Daily Archive: June 8, 2009

BBC NEWS | Business | Obama pledges 600,000 summer jobs

BBC NEWS | Business | Obama pledges 600,000 summer jobs.

One thing I know is that there is a lag when it comes to fiscal policy.  The government spends the money, but creation of jobs takes a bit of time as projects are identified, and certainly hiring into those jobs takes time, then income, then willingness to spend, then GDP rise.  

But I wonder how long the lag usually is.  This is something we never studied really in my macroeconomics classes.

I also wonder whether the fear of spending for the sake of spending (which is actually kind of okay when the goal is to SPEND above all else) made selection of “shovel-ready” projects a lot more difficult.  So even if a project was ready to go there was still more scrutiny, so it took longer to get going, so jobs are still falling.

Smart move: Feds refuse to buy troubled assets with TARP – Jun. 8, 2009

Smart move: Feds refuse to buy troubled assets with TARP – Jun. 8, 2009 .

I am usually not one to question Allan Sloan (but who am I to say I do or do not question person X or Y – I’m kinda nobody), but this is kind of a strange argument.

Okay, in our 20/20 hindsight, maybe, just maybe, the Treasury’s switch-a-roo with TARP to invest in bank equity instead of buying off troubled assets wasn’t so terrible.  I still think it’s lousy to have done that, but maybe Sloan has a point that the obstacles of figuring out exactly how to value those troubled assets might have killed the effort in the first place.

But we knew about those obstacles.  And I think the folks running TARP had a pretty good amount of leverage they could wield.  And, finally, Sloan’s use of the problems other, quasi-similar programs have faced as reasons why TARP would have been just have difficult to implement is a weird way around.  Just because another program has had problems doesn’t mean TARP would have had such problems.

And those assets are still sitting on bank balance sheets.  Massive recapitalization is still needed.  Hm.