Economists: The stimulus didn't help

[BloodEclipse]

Economists: The stimulus didn't help

By Hibah Yousuf, staff reporterApril 26, 2010: 3:56 AM ET




NEW YORK (CNNMoney.com) -- The recovery is picking up steam as employers boost payrolls, but economists think the government's stimulus package and jobs bill had little to do with the rebound, according to a survey released Monday.
In latest quarterly survey by the National Association for Business Economics, the index that measures employment showed job growth for the first time in two years -- but a majority of respondents felt the fiscal stimulus had no impact.

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NABE conducted the study by polling 68 of its members who work in economic roles at private-sector firms. About 73% of those surveyed said employment at their company is neither higher nor lower as a result of the $787 billion Recovery Act, which the White House's Council of Economic Advisers says is on track to create or save 3.5 million jobs by the end of the year.
That sentiment is shared for the recently passed $17.7 billion jobs bill that calls for tax breaks for businesses that hire and additional infrastructure spending. More than two-thirds of those polled believe the measure won't affect payrolls, while 30% expect it to boost hiring "moderately."

0:00 /1:48Job growth ... now what?
But the economists see conditions improving. More than half of respondents -- 57% -- say industrial demand is rising, while just 6% see it declining. A growing number also said their firms are increasing spending and profit margins are widening.
Nearly a quarter of those surveyed forecast that gross domestic product, the broadest measure of economic activity, will grow more than 3% in 2010, and 70% of NABE's respondents expect it to grow more than 2%.
Still, the survey suggested that tight lending conditions remain a concern. Almost half of those polled said the credit crunch hurts their business.

but a majority of respondents felt the fiscal stimulus had no impact.

The impact will soon be felt in the most negative of ways. The weight of our national debt will be crushing to this economy.

 

[Expat]

It wasn't a stimulus bill. It was an old fashioned Chicago style payoff to liberal constituency groups.

 

[Que]

It wasn't a stimulus bill. It was an old fashioned Chicago style payoff to liberal constituency groups.

Wait, why would President Bush pay off liberals?

 

[dross]

Wait, why would President Bush pay off liberals?

We've really got to get an understanding of the "stimulus" bill.

TARP and the stimulus are two different things. TARP was a bailout of the finanacial industry. While I didn't completely agree with TARP, some of it will be paid back, and lots of even conservative leaning economists insisted that it was necessary to avoid total collapse. I have a pretty good layman's understanding of economics, and I plead ignorance on TARP's necessity.

The stimulus for all practical purposes was an extra budget bill and that was entirely Obama's.

As to the boost in payroll, for most of the 90's, I was in the recruiting industry. Hiring slows every year in November and doesn't pick up again until April. It goes strong from about April, then slows slightly during the summer months, picking up again from September through November.

 

[leftsock]

Wait, why would President Bush pay off liberals?

Because we have a difficult time remembering what happened more than a month ago, and we like to blame "liberals" (whatever that term means anymore).

American Recovery and Reinvestment Act of 2009 - Wikipedia, the free encyclopedia


er, I mean...

IT'S A CONSPIRACY!

 

[Expat]

Wait, why would President Bush pay off liberals?

The $787 Billion stimulus bill was signed into law 2/17/09 by President Obama. No Republican in the House voted for it.

 

[leftsock]

Any word on the success of the Economic Stimulus Act of 2008 or the Emergency Economic Stabilization Act of 2008?

I'm still not sure if our $152 billion and $700 billion was well spent.

I mean, when I see an entity engaged in financial practices that aren't economically sound and then proceeds to be a financial failure, my first thought is to make a large investment into it.

 

[Fletch]

We've really got to get an understanding of the "stimulus" bill.

TARP and the stimulus are two different things. TARP was a bailout of the finanacial industry. While I didn't completely agree with TARP, some of it will be paid back, and lots of even conservative leaning economists insisted that it was necessary to avoid total collapse. I have a pretty good layman's understanding of economics, and I plead ignorance on TARP's necessity.

TARP was unnecessary because all of the assets could be sold... just not at prices the banks were willing to accept. The banks had a 1977 Dodge Aspen sitting in their back yard, rusting out at the frame, not running, engine completely seized. The market offered them $100 for the scrap metal, and they said no. Bush and TARP came along, and offered $5000 of taxpayer money for it.

(numbers pulled out of thin air, but you get the gist)

The reason this was deemed necessary is a little-known regulation called mark-to-market. Essentially it requires all banks to account for the market value of their assets, and combined with their minimum asset requirements, some of them would have been below the threshold required. Those banks would have been forced to close, and depositors would have been covered by FDIC, also with taxpayer dollars, while their loans would have been bought up by others at rock-bottom prices.

It would have been far simpler to suspend mark-to-market, or to allow a grace period for banks to return their asset portfolios to a healthy footing, or to simply allow them to go belly-up. TARP was deemed "necessary" because the massive market correction that was preparing to happen was feared more than the considerable wrath of the taxpayers and voters who were going crazy with calls and letters opposing it.

