Re: [Pen-l] Democrats to placate Republicans on recovery plan

[Doug Henwood <dhenwood@xxxxxxxxx>]

> Gulick:
>
> Admittedly I was exaggerating for effect... but apparently not so  
> much so that you
> deemed my post unworthy of your attention ;)
>
> Two retorts: 1) When I composed my remarks one thing I had in mind  
> was a worsening
> financial crisis and a worsening "real" (sic) economy. I was  
> thinking in particular of the coming
> plague of credit card/car loan/etc defaults, and the chimerical  
> credit derivatives that will
> fail to prevent lender insolvency. Will this not take the edge off  
> the stimulus package?

For sure, especially if all that happens. It's possible that a big  
stimulus package could stabilize the real sector enough to keep the  
financial sector afloat. Of course, it's also possible that it won't.

> 2) I have witnessed you comment yourself that the bulk of the  
> package will simply put
> cash in the hands of heavily indebted households and they will use  
> said cash to ameliorate
> said debt loads.

Yup, but that would help stabilize the financial sector. Isn't that  
what the populists want anyway?

> Henwood:
>
> ...even the wet dream legislation of Barry, Larry, and Tim couldn't  
> get through the Senate.
>
> Gulick:
>
> You follow this stuff for a living and I don't. Please enlighten me  
> as to what whets the wet
> dreams of the aforementioned triumvirate. Do you mean the emergent  
> TARP stage two proposal
> which looks to be an even bigger rip-off than the "bad bank" rip- 
> off? Or do you mean their ideal
> stimulus package (the content of which eludes me)?

Summers had been arguing against big tax cuts and for infrastructure/ 
green jobs, on the grounds that the last thing the U.S. economy needs  
is to sustain overconsumption - instead, what we need is higher  
investment and new dynamic sectors to generate long-term growth. The  
Reps don't like that at all.

Doug
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