What are the direct results of the Stimulus Plan?

[WhoWee]

I'd like to start a discussion about the practical aspects and direct results of the Stimulus plan. If anyone has direct knowledge of a project that is/will be funded or knows of someone who is actually hired for a job as a direct result of the stimulus plan...please share any details you can. We all need some positive news.

 

[wildman]

I'd like to start a discussion about the practical aspects and direct results of the Stimulus plan. If anyone has direct knowledge of a project that is/will be funded or knows of someone who is actually hired for a job as a direct result of the stimulus plan...please share any details you can. We all need some positive news.

Positive news? From the stimulus plan? It is nice to know that the naive are still out there...

 

[WhoWee]

Again, this discussion will take time to develop...as projects develop...please update with any first hand knowledge of someone who got a job or won a contract.

 

[Evo]

One of my clients is a mortgage company and the money they are planning to get will allow them to rehire the people they laid off.

So definitely the stimulus is going to help.

 

[WhoWee]

One of my clients is a mortgage company and the money they are planning to get will allow them to rehire the people they laid off.

So definitely the stimulus is going to help.

Great! Please keep us posted.

 

[WhoWee]

This is the best overview I've read yet

http://news.yahoo.com/s/ap/20090214/ap_on_go_co/stimulus_stakes_who_gets_what

 

[Chi Meson]

Whether or not my High School hires a replacement science teacher next year, or not, depends on the Stimulus Plan. It has to come from the fed, to the state, to the CT Dept of Ed, then to the towns in the state. No one knows how much will drift our way, or how much will be skimmed before it reaches us.

 

[Incyder]

I used to work for a non-profit that was funded by the government. One of the programs they offered was Insulating homes. I know the stimulus package is going to cover that. The plus side is more efficient homes and lower energy costs as well as a handful of people employed. It's targeted at the african american communities as I was the only white guy working for the company. Who, coincidentally, fired me after 3 months after catching their books up that were 9 months behind. I guess we all could use the stimulus these days. My lawyer told me I would receive no economic package from that little fiasco. Anywho, cheers to a better tomorrow, good luck all!

 

[chayced]

Not to offend, but I have seen very little to support this stimulus plan as a stimulus plan. It is a spending bill.

Perhaps I'm making a mountain out of a molehill, but stimulus is to 'jump start' the economy, that is spending a large amount of money for a short time.The purpose is to keep enough cash flowing so that consumers keep buying and people keep employed until the economy rebounds. This works because cash flows circularly. Person A produces a widget and sells it to person B, then takes the money and buys a widget from person C who in turn buys a widget from person B. If person B does not buy a widget then they all go out of work. If the government puts the cash in the pockets of each of the three people then they can buy widgets from each other and then the government can take the money back when everyone is successfully producing and selling. That is stimulus.

If the government instead spends a huge of money over a long period of time that can stimulate the economy, but as in the case above unless the people have cash right now to buy things and keep each other employed it all falls apart. If persons A,B,and C are getting small amounts of cash over years then they may buy widgets from each other or they may not depending on if they can afford essentials. If the economy does not rebound quickly from this then the money spent is waisted and worse yet inflationary. You cannot permanently increase the amount of money in an economy without increasing production and avoid inflation.

Seems to me that the government would have done much better to buy up all the homes currently in foreclosure and create new HUD housing, while at the same time replacing different agencies fleet vehicles with the surplus vehicles GM and Ford have. All I've seen from the current stimulus bill is a lot of spending that should be regular budget stuff that would never get approved by the tax payers and a few actual pieces of stimulus. The idea is to use money to crank the engine of the economy quickly so it will start, not to turn it slowly to keep the wheels moving at the taxpayer expense.

I don't know what the results of this stimulus plan will be, but if it does not rebound the economy in 6 months it will be money foolishly spent. Look at what happened to Brazil when it went crazy printing money.
http://en.wikipedia.org/wiki/Hyperinflation
If you don't pull back out the money you put in, and do so with the economy running you lose.

 

[skeptic2]

The 2008 real GDP is estimated to be $14.8 trillion. In the 3rd quarter the GDP declined 0.5% and 3.8% in the 4th quarter. The $787 billion stimulus package amounts to about 5.3% of the 2008 GDP. This is in addition to the bailout money already allocated by the Bush administration. What would be an appropriate amount of stimulus to reverse the decline?