 

[Que]

We've really got to get an understanding of the "stimulus" bill.

TARP and the stimulus are two different things. TARP was a bailout of the finanacial industry. While I didn't completely agree with TARP, some of it will be paid back, and lots of even conservative leaning economists insisted that it was necessary to avoid total collapse. I have a pretty good layman's understanding of economics, and I plead ignorance on TARP's necessity.

The stimulus for all practical purposes was an extra budget bill and that was entirely Obama's.

As to the boost in payroll, for most of the 90's, I was in the recruiting industry. Hiring slows every year in November and doesn't pick up again until April. It goes strong from about April, then slows slightly during the summer months, picking up again from September through November.

The $787 Billion stimulus bill was signed into law 2/17/09 by President Obama. No Republican in the House voted for it.

Thanks guys. I honestly had this screwed up and now have a better understanding. As soon as I hit the "send" button, I thought I should have provided more clarity, but I really appreciate your concise and easily understood replies. Rep to you!

 

[Expat]

TARP was unnecessary because all of the assets could be sold... just not at prices the banks were willing to accept. The banks had a 1977 Dodge Aspen sitting in their back yard, rusting out at the frame, not running, engine completely seized. The market offered them $100 for the scrap metal, and they said no. Bush and TARP came along, and offered $5000 of taxpayer money for it.

(numbers pulled out of thin air, but you get the gist)

The reason this was deemed necessary is a little-known regulation called mark-to-market. Essentially it requires all banks to account for the market value of their assets, and combined with their minimum asset requirements, some of them would have been below the threshold required. Those banks would have been forced to close, and depositors would have been covered by FDIC, also with taxpayer dollars, while their loans would have been bought up by others at rock-bottom prices.

It would have been far simpler to suspend mark-to-market, or to allow a grace period for banks to return their asset portfolios to a healthy footing, or to simply allow them to go belly-up. TARP was deemed "necessary" because the massive market correction that was preparing to happen was feared more than the considerable wrath of the taxpayers and voters who were going crazy with calls and letters opposing it.

I was instinctively against TARP. If a bank or other business is going to fail, then let it fail. But there were a lot of financial experts that seemed to know what they were talking about that did a pretty good job of conveying that they were absolutely terrified of what would happen. So maybe it had to be done. I simply don't know. But I also know that what occurred was at least partially caused by our government.

 

[Fletch]

Two very good articles on TARP and the stimulus:

Year After TARP: $700 Billion Down the Drain - Randall G. Holcombe - Mises Institute
Government Intervention and Market Volatility - Benjamin Weingarten - Mises Institute

 

[dross]

TARP was unnecessary because all of the assets could be sold... just not at prices the banks were willing to accept. The banks had a 1977 Dodge Aspen sitting in their back yard, rusting out at the frame, not running, engine completely seized. The market offered them $100 for the scrap metal, and they said no. Bush and TARP came along, and offered $5000 of taxpayer money for it.

(numbers pulled out of thin air, but you get the gist)

The reason this was deemed necessary is a little-known regulation called mark-to-market. Essentially it requires all banks to account for the market value of their assets, and combined with their minimum asset requirements, some of them would have been below the threshold required. Those banks would have been forced to close, and depositors would have been covered by FDIC, also with taxpayer dollars, while their loans would have been bought up by others at rock-bottom prices.

It would have been far simpler to suspend mark-to-market, or to allow a grace period for banks to return their asset portfolios to a healthy footing, or to simply allow them to go belly-up. TARP was deemed "necessary" because the massive market correction that was preparing to happen was feared more than the considerable wrath of the taxpayers and voters who were going crazy with calls and letters opposing it.

This is my basic understanding and belief as well. I hesitate only because again, some people I've become accustomed to trusting came out for the measure.

I think if more natural adjustments had been allowed to happen we would have had more acute pain in the short run, but it wouldn't have lasted as long.

 

[jsgolfman]

TARP was unnecessary because all of the assets could be sold... just not at prices the banks were willing to accept. The banks had a 1977 Dodge Aspen sitting in their back yard, rusting out at the frame, not running, engine completely seized. The market offered them $100 for the scrap metal, and they said no. Bush and TARP came along, and offered $5000 of taxpayer money for it.

(numbers pulled out of thin air, but you get the gist)

The reason this was deemed necessary is a little-known regulation called mark-to-market. Essentially it requires all banks to account for the market value of their assets, and combined with their minimum asset requirements, some of them would have been below the threshold required. Those banks would have been forced to close, and depositors would have been covered by FDIC, also with taxpayer dollars, while their loans would have been bought up by others at rock-bottom prices.

It would have been far simpler to suspend mark-to-market, or to allow a grace period for banks to return their asset portfolios to a healthy footing, or to simply allow them to go belly-up. TARP was deemed "necessary" because the massive market correction that was preparing to happen was feared more than the considerable wrath of the taxpayers and voters who were going crazy with calls and letters opposing it.

Whenever I hear mark-to-market, I can't help but think of Enron.