stimulus package

Sometimes I wake up in the middle of the night thinking about the strangest things. I should be like Dagwood and go down to the kitchen to make myself a sandwich, but instead I fire up my computer and start Googling. It’s less fattening, I guess.

I awoke last night wondering whether, in the wake of the Federal Government takeover of GM and Chrysler, the Feds were favoring their new subsidiaries when it came to buying government cars. Instead of returning to my vivid dream of being stranded on a desert island with a bevy of Singapore Airlines stewardesses, I decided to look it up. I couldn’t find any conclusive evidence one way or another, but I did learn a few interesting things.

One provision of last year’s Recovery Act (aka the “stimulus package”) was the Energy-Efficient Federal Motor Vehicle Fleet Procurement program, mandating the purchase of thousands of fuel-efficient cars from American car companies. I know, I missed it too the first time I read through the 1,400 page law. According to Edward Niedermeyer, writing on a blog called “The Truth About Cars,” a Freedom of Information Act inquiry to the General Services Administration revealed that as of June 2009 a total of 17,205 cars were purchased under the plan, of which 7,924 came from Ford, 6,348 from GM, and 2,933 from Chrysler. So there’s no indication the Feds bought more from government-owned GM and Chrysler than their relative market shares and/or production volumes would suggest. [click to continue…]

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In yesterday’s New York Times Janet Yellen, President of the Federal Reserve Bank of San Francisco, is quoted as predicting a slow drop in the U.S. unemployment rate, now 9.7 percent, to 9.25 percent by the end of this year and 8.0 percent by the end of 2011.  This is pretty anemic in view of her forecast of 3.5% GDP growth this year and 4.5% next year, a robust performance for a mature economy, though she attributes much of this growth to reduction in inventories rather than growth in sales. Ms. Yellen doesn’t foresee a return to peak economic performance and a corresponding drop in unemployment until 2013. The cause, she says, is clear: an increase in business efficiency and labor productivity, which she says, “is here to stay.” [click to continue…]

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Paul Krugman, who won last year’s Nobel Prize, is one of the most talented economists working today, and also one of the best writers in the profession. He is a liberal Democrat and I am not, but his op-ed piece in today’s New York Times is the best dissection I have yet seen of the flaws of the latest bank rescue plan which, as Krugman points out, is essentially a rehash of the original, and failed, Bush-Paulson Troubled Asset Recovery Plan (TARP).

I won’t try to paraphrase Krugman’s article here; he says everything that needs to be said far more eloquently than I could, and you should definitely read the article, available on http://www.nytimes.com/2009/03/23/opinion/23krugman.html?_r=1&ref=opinion. It is right on every count. [click to continue…]

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Once upon a time there was something called the “Washington Consensus,” a set of economic policy prescriptions championed by the World Bank and the IMF and endorsed by all of the large industrialized countries. The main pillars of the consensus included:

  • Fiscal discipline;
  • Reducing government spending on subsidies for businesses, farmers, and consumers in favor of increased spending on things like education, health care, and infrastructure;
  • Tax reform – broadening the tax base and lowering tax rates;
  • A market-based approach to interest and foreign exchange rates;
  • Liberalizing trade by getting rid of licensing requirements and lowering import duties;
  • Liberalization of inward foreign direct investment;
  • Privatization of state enterprises;
  • Getting rid of regulations that impede market entry or restrict competition, except those that protect the environment and public health and safety ; and,
  • Reinforcing property rights. [click to continue…]

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For most of my professional life I have been pretty much a single issue voter. I’m not talking about abortion or gay marriage, but trade. I’m in favor of it. That has normally caused me to vote Republican, though I was reasonably happy with Clinton as President, mainly because of his solidly pro-trade stance and his vigorous promotion of NAFTA and AGOA (the Africa Growth and Opportunity Act). As much as I disliked Bush 43, I thought he was sounder on trade than Gore or Kerry.

This time it was different. [click to continue…]

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