 

[Ivan Seeking]

The stimulus plan includes both long-term and short-term goals. As with the New Deal, Obama hopes to provide a foundation for long-term recovery.

In order to be on par with WWII level spending - national debt to GDP ratio - we could spend another $7 trillion.

Note that WWII was really just a massive spending program with no direct long-term benefits like those that we get from building roads and energy infrastructure, improving education, increasing energy efficiency, spurring growth in green technologies, etc.

 

[chayced]

While I agree investments in infrastructure will provide long term gains, they have nothing to do with stimulus. Neither do programs to expand welfare/unemployment. Neither does investment in alternative energy.

The important things for stimulus to work is for it to be fast and effective. It does not have to be big, but it has to be well targeted. The problem is that the government does not do small well targeted things and they never accomplish anything good fast. If done right a stimulus package could earn the taxpayer money by stabilizing prices when they are low and then cashing back out when they come back up. The point is to turn the trend not to drive it up.

Leveling out the housing market is important. Adding measures to help businesses expand and maintain profitability without cutting workers such as tax breaks are important. Freeing up the credit market is important. Above all else, the most important thing is to help people believe that things are going to get better. If everyone is saving up cash in fear of the next great depression then they are going to cause it.

What I see right now is a dangerous spending precedent that is not targeted on anything and is going to eventually bite us. Remember this new 'stimulus' alone cost more than the whole Iraq war and that's not including subsequent costs for programs created by the stimulus bill.
http://zfacts.com/p/447.html
Remember all the pundits claiming the cost of the Iraq war was going to destroy us? Now they tell us we need this new stimulus bill.

As for the WW2 spending comparison, remember during WW2 we increased domestic production. If you increase the productivity of an economy while equally increasing the total amount of money you do not get inflation, and even acounting for the increase of productivity durring WW2 there was quite a lot of inflation that has continued to this day. The US used to have alternating periods of inflation and deflation, then about 70 years ago we started to only have inflation.
http://en.wikipedia.org/wiki/File:US_Historical_Inflation_Ancient.svg

We may spend 50 years paying for this in the form of inflation, but one way or annother we will pay for it. If in the end this does not work as advertised we will be paying for nothing.

 

[OmCheeto]

The stimulus plan includes both long-term and short-term goals. As with the New Deal, Obama hopes to provide a foundation for long-term recovery.

In order to be on par with WWII level spending - national debt to GDP ratio - we could spend another $7 trillion.

Note that WWII was really just a massive spending program with no direct long-term benefits like those that we get from building roads and energy infrastructure, improving education, increasing energy efficiency, spurring growth in green technologies, etc.

I must say Ivan, that that thread put the same idea into my head.

Has anyone written a book or short story on what the planet might be like today if all that destructive energy had been expended productively?

Though I think it might be a bit boring in the end:

Techno-geeks working 10 hours a week creating machines that do all our work for us. Everyone spending the rest of eternity pretending to write poetry, sitting on a beach, watching kids playing in the sand, listening to young peoples foolish new music, drinking piña colada's, pretending not to notice that our old friends are old and will soon pass on. Trying to play an instrument that you've never played before, peace on earth.

...

Yes. I did say boring.

BTW. Has anyone heard about electric car drag races?

My friend called me today, and he had to cut the conversation short because he had to get back to some car race going on out east.

I tried to imagine him at an all electric drag race. (He's 65 +/- 5)

SQWEEEEEELLLLLL... Wooooshhhhhhhhhhhh...

"Well that was stupid. There wasn't any noise. I want to feel those dragsters thump my chest, and spit fire, and maybe blow up once in awhile".

...

Sorry Bill, but that's why god invented the x-box*.

That was then, and this is now.

Get over it.

*edit: I had "gameboy" listed, but I realized, well, um, that I'm real old too.

 

[Ivan Seeking]

While I agree investments in infrastructure will provide long term gains, they have nothing to do with stimulus. Neither do programs to expand welfare/unemployment. Neither does investment in alternative energy.

Shovel-ready projects are what's targeted. Jobs creation certainly will help the ecnomony.

Expanding unemployment allows people to continue purchasing, as does welfare. But unlike tax breaks or rebates that normally go to savings or credit payments - as happened with Bush's rebate - unemployment and welfare money will go right back to purchases. That is also why they are only giving back small quantities as tax breaks over a period of time. This will help to promote spending immediately rather the money going to credit card payments as a lump sum. Alternative energy is more a long-term stimulus, but it is still a stimulus. It will mean jobs.

