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« A Costly Error in Analysis | Main | Did President Bush Cause the Market Rally? »

November 12, 2008

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MurrayR

There are two reasons stimulus packages are popular economic issues:

* Politicians like excuses to spend more of our money.
* And the public is made to think that they are bound to work, because politicians and the media promote it as a one-sided thing. So, it seems obvious that if government spends more money – or cuts taxes – the economy is bound to improve.

http://www.contrarianprofits.com/articles/the-risks-of-a-1-trillion-government-stimulus/9123

inthewoods

"If you were a bank manager with TARP funds, would you choose to strengthen your balance sheet in the face of declining assets, or make more loans? Simply instructing them will not work."

Wouldn't that line of argument imply that you should use a club instead of incentives? Or I guess we're using neither a club (no real requirements), nor incentives (such as lower interest rates if you loan the money vs. keeping it on your balance sheet).

Whole thing is a disgusting mess - Morgan Stanley borrow $10b at the window then pays out $10b in bonuses. I have no problem paying bonuses if they are earned but good god that's ridiculous.

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