party be Democrats.

I don't know how the stimulus will affect the stop market, because a growing economy pushes the stock market both ways: By making investors expect higher profits, it pushes the stock market up. On the other hand, by making investors expect higher interest rates, it pushes the stock market down. The direction and size of the over all effect can vary from case to case. In this case, I'm guessing the profit effect dominates.

I lost seven percent of my nest egg in the crash. It could have been much worse. But luckily, I withdrew 80% of it from the stock market in summer 2007, and moved it into fixed deposit accounts.

I think the best strategy moving forward is an aggressive Keynesian stimulus plan, three times greater than the one Congress just passed, and much more focused on government spending rather than tax cuts. Because only the left wing of the Democratic party supports it, the best available strategy will never be tried, and moderate Democrats will lose the midterm elections to radical Republicans. It's depressing, but I think that's how it's going to be.

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So, no one thinks this bill will work (for a variety of reasons), and instead of, I don't know, NOT passing the bill, everyone is cool with increasing our ENTIRE NATIONAL DEBT by 40% for NOTHING ?!?!?!?!

Is there something I'm missing?

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@Thomas,

Quote:

I don't know how the stimulus will affect the stop market, because a growing economy pushes the stock market both ways: By making investors expect higher profits, it pushes the stock market up. On the other hand, by making investors expect higher interest rates, it pushes the stock market down. The direction and size of the over all effect can vary from case to case. In this case, I'm guessing the profit effect dominates.

as the uncertainty persists, and as the notion dawns in mass consciousness that the current economic order is dead, the current equity market valuations will become unsustainable. We don't even know for sure that the corporate structure will work in what ever replaces the economic system that failed, owning part of a corporation will not be attractive until the new system is worked out and we get an idea what the new valuations will be.

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@maporsche,

Quote:

So, no one thinks this bill will work (for a variety of reasons), and instead of, I don't know, NOT passing the bill, everyone is cool with increasing our ENTIRE NATIONAL DEBT by 40% for NOTHING ?!?!?!?!

Is there something I'm missing?

no, you have it. This last gasp of on economic theory that failed will be an expensive one.....not for us of course, our kids, grandkids, maybe great grandkids.

1 Reply

@maporsche,

maporsche wrote:

So, no one thinks this bill will work (for a variety of reasons), and instead of, I don't know, NOT passing the bill, everyone is cool with increasing our ENTIRE NATIONAL DEBT by 40% for NOTHING ?!?!?!?!

Is there something I'm missing?

Yes, the part where slowing the fall is very desirable and that if it achieves this without solving the financial crisis (which seems to be your definition of "work") it will not be for "nothing".

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@Robert Gentel,

Quote:

Yes, the part where slowing the fall is very desirable and that if it achieves this without solving the financial crisis (which seems to be your definition of "work") it will not be for "nothing".

the resulting social instability will be exactly the same whether the collapse is fast or slow....and it changes nothing about finding a solution. It IS all for nothing.

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@maporsche,

What Craven said.

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the stimulus package seems to be working already for warren buffet :

http://www.nytimes.com/2009/02/14/business/14bizbriefs-BERKSHIREHAT_BRF.html?ref=business

Quote:

February 14, 2009
Berkshire Hathaway to Invest in Tiffany
By REUTERS
Berkshire Hathaway, Warren E. Buffett’s holding company, has agreed to buy $250 million of debt from Tiffany & Company, the latest in a string of high-yielding investments by Mr. Buffett. Tiffany said it had sold Berkshire $125 million of eight-year notes and $125 million of 10-year notes, all yielding 10 percent. It said it would use the proceeds to refinance debt and for general corporate purposes. The investment is at least the seventh time since September that Berkshire has secured a payout of at least 10 percent by buying company bonds, preferred stock or convertible securities.

it seems that buffet assumes that tiffany will not go out of business anytime soon - kind of encourging , isn't it ?
hbg

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@hawkeye10,

I agree; I'm not normally a doom-sayer, but I can seriously imagine the total financial collapse of our nation w/in my lifetime.

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@Robert Gentel,

I don't think slowing the fall is desirable.

It's the whole rip off the band-aid apporach. Get the painful part over with and then focus on the problems. Instead we get to take the band-aid off slowly over the next 2 years and still wind up in the EXACT same spot, only 2 years later.

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If and when do you think this stimulus plan will work?

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