Archive for the ‘Wall Street’ Category

A year after Barack Obama’s historic election, one of his most contentious programs has been the $700 billion stimulus package. Here’s a clip of Lewis Black explaining John Maynard Keynes’ theory of how public works projects can stimulate the economy in his own inimitable (and be warned, very foul-mouthed way):

Now, just in case you’re thinking “that’s just crazy comedian talk and has no basis in proper economics” here’s the view of Keynes himself from “The General Theory of Employment, Interest and Money”:

“If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coal mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.” (p. 129)

So while Barack Obama may not have been thrilled about having to spend such a huge amount of money getting the American economy going and saddling the American taxpayer with such a large debt (yes, I said it), is was absolutely the correct thing to do. In this instance, to compromise the spending aspects of the package to appease Republicans (the people who, to a large extent, created this mess) in the name of bipartisanship could have led to the Great Recession becoming the second Great Depression and may have left future generations with an even more unmanageable National Debt. The world is now in the thankful state of seeing a light at the end of the tunnel, just over a year after we faced economic catastrophe, as the recession ends (at least technically) in many countries and hopefully we can get back to job creation in the new year…

 

The Bank of England dropped interest rates another half a percent, bringing it to a record low of 1.5%, causing City Workers to wet themselves with excitement. Because of course, as they all knew, that pathetic 1.5% drop in November followed by a wimpy 1% cut in December would obviously not be enough to kick-start the economy, but that this historic 0.5% adjustment will obviously send the economy rocketing upwards. At the risk of repeating myself, it’s really looking like we’re pushing on a piece of string, as Keynes would say. I could be wrong, maybe somewhere around 1%, everybody will get the mother lode of money from their banks and go on a crazy spending spree. Maybe those of you in US can clear that up and let me know if a 0% rate has brought about a new economic paradise.

Meantime Obama is forced to twiddle his thumbs in a hotel room and come up with economic plans that may be of no use by the time he even gets into office. Hey, reality show idea, why don’t we allow Obama into the White House early and force George Bush, John Howard and Tony Blair to stay in the Big Brother House with a volatile mix of Iraqis and shoes.

Firstly, a very Happy New Year to everybody. However, I have this weird feeling of still being stuck in 2008 with all it’s problems at least until January 20th. Because as long as Still President Bush is in office these problems sure as hell aren’t going to get solved. So it feels like we’re all sitting in a lifeboat waiting for the coastguard and hoping that nobody does anything to cause a leak (Dammit Israel!!!). They say a week is a long time in politics, so the next three weeks are going to feel like a lifetime. And what an in-tray President Obama is going to have on his first day: Fix the global economic crisis, arrange for an orderly withdrawal from Iraq, save the American motor industry while ensuring its long-term viability, achieving energy independence and solving global warming, stopping a resurgent Taliban and getting Israel and Hamas to talk just after a pretty severe deterioration in relations that weren’t the best to begin with. So…no pressure then.

I know what you’re thinking – Obama hasn’t even taken office yet – how is it possible to judge whether voters chose the right president already. Well let’s take a quick look at events from the last few days:

– President-Elect Obama has gathered some of the top economic minds in the country to come up with ideas as to how to stimulate the country out of recession. He has received messages from Chavez, Ahmedinejad and the leader of Hamas, indicating that they are willing to talk.

– The Republicans have continued name-calling, only now they’re insulting each other, with McCain aides calling Palin a “diva” and Palin responding by calling them “jerks”

So I may be proven wrong yet but it certainly looks like yes, America made the right choice


Welcome back, USA, to your rightful position as inspiration to the rest of the world. You have restored our faith in you and your ideals, quite simply by moving back towards them. Because when most people in the rest of the world question the USA, it’s not because we are questioning the ideals, but rather whether America’s actions are consistent with these ideals. And on Tuesday, you took a giant leap towards these ideals.

I didn’t post yesterday because I had to stay up until 4am UK time to watch the moment in history and thus got only five hours sleep. I have been lucky in my shortish stay on this earth to witness a few great moments in history – the fall of the Berlin Wall, the release of Nelson Mandela and the end of apartheid, the end of Northern Ireland’s Troubles – and that moment was right up there with them. It brought tears to the eyes of both my wife Meri and me. And it wasn’t just us – the entire presenting team of ITV News choked up at some point (except for poor Bill Neely, stuck in the McCain party and looking freaked out by their refusal to relay Obama victories to the crowd). John Irvine at Grant Park could hardly contain himself – He looked like he had been drinking with some college students and was ready to surf across the crowd.

And of course everybody over there was emotional with good reason. It was amazing to watch Jesse Jackson (who had been so critical of Obama previously) overcome by the enormity of what was happening. On Tuesday the American People made a massive choice. You chose hope over fear, unity over division, excellence over mediocrity, positivity over negativity. This truly was the people’s election and restored the faith of people around the world in American Democracy, giving us all hope that things will work out in the future and for that I thank you.

If you’re still undecided, firstly make up your freakin’ mind!!! There’s less than forty-eight hours left!!! After 20 months, countless debates, numerous interviews and millions of ads, what more needs to be said?? Anyway, hopefully this list, compiled with my wife Meri (http://merihayden.wordpress.com) will swing it for you – if it doesn’t nothing will.  

1. Obama’s awesome jumpshot

2. Joe Biden has the whitest teeth on the planet

3. Neither one is Sarah Palin

4. Obama would never mix up a French-Canadian radio host with Nicolas Sarkozy

5. Obama looks like a GQ model (settle down Meri! – Sam)

6. Wardrobe budget will be considerably less

7. Between Obama’s booming voice and Biden’s intense eyes, they’ll scare the crap out of Bin Laden

8. Frees up Palin and McCain to pursue their own successful careers in TV and radio sketch shows

9. Keynesian plans to grow the economy from the bottom up (lighten up Sam!-Meri)

10. It’ll be a complete lurvefest

So the Fed, in its eternal wisdom, is dutifully following Monetarist orthodoxy by cutting interest rates by half a percentage point. So what is the rate at now? 1%!!!!! Has nobody in the government realised that this is not working???!!!! Do they seriously believe that they are not, as Keynes put it, pushing on a piece of string???!!! Confidence is in the toilet, there’s nowhere else to go with interest rate cuts, it’s becoming an exercise in futile grandstanding for the business media. Nobody is spending. And John McCain wants to freeze government spending, the only way the government can guarantee that money gets spent to stimulate the economy!!!

Now the stock market went up yesterday in anticipation of this cut, but then the stock market went up in anticipation of the bailout that was demanded from the banks and when it was confirmed, the market proceeded to plummet. So how long will this bounce last, before stocks drop again? Seriously, I’m beginning to wonder whether all the decisions on Wall Street, the City of London and other financial centres are being fuelled by traders’ well-documented consumption of cocaine! Because there seems to be absolutely no reason at all involved. Should we start testing all market traders for drugs on a weekly basis and banning those who fail it?

In the light of all this, it is economically irresponsible for John McCain, Sarah Palin and the rest of the Republican Party to equate the modest taxation and spending plans of Barack Obama with socialism in an effort to scare people into giving them four more years of cronyism. In fact, it’s so irresponsible it’s practically Anti-American.