I have calmed down a bit since this post about the stimulus. I had an interesting discussion with part of my team of economic advisers a few nights ago that mostly centered around the stimulus. I do my best to summarize below.
- How much would you pay to end this? By this, I mean the general uncertainty and fear of a return to the 1930’s (or some derivation thereof). If you are okay with $3,000, that is about what the stimulus will cost per person in the U.S. If you tack on TARP1 and the TARP2 (coming soon), that number is much higher. For the sake of argument, let’s say it’s $10K. Our group agreed we would happily write such a check to end the uncertainty if we were able. Of course, TARPs 1 through N + Stimuli 1 through N are not a guarantee because nobody really knows what they are doing…which puts us back at square one.
- How do you feel about government assistance so that all qualified individuals would be eligible for 4.0% mortgages? This scares me because our government has been rigging things for many years to encourage home ownership and that didn’t turn out so well. That being said, I would be near the front of the line for a 4.0% mortgage.
- Psychologically, would it help if you saw your colleagues, friends, family start to relax and spend somewhat more freely again? Would an uptick in the stock markets help? This is part of the argument for the stimulus. The government is doing something and they must be smarter than me. Personally, I don’t think this would do much for me, but I can see how it might help others.
- Principles of Economics, rap version – This was not part of our discussion, but it’s fantastic and I think it should be distributed to high schools across the country.
- A proposal from Greg Mankiw – I like his ideas, but I think this is a political pipedream.
- Article by Steven Pearlstein – Nicely written and very level-headed. This helped me calm down about the stimulus in general.
I will leave you with these immortal words from Rhythm, Rhyme, Results:
Demand Supply, Demand Supply
Learn this and you’ll know why
We work, We buy, We work, We buy
You know the price is right when the competition’s alive