 

[Ivan Seeking]

What I see right now is a dangerous spending precedent that is not targeted on anything and is going to eventually bite us. Remember this new 'stimulus' alone cost more than the whole Iraq war and that's not including subsequent costs for programs created by the stimulus bill.
http://zfacts.com/p/447.html
Remember all the pundits claiming the cost of the Iraq war was going to destroy us? Now they tell us we need this new stimulus bill.

I don't remember anyone saying it would destroy the economy, but I was personally complaining that for a trillion dollars, we could be well on our way to energy independence. Then we wouldn't need to be in the ME. The money spent on Iraq will eventually prove to be a giant waste. There is certainly no economic benefit to us. But the Republicans sure get fired up about nation-building when it comes to other countries. And as for oversight, the Republicans had no problem issuing no-bid contracts to Halliburton, did they.

As for the WW2 spending comparison, remember during WW2 we increased domestic production. If you increase the productivity of an economy while equally increasing the total amount of money you do not get inflation, and even acounting for the increase of productivity durring WW2 there was quite a lot of inflation that has continued to this day.

Inflation is a valid concern that Obama's people have addressed as such. But WWII was still just a giant spending program with no direct net benefit. Investing in infrastructure makes much more sense. And infrastructure requires domstic production. Green technologies even promise to help replace industries lost to China.

 

[skeptic2]

Leveling out the housing market is important. Adding measures to help businesses expand and maintain profitability without cutting workers such as tax breaks are important. Freeing up the credit market is important. Above all else, the most important thing is to help people believe that things are going to get better. If everyone is saving up cash in fear of the next great depression then they are going to cause it.

If everyone is saving up cash, in the bank, is that not helping to free up the credit market? With freer credit doesn't that level out the housing market? Aren't those savings now also available to help businesses expand and maintain profitability without cutting workers? In fact if banks are required to maintain a 10% reserve, won't the money people save have 9 times the effect as spending it in doing exactly those things which you deem important to stimulate the economy?

The part of the economy that saving hurts are those items which are part of discretionary spending that people don't buy on credit. It seems to me the best strategy is to spread the money around. Put some money in people's pockets for immediate spending, but also stimulate the credit market to make borrowing easier. This seems to be close to what is being done. But regardless of how it is spent, it's being spent in a far better way than in buying shrapnel for Iraq.

 

[OmCheeto]

What I see right now is a dangerous spending precedent that is not targeted on anything and is going to eventually bite us.

Sorry about this. I would not have noticed your comment if Ivan hadn't had it in the first line of his response.

$1 trillion dollars is less than what America spends in a month on average.

I've seldom flinched on buying something on credit that cost me a months wages, even though it might take me several years to pay back. Why should we, as a nation, now get all upset about it?

I was talking to a young Russian acquaintance regarding the economy this last Thursday, and she said that America was better suited to ride out this economic storm than any other country in the world. I was a bit taken aback, as I'd not heard anything like that on Fox News or CNN lately.

She said the infrastructure of America was like no other in the world.

She listed off a few things, none of which included military might, politics, finances, or things you might think that were important in a strong country.

I suppose I didn't believe her at first. But I think she is correct.

Now let's go spend some of Prez-O's dollars, and ramp this world up!

Woooweeeeeeee!

http://www.smileyvillage.com/smilies/banana005.gif

 

[WhoWee]

If everyone is saving up cash, in the bank, is that not helping to free up the credit market? With freer credit doesn't that level out the housing market? Aren't those savings now also available to help businesses expand and maintain profitability without cutting workers? In fact if banks are required to maintain a 10% reserve, won't the money people save have 9 times the effect as spending it in doing exactly those things which you deem important to stimulate the economy?

The part of the economy that saving hurts are those items which are part of discretionary spending that people don't buy on credit. It seems to me the best strategy is to spread the money around. Put some money in people's pockets for immediate spending, but also stimulate the credit market to make borrowing easier. This seems to be close to what is being done. But regardless of how it is spent, it's being spent in a far better way than in buying shrapnel for Iraq.

You're right...money in the bank will help unfreeze credit. However, the problem with savings rates is there's NO INCENTIVE...look at the 6 month CD rate...paying down a high interest credit card makes more sense right now.

