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Mercnbeth -> RE: The checks go out today...... (4/30/2008 1:07:59 PM)
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ORIGINAL: Griswold
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ORIGINAL: Mercnbeth
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I'm constantly amazed at all the armchair economists there are in the press and in various social circles willing to spend significant ink and effort explaining why it won't do anyone any good.
Griswold,
Sure having an extra $300 is much better than not having $300. But the other factors should also be considered.
The taxpaying citizens are getting $28 Billion of the $100 Billion 'Economic Stimulus Package'. With all the happiness being expressed in this thread, I'm sure many votes for the reelection of the incumbents who passed the Bill. Although the emphasis was placed on the big check the people will be getting, there was $50 Billion allocated in the Bill for "business tax cuts". $50 Billion is $22 Billion MORE than the estimated $28 Billion going to individuals.
Its a great tactic. I guess history would be different if Marie Antoinette's comment "Let them eat cake!" were followed up and every Frenchmen received a 2 inch square piece of devil's food, pound, bundt, or pineapple upside down.
An amazing thing that eh?
Funny how the feds put that in the bill.
See...we're in a recession.
Recessions cause companies to lay people off, which makes people very cranky. It also makes them less likely to buy things like food, which tends to make the people hungry.
Sooooooooo....the feds did a silly little thing; They gave businesses financial incentives to make them less likely to lay people off thanks to investment opportunities which would make it more likely that via these incentives....that they'd hire people.
An amazing thing that, eh?
Gris,
Amazingly great for the industries; amazingly bad for the naive people who think this benefits them personally, long or short term.
Just received a phone call. My cost of funds was reduced again. Prime Rate dropped another 25 basis points. That means I'm getting stimulated again to the tune of about $7/day/Million. I don't qualify for a stimulus check but my stimulus will amount to about $3,100.00 more dropping to the bottom line; and I'll be getting that up until rates go the other way. Peanuts in comparison to the those applying the same numbers to their bottom line but have borrowings in the hundreds of millions if not billions, like Banks.
But of course your point is correct. This latest move will inhibit some financial institutions from failing. It will stop the momentum of some pending mergers and acquisitions of the weak. It did save some jobs for the time being.
It also assures that all those people who had their jobs saved will most likely be paying $5/gallon for gas by September. Not because the cost of oil has risen but because the value of the dollar will fall further.
Crude oil is now around $120/barrel; or 76.82 Euro. One year ago oil was selling at $62 dollars a barrel. The exchange rate for the Euro was 0.74; cost per barrel in Euro - 45.88. Using the Euro, oil has gone up 67%. Using the dollar the increase is 94%.
Why? Cheap money and these 'economic stimulus' programs; benefiting companies and industries that should be allowed to fail for their mistakes and their lack of foresight.
What would be more 'stimulating' a one time check to tax payers, or oil back at $62 per barrel? I don't hear many people who got their check say they were going to save it and proportion it out to pay their weekly fuel cost.
Prima Facie, you are correct. Some of those people wouldn't have jobs to go to; they would be economically dead. Instead now they are economically dying. Each day getting further behind that carrot being dangled in front of them.
The impact:
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“Every 10-cent increase in gasoline prices is like a $12 billion tax increase,” he said. “You don't need much of a rise in price to blunt the impact of the rebate. A lot of this money could well go into the gas tank and from there into the coffers of the governments of Iran, Venezuela and Saudi Arabia. Once it's there, it's gone (from the U.S. economy).” Source: http://www.signonsandiego.com/news/business/20080430-9999-1n30stimulus.html
Doing the math, if gas goes up $0.50/gallon and you use 20 gallons per week you're be spending $520 of your stimulus in a year. Add the extra cost for having your food delivered to your neighborhood store, heating, electricity, not to mention the interest the FED has to pay on the borrowed money; and the bottom line is that the average person LOST money.
Meanwhile, it doesn't look like things are getting better in the US or anyone who has invested here. It is a good thing that the US economy has such a great effect on the world preventing the rest of the world to allow it to fail. Otherwise, we experienced a 'run on a bank'; we could see a 'run on a country'.
quote:
BRUSSELS, Belgium (AP) -- The European Union on Wednesday approved a German bailout of WestLB, a regional bank that lost billions from U.S. mortgages gone bad.
Germany can now put up 5 billion euros ($7.8 billion) to help the bank ride out its exposure to the subprime banking crisis.
http://biz.yahoo.com/ap/080430/eu_germany_bank.html?.v=5
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April 30 (Bloomberg) -- Citigroup Inc., under pressure to bolster capital depleted by mounting losses, sold $4.5 billion of stock, 50 percent more than it planned. Source: http://www.bloomberg.com/apps/news?pid=20601087&sid=aEdkikTTTWwA&refer=home
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