Gary Rumor’s Anti-Entropic Continuum

Economists at the Urban Institute on CSPAN are talking about the stimulus package. These economists are saying the Stimulus bill was too small and should have been more like $1 Trillion dollars. They are not sure if the Stimulus package has come to a head yet. The CBO analysis claims that the stimulus will reach it maximum impact in 2010. Private analysis all say the impact reached its peak in the fall of 2009. Most of it is infrastructure spending and not really a stimulus package. They think infrastructure is a cumbersome method of providing economic stimulus. At least according to Rudolph Penner former director of the CBO. A job tax credit might help but it may not be as efficient as it could be. Mark Zandi of Moody’s Economic Advisor wants to see a Jobs Tax Credit to stimulate job growth.
A major problem is a lack of credit for small businesses and the President wants to add $30 Billion from the TARP money as a low interest loan for small businesses. Mark Zandi thinks the Small Business Administration should have access to distribute the funds.
Rudolph Penner says a foreclosure mitigation program is hard to design. He says push Freddie and Fannie Mac/Mae to run credit at a loss for the time being. He thinks the housing market has reached its bottom. Zandi thinks the housing tax credit helped, but he said the is a risk of a double dip in the housing foreclosures. He wants to change the modification plan. Zandi says that any mortgage from 2005 until 2008 was a bad loan and should not be honored. He would have a plan for principal write down to 105% to give them a reason to fight to keep that home. With a claw-back that says if you miss a payment you are out. This helps the banks but it is a way to keep people in their homes.
He is saying we consider this as a one time solution. But it is interesting to see establishment types calling for a home Mortgage Jubilee.
Infrastructure spending is good in itself but it is not a good way to stimulate the Economy according to both of these economists.
One commentator is saying why not do a claw-back of the buyouts. Capital was miss allocated and we should reallocate. We should let big companies fail.
Zandi is saying there should be a permanent Too Big to Fail tax because these large entities are getting cheaper capital and this should be an equalization tax on them for getting access to this less expensive social capital. The TARP tax is on companies of over $50 Billion dollars who got TARP funds.
We have a structural problem with a lack of jobs. Where are the jobs going to come from is what one person viewing is asking. Penner thinks things are so bad that they have to bounce back. Home buying and car buying are about half what they should be. Over half the GDP is in the emerging economies. We need to figure out what to sell them. Lawyers, economic consulting services etc are here and as long as people want to come here we can expect to see growth in the American Economy. Interestingly they did not say anything about the new green economy.
$172 Billion of the $787 Billion stimulus bill has been paid out and $384 Billion has been promised but not spent.