Friday, 30 January 2009

Stimulus

Stimulus is an awful hard concept to grasp.

The reality of the concept for economics...is that you are triggering something that will shift positive numbers and help gain momentum. The $819 billion stimulus package has been questioned since day one. If you asked will it trigger a momentum push from day one.....the answer is yes. If you asked if you could delete half of the $819 billion and still get the same amount of momentum.....that answer might very well be yes as well.

Today, the "gang of fourteen" arose in the Senate. For Bush, this was a very tight and middle-of-the-road group with both Republican and Democrat leadership in it. These fourteen folks made the Bush projects very difficult.....particularly for the federal judge episodes. The tide now is turning....against the Obama crew.

I suspect that by the end of next week.....the "gang of fourteen" will have settled a great deal of debate and shifted momentum of this bill to rebuild itself. They could find various parts of this package which irritates the Republicans and trim almost $200 billion off the amount. For Pelosi, its a win, but a soft win. Considering the fact that the states are lined up and waiting for this to pass before they haul their $1 trillion package up....anything here that passes....is positive.

For the Obama team, this is an amusing episode. They could have passed the entire package through the House and the Senate, with 10 percent less fat on this, with zero support from the Republicans. There never was any need to make them happy. I suspect now that a small number of Democratic senators had issues from day one, and they already knew that they would have trouble.

The truth of the matter is that the "real" Democratic party has maybe 30 members in the senate and the "real" Republican party has maybe 20 members. And the other fifty are simply pretenders who will vote on both sides of the aisle. Few people grasp the composition of the senate and realize that most of these guys aren't absolutely dedicated to their party line.

There will be stimulus in the end, and it might help a small bit.....but the honest truth is that you could do the same thing with $400 billion, that you could do with $800 billion. That ought to make you stand and think about the reality of this mess.

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