Daily Archives: Monday, February 9, 2009

When the American economy enters a downturn, you often hear the experts debating whether it is likely to be V-shaped (short and sharp) or U-shaped (longer but milder). Today, the American economy may be entering a downturn that is best described as L-shaped. It is in a very low place indeed, and likely to remain there for some time to come.

continue reading here:  http://www.vanityfair.com/politics/features/2008/11/stiglitz200811

And here’s Robert Reich on the stimulus bill (he gives it an A minus)  http://www.talkingpointsmemo.com/archives/2009/02/tpmtv_talks_to_robert_reich.php

h/t Greg Sargant, the plum line

Brad DeLong:

“The compromise is worse than the original bill because it is smaller, and the changes appear to have reduced rather than increased the bang-for-buck effectiveness of the bill.  Ben Nelson and Susan Collins don’t appear to have understood what they were doing very well — the point is to keep lots of extra Americans from being unemployed for the next two years and have them, instead, do useful things for the country. Nelson and Collins, well, it’s not clear what their objective is.”

Jeffrey Sachs:

“comparing the House and Senate versions, the Senate version is clearly worse: more tax cuts, less infrastructure, and less in transfers to state and local governments. Immediate and sizable spending increases in the stimulus package should be directed to a few areas: significant support for our crisis-ridden state and local governments [just what got cut in the Senate], especially for health (Medicaid), education, and other urgent public services; income support (unemployment, anti-poverty including food stamps and child nutrition); health care coverage for the uninsured (as well as adequate Medicaid funding mentioned earlier); and a significant multi-year rollout of infrastructure of all sorts (roads, rail, other mass transit, ports, water, energy, broadband, etc.).”

James Galbraith:

“The behavior of the so-called bipartisan group has been outrageous. On the economics, they are pretending to know things they can’t possibly know: specifically, (a) how deep and serious the crisis actually is, and (b) what is ‘stimulus’ and what is not. The reality is, professional economists have no clear idea how bad things can get….. The cutbacks to state aid have every potential of being disastrous. What they really reflect is the indifference of people who represent places like Nebraska and Maine to what goes on in New York or California.”

Menzie Chinn:

“I don’t understand the direction of the movement toward cutting spending. Cutting the transfers to the states seems particularly ill-advised, as we have a good feeling that the propensity to spend out these funds will be high and relatively quick.”

Last group of quotes taken from http://www.huffingtonpost.com/2009/02/09/the-800-billion-gamble-ec_n_165146.html