Wednesday, August 26, 2009

Making Money in a Desperate Economy

The president of the United States of America, Barack Obama has come up with some very innovative and interesting ways to dig his country out of the economic hole it is in. However, many Americans are becoming quite impatient with his plans and fears about a prolonged recession are now beginning to take a toll on not only the psyche of the people, but also on their confidence in the president and his administration. The following article from written by Matthew Benjamin and Alison Sider will give further insight:

July 17 (Bloomberg) -- The debate over whether the $787 billion stimulus package is sufficiently large or efficiently designed obscures a broader question, some economists say: Can any fiscal measure pull the economy out of the recession?

With credit still crimped and the outlook for consumer demand gloomy due to rising unemployment and increased personal saving, no amount of government intervention will be able to stanch the hemorrhaging of jobs and quickly ease the U.S. out of its deepest recession in a half-century, they said.

“Many households that want to borrow can’t, and many that can borrow won’t because they now must save for retirement the old-fashioned way,” said Richard Clarida, global strategic adviser at Newport Beach, California-based Pacific Investment Management Co., the world’s biggest bond-fund manager. “As a result, the multiplier from even a well-designed stimulus package is likely to be quite modest.”

The stimulus plan passed in February “is executing pretty much as expected,” yet it “won’t affect the economy’s primary problems, which are falling values of assets like homes and stocks,” said Doug Holtz-Eakin, who was director of the Congressional Budget Office from 2003 to 2006 and is now president at DHE Consulting LLC in Washington. So far, about $60 billion in spending and $43 billion in tax relief has been dispensed, accounting for 13 percent of the plan’s total.

To read the article in its entirety follow this link: