Stimulus,Stimulus :Essence or Non-sense for Dummies

drawing by marguerita- from The Hormones series
WASHINGTON — The fresh evidence on Friday of the economy’s downward spiral focused even more attention on two questions:
Is the stimulus package being pushed by President-elect Barack Obama big enough?
And will the component parts being assembled by Congress provide the most bang for the buck?
...as the Federal Reserve has been learning for months now, the biggest obstacle to economic activity right now is not a shortage of money. The real obstacle is pervasive fear.
“It’s much bigger than anything that’s been tried in my lifetime, but this is scarier than anything we’ve seen in my lifetime,” Professor Auerbach said.Mark M. Zandi, chief economist at Moody’sEconomy.com, a forecasting firm, told a forum of House Democrats this week that the “bang for the buck” — the additional economic activity generated by each dollar of fiscal stimulus — was highest for increases in food and unemployment benefits
“It’s that current conditions are not normal and are not favorable to rebates or broad tax relief.”

.....economists and policy makers acknowledge that there is no playbook.

“I don’t know of any convincing evidence that what has been proposed is going to be enough.” Plan to Jump-Start Economy With No Instruction Manual - NYTimes.com

The Dollar: Life guard,Underground and Over & the Sprinkler Systems

drawing collage by marguerita


"all just one big lie"


Today we celebrate the Feast of the Guardian Angels, those heavenly creatures who are assigned to be our protectors from the moment of our birth and throughout life. Although the nature of angels and the tasks given to them vary in each tradition ,other roles include acting as warrior or guard :a legend among Wall Street traders, was arrested on Thursday morning by federal agents and charged with criminal securities fraud stemming from his company’s money management business.“We are alleging a massive fraud — both in terms of scope and duration.
Although not a household name among consumers, Mr. M’s firm has played a significant role in the structure of Wall Street for decades, both in traditional stock trading and in the development of newer electronic networks for trading equities and derivatives......Prominent Trader Accused of Defrauding Clients - NYTimes.com

America's Self Portrait: Food for Thought

drawing by marguerita Principle 8. Life and the Pursuit of Happiness

Japan’s failure to respond urgently and decisively to its banking mess caused the country to endure a “lost decade” of economic stagnation. If America wants to avoid Japan’s decline, the House should follow the Senate’s lead and approve the bailout — immediately.

Just as in the U.S. today, most Japanese did not initially appreciate how devastating a banking crisis could be to the real economy. Banks and real estate tycoons in Japan were corrupt, profligate and unsympathetic figures, and no one wanted to help them. On corporate expense accounts, they sipped coffee with gold leaf and patronized “no-panties shabu-shabu” restaurants, which had mirrored floors and miniskirted waitresses.

In short, the businessmen involved were jerks. Op-Ed Columnist - Save the Fat Cats - NYTimes.com

This is what a credit crisis looks like.

It’s not like a stock market crisis, where the scary plunge of stocks is obvious to all. The credit crisis has played out in places most people can’t see. It’s banks refusing to lend to other banks — even though that is one of the most essential functions of the banking system. It’s a loss of confidence in seemingly healthy institutions like Morgan Stanley and Goldman — both of which reported profits even as the pressure was mounting. It is panicked hedge funds pulling out cash. It is frightened investors protecting themselves by buying credit-default swaps — a financial insurance policy against potential bankruptcy — at prices 30 times what they normally would pay.It was this 36-hour period two weeks ago — from the morning of Wednesday, Sept. 17, to the afternoon of Thursday, Sept. 18 — that spooked policy makers by opening fissures in the worldwide financial system.

In their rush to do something, and do it fast, the Federal Reserve chairman, Ben S. Bernanke, and Treasury Secretary Henry M. Paulson Jr. concluded the time had come to use the “break the glass” rescue plan they had been developing. But in their urgency, they bypassed a crucial step in Washington and fashioned their $700 billion bailout without political spadework, which led to a resounding rejection this past Monday in the House of Representatives.

As Credit Crisis Spiraled, Alarm Led to Action - NYTimes.com