Stimulus round 2

So apparently the economy completely went into the shitter fourth quarter.

"It's premature to say we need another stimulus, but the economy is performing much worse than when [the law] was signed, and the odds are increasing that we'll need a bigger policy response," said Mark Zandi of Moody's, who has advised Democratic lawmakers. "What we've learned is policy has been a step behind this whole downturn. It's important to get a step ahead."

The International Monetary Fund yesterday urged governments worldwide to consider additional fiscal stimulus, noting that the public sector must help prevent a collapse of confidence.

Consumer confidence in the U.S. economy has already been driven dangerously low by layoffs across nearly every sector. Last month alone, employers slashed 651,000 jobs from their payrolls, and job losses in December and January were far worse than originally reported, according to revised data released yesterday. Since December, employers have cut jobs at the sharpest pace since 1975.

But even the current job-loss figures mask the degree of pain among American workers. A broader measure, which includes people who want a job and have given up looking and those working part time but who want full-time work, rose nearly one percentage point, to 14.8 percent.
“I think what it shows is neither the government nor many economists have a grasp yet of how bad the economy really is right now,” said Bernard Baumohl, chief global economist at the Economic Outlook Group. “We can’t get our arms around what’s going on.”

There is little reason to think conditions for workers will get better in the coming months and many reasons to think the steep decline will continue; employment tends to lag behind overall growth in the economy by several months, and the nation, by all accounts, remains in recession. There have been some signs lately that consumer spending is stabilizing at low levels, but even if that trend holds up, it would probably take until summer for job losses to slow.

Economists are now calling into question whether the intricate suite of policies crafted by Congress, the Obama administration and the Federal Reserve are bold enough to deal with the scope of the economic damage.
“Up until the third quarter, we thought we were on track for a relatively moderate recession, but then in the fourth quarter, everything fell apart,” said David Wyss, chief economist at Standard & Poor’s.

The Obama administration’s budget, released in late February, assumes that the jobless rate will average 8.1 percent this year. That now appears unlikely, which in turn could make officials rethink their approach to the crisis.

Regulators, for instance, are conducting “stress tests” of major banks so that the Treasury Department can better determine what kind of financial support they might need. Those tests assume that, in a particularly bleak scenario, the unemployment rate will average 8.9 percent this year and 10.3 percent next year. But if the government projections on unemployment turn out to be too rosy, officials could underestimate the trouble banks are in. A higher unemployment rate means greater losses for banks because more people default on their loans.

Another stimulus?

Has the money for the first stimulus even really started to flow in any real quantity?

So Krugman was correct and right wing talking heads were wrong? Shocking.

You know, not once in that stimulus/monkey cartoon thread did the adbot call up a “shoot the monkey and win” topper. another victim of the ailing economy?

And is it wrong to visualize this stimulus check as a Blu-Ray player? Well, I mean a PS3 of course, just not for the games (except God of War 3, maybe?). Whatever, just don’t tell this guy that:

Seriously? He’s protesting the goverment sending us money? That guy’s a bit of a cocksucker.

uh oh.

What I get from the chart—apart from the realization that I have no future in graphic design—is that job losses from this recession are now worse than in 1981-1982, which is generally considered to have been the most severe economic downturn in the U.S. since the Great Depression. Barring a more or less unimaginable turnaround in the month or two, they will be much worse. Just look at how steep that brown line is!

One interesting idea I’ve heard for stimulus money is to release a special currency that loses value over time (generally a monthly stamp tax of 2% of the value) so that people spend it as fast as possible. It’s been tried elsewhere to fairly good effect, just not on this large a scale.

I was just thinking that they should mail people gift certificates for places that sell frivolous goods. Nobody’s going to save a gift certificate.

How about a pre-paid Visa card that depreciates 1% each month it isn’t used?

None of those things accomplish anything unless spending is close to 0 - most of that money will still just be saved, because people will use the expiring currency to purchase what they would have bought anyway and save or pay off debt with the money they would have used to buy that stuff.