Monday, November 24, 2008

Now the Stimulus is $700 Billion

If anyone is aware of how I can invest in the future size of the coming "stimulus" package that would be great. Just a few weeks ago Obama was suggesting a $150 Billion package. Within that last week I was none too surprised to see Paul Krugman pushing "at least $600 Billion". Now, Obama's advisors are topping them all.

$700 Billion From Bloomberg.

Let's do some addition.

$450 Billion - deficit already.
$1,350 Billion - for the Wall Street Bailout ($1.2 Trillion bailout + $150 Billion in Pork) see update
$25 Billion - in Auto Loans (enacted not the new proposed)
$0 - No tax hikes on those evil rich people
$700 Billion - for stimulus
$2.525 TRILLION Deficit next year

And this doesn't count the other likely effects.
($?? Billion) - Lower Tax revenues from weaker economy
$50 Billion - Detroit bailout

Wonder if that will effect interest rates for the government to borrow 1/6th of the entire US economic output?


Whoops, I should have finished the entire article before posting. It's even worse!

The incoming administration may also enlarge the $700 billion financial-rescue fund enacted last month. It may surge to perhaps $1.2 trillion, said Martin Baily, who served as White House chief economist under Clinton and is now at the Brookings Institution in Washington.


Vincent said...

2250 trillions... not counting the latest FED anouncements of purchases of MBS from Fannie-Freddie.

It's about the same order of magnitude that the US federal annual budget ! For one dollar of taxes, the treasury will spend two !

It's awful. The competition to borrow the necessary money between states will be harsh, and the resulting rates will soar. Enterprises and households will face financial struggle, and states will find in money printing the only "convenient" way to avoid mass bankruptcies.

We are going into hard times, because of stupid state policies... and markets will receive the blame for all the mess. I'm overly pessimistic.

Brian Shelley said...

I agree. I am a little scared about how bad the mess will be. All the more motivation to keep learning, thinking and writing.

Also - I'm picking up French pretty quickly by reading/translating your site.

Vincent said...

Hi Brian

I'm Very pleased to read that you're actually using my blog to improve your french !

Let me know if you've translated some articles, So I can advertize it.

vincent at benard dot com

and oh, I've to add you into my blog roll... So many things to do.

Brian Shelley said...

I sent you an e-mail, but it came back as an error. Is that your correct address: v @ ?