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What a week!
By Jon Menaster | January 26, 2008
Wow. That’s all I can say after taking in everything that was this week in the markets. Monday, January 21st, saw huge sell-offs worldwide as everybody panicked over a potential United States recession. Then come Tuesday, the Fed himself panics and decides on a non-scheduled 75 basis point cut in the interest rate, the largest such cut ever. Ever! I mean, wow. And since then, all the markets worldwide have been going up, and down, and up, and down, in moves gyrating enough to make even the most seasoned rollercoaster rider sick. What do I think? I just try and tune out the noise! Of course, I’m in a unique position and you may not be able to do that. Well, lucky you, the amazing federal government will ride in on its gold plated horse and offer you nothing less than.. free money!
Yes, that’s right, the House, Senate, and President all managed to agree on one thing - that they didn’t want to look bad in an election year! So they worked out a nice pretty little economic stimulus package - how quaint! As discussed in the Times article,
The centerpiece of the plan is a rebate of as much as $1,200 per household — even more for families with children — that could be mailed to most taxpayers as soon as late spring. The package also includes temporary tax breaks to encourage businesses to expand and create more jobs this year.
Hmph. Sounds great. How much will it cost the government, you say?
The cost of the economic stimulus package, some details of which remain murky, would be roughly $140 billion — $100 billion for the rebates and $40 billion for the business tax incentives. Leaders have set a deadline of Feb. 15 for passing the legislation, although it remained to be seen whether the Senate would leave the deal intact.
Wow. $140 billion. Almost the cost of a year’s worth of the war in Iraq. I wonder how we intend to pay for all this, what with the ballooning federal deficit. Ah, that’s right, borrow some more. Or wait, even better, why not just print more money? That sounds like fun!!
As you can see I’m being entirely too cynical about the matter, but nonetheless I think we need serious reforms to our budget along with the tax code to really see any long term change. This “shot in the arm” stimulus package is entirely dependent upon.. drumroll please.. people irresponsibly spending the tax rebate checks they receive! If people just take the cash and stash it in a bank, why the economy won’t get much stimulus at all (except for the banks. lucky them.) If, on the other hand, people take that tax rebate check and spend it wildly, everybody wins! The corporations have more money to make their annual profits rise, and the people have.. more junk they don’t need. Hmph. And isn’t overconsumption and overextension of most people’s finances what really got us in this mess in the first place? Plus, with all this money printing/money borrowing and cutting interest rates, that tends to.. raise inflation! If the measures the government took this week don’t help, but hurt, we’ll even have a potential for some stagflation! Bottom line: if you get money back, save it for the rainy day which is sure to come. Try and keep your budget balanced, even if the government can’t do the same. You’ll be better off in the long run avoiding debt in general. Till next time meat popsicles, away!
Topics: Business, Money News |