On the other hand...we need to be careful what we wish for...a higher CD yield will mean higher borrowing rates...BTW...the historical benchmark interest rate is 8%.

 

[WhoWee]

Obama invited 85 Mayors from around the country to the White House today. I see this as a positive move...if anyone actually has "shovel ready" projects, it should be the Mayors.

Again, if anyone knows of a local project or a new job...please post.

 

[WhoWee]

Here is the latest update

http://news.yahoo.com/s/ap/20090221/ap_on_go_pr_wh/obama_economy

 

[Adrock1795]

But is government intervention just creating more volatility in markets? You saw this just on Friday when their was a generalization that the gov. was to nationalize banks, BofA stock shot down 20%, the white house came on and bunked the idea, the BofA stock rose back to Thursday levels. No one but daytraders can make money of that kind of stock action.

 

[WhoWee]

But is government intervention just creating more volatility in markets? You saw this just on Friday when their was a generalization that the gov. was to nationalize banks, BofA stock shot down 20%, the white house came on and bunked the idea, the BofA stock rose back to Thursday levels. No one but daytraders can make money of that kind of stock action.

I'm not real worried about the permanent nationalization of the banks...too many 401K investors in public banks.

The immediate problem isn't that they don't have cash to lend and most of the losses reported are write-downs.

It seems as though Geithner is waiting to structure his plan before making any additional moves...the next obvious adjustment will be to tweak the current Mark to Market ratios.

http://www.investopedia.com/terms/m/marktomarket.asp

This, combined with the Treasury plan, should free up some capital.

 

[WhoWee]

Does anyone have any updates...any personal knowledge of Stimulus Projects moving forward or new jobs created?

 

[turbo]

Does anyone have any updates...any personal knowledge of Stimulus Projects moving forward or new jobs created?

Sorry. Some of those funds might go toward infrastructure projects (shovel-ready) but the jobs that they create will necessarily be seasonal in nature (we don't do a lot of road-building, paving, and bridge-repair when the ground is frozen). In addition, there could be bottlenecks that would further depress private concerns. My niece's husband is an experienced asphalt paver (generally foreman on small-to-med jobs) who ended up cutting firewood, etc, all last year because the high price of paving (petroleum-based) and the high price of diesel to transport the material, keep it hot, and fuel the spreaders and rollers caused private companies to cancel their paving projects. If you own a strip-mall and contracted to get the parking lot re-paved only to see the economy tanking and many of your best tenants going under, will you re-pave the parking lot? What will happen if stimulus money goes to high-volume infrastructure projects? I fear that production bottlenecks at local asphalt plants will not only starve small pavers of materials, but also price them out of the market. No matter how this plays out, the big bidders with the clout to take large state-sponsored projects will do OK. We may lose a lot more small paving companies this year.

I have highlighted only one narrow industry that I happen to know a bit about, both from work experience, professional experience, and family contacts in the smaller-scale businesses. I'm sure that there will be a LOT of unintended consequences.

 

[WhoWee]

Sorry. Some of those funds might go toward infrastructure projects (shovel-ready) but the jobs that they create will necessarily be seasonal in nature (we don't do a lot of road-building, paving, and bridge-repair when the ground is frozen). In addition, there could be bottlenecks that would further depress private concerns. My niece's husband is an experienced asphalt paver (generally foreman on small-to-med jobs) who ended up cutting firewood, etc, all last year because the high price of paving (petroleum-based) and the high price of diesel to transport the material, keep it hot, and fuel the spreaders and rollers caused private companies to cancel their paving projects. If you own a strip-mall and contracted to get the parking lot re-paved only to see the economy tanking and many of your best tenants going under, will you re-pave the parking lot? What will happen if stimulus money goes to high-volume infrastructure projects? I fear that production bottlenecks at local asphalt plants will not only starve small pavers of materials, but also price them out of the market. No matter how this plays out, the big bidders with the clout to take large state-sponsored projects will do OK. We may lose a lot more small paving companies this year.

I have highlighted only one narrow industry that I happen to know a bit about, both from work experience, professional experience, and family contacts in the smaller-scale businesses. I'm sure that there will be a LOT of unintended consequences.

We've had the same problem in the midwest for a long time with the construction industry.

But there has to be a project somewhere that someone can share...a lot of funds have been released.

I found this report in Ohio
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=AP&date=20090423&id=9833073
but there aren't any job estimates of timelines.