Yesterday, Warren Buffet was quoted across the "major media" as saying that the current fiscal stimulus efforts were not enough. Paul Krugman has been saying that consistently since the stimulus plans were initiated. But Krugman (article attached) doesn't harp on what he has said in the recent past. His point with today's observations is that there is a "trap" for the Obama administration in not doing enough stimulus because the "opposition" will say that what has been done "didn't work". Politically, it will be very difficult to go back for more.
For you "macroeconomists" out there, you know that the Fed ran out of bullets long ago (zero interest is as far as they can go), and, as Krugman so accurately points out, only 15% of the stimulus money has made its way into the economy. All sides of this issue knew and know that. Buffet doesn't like the "pork" aspect of the spending. Frankly, I don't think it matters "what" we're spending as long as we "spend". I'm not a fan of spending $30 million on Nancy Pelosi's "marsh mouse" but that environmental money will go into supporting employment and research so I don't care.
It would appear that President Obama has spent a portion of his very high initial approval ratings already. He may need to spend more (rating points) on "spending more" because his multiple front approach to issues is not going to help him if lagging indicators like unemployment don't get any better.
Interesting analysis.
ReplyDeletehttp://www.businessweek.com/magazine/content/09_19/b4130040117561.htm
This analyzes the unemployment situation well. Ah yes... politics... That nasty beast rears its head again. However, all this might be just inefficient information distribution. There are 2.554 million jobs out there as of May according to the Job Openings and Labor Turnover Survey, a study done by the BLS. Have another stimulus bill moving around the chambers just in case, but I still want to see more from the current stimulus package before we spend billions more. Why can we not spend everything over the over the next six months? Something seems weird here. Why is most of the stimulus going to be spent as economists predict GDP to recover? Behavioral economists from University of Chicago must be thinking about this. It just does not make sense to me. Something must be missing from this thought process. Perhaps someone else has insight on this.