Professor Elam

Robert Samuelson puts  the idea of an economic stimulus in perspective.  This is important as of course eveyrone will be talking about it.  Basically the idea is either a one time ‘check’ or a short term tax cut like a tax credit for this year’s filing, or worse, some kind of federal spending program. Consider this

Despite all the negative stories, the total market for single family mortgages is about $14 Trillion. The write offs thus far are about $200 Billion.  Which is to say nine zeroes of write offs in a  twelve zero market, not a big deal.  Samuelson also points out that housing is about 5% of the total economy.

So at the end of the day, the big bank and brokerages minimized their real exposure (had you done this it would be called a lie, on Wall Street it is known as fell short of initial estimates….), politicians and both parites will pander to voters as though $250 is really going to change your life or the overall economy, by the way, where did that $250 come from, and by the time they do all this the stock market will probably have run it course and hit bottom anyway. 

Larry Lindsey was Deputy Secy of Treasury under Rubin in the Clinton administration. He weighs in wtih his thoughts in this article, less spending, lower taxes, I will vote for that.

Your take?