Obama Seeks Fast Action on Plan – WSJ.com

The soon-to-be Obama administration is pushing hard to get an economic stimulous package passed quickly:

The incoming president conceded that his American Recovery and Reinvestment Plan will “certainly add to the budget deficit” — projected to be $1.2 trillion for this fiscal year. But, he said, the alternatives to bold and expensive action would be unthinkable. “Equally certain are the consequences of doing too little or nothing at all, for that will lead to an even greater deficit of jobs, income and confidence in our economy,” Mr. Obama said.

…

Mr. Obama’s team has laid out some components of his plan: a $500-per-worker tax cut; tax write-offs for businesses suffering losses in 2008 and 2009; incentives for business investment; about $100 billion for health care, to temporarily take on more of the states’ burden for Medicaid and to finance computerized medical records; billions for old-style building projects targeting roads, bridges, water systems and schools; and billions more to foster alternative energy and energy efficiency.

via Obama Seeks Fast Action on Plan – WSJ.com.

It will be interesting to see what ends up in the final draft of this bill. Any economic stimoulous must have a high expected return to make up for the increased borrowing.

Technology Levels Playing Field In Race to Market Electric Car – WSJ.com

Advancing battery technology is drastically changing the way we make cars and in doing so is reshaping the automobile industry.  Newcomers, such as BYD mentioned in the article, are able to gain the aptititude to make modern electric cars much easier and faster than they could with  gasonline automobiles. Hopefully, the drive train components of electric cars can be made a commodity so that new manufactures can enter the market to compete on features and technology. 

“It’s almost hopeless for a latecomer like us to compete with GM and other established auto makers with a century of experience in gasoline engines,” said Mr. Wang in an interview, pacing and juggling calls in BYD’s headquarters on the outskirts of Shenzhen. “With electric vehicles, we’re all at the same starting line.”

It’s still a bumpy road to a full-blown era of battery cars. Punishingly high gasoline prices have come down, potentially damping the public’s willingness to embrace alternative-fuel vehicles. In addition to convincing consumers to try untested technology, BYD has to fight mistrust in the West of Chinese-produced goods. Safety has also come into question, as some of the lithium-ion batteries — widely believed to be the key to making viable electric cars — have shown a tendency to overheat and sometimes catch fire.

via Technology Levels Playing Field In Race to Market Electric Car – WSJ.com.

A Dose of Skepticism on Government Spending – NYTimes.com

Mankiw questions the Keynesian idea of  working our way out of an economic funk by boosting government spending.

WILL THE EXTRA SPENDING BE ON THINGS WE NEED? If you hire your neighbor for $100 to dig a hole in your backyard and then fill it up, and he hires you to do the same in his yard, the government statisticians report that things are improving. The economy has created two jobs, and the G.D.P. rises by $200. But it is unlikely that, having wasted all that time digging and filling, either of you is better off.

….

All these questions should give Congress pause as it considers whether to increase spending to stimulate the economy. But don’t expect such qualms to stop the juggernaut. The prevailing orthodoxy among the nation’s elite holds that increased government spending is the right medicine for what ails the economy.

via Economic View – A Dose of Skepticism on Government Spending – NYTimes.com.

Bloomberg: Blame the Ratings Agencies (Part I) from The Big Picture

An example of what I have been saying all along: the special status of Rating Agencies was pivotal in the excesses of the credit boom.

That day, a member of an S&P executive committee ordered him, the company’s top mortgage official, to grade a real estate investment he’d never reviewed.

The Big Picture | Bloomberg: Blame the Ratings Agencies (Part I).

The Bailout We Deserve

All the discussion has been about the Bailout being targeted at big wall street bankers. Implying that the government is going to spend 700 billion on helping those poor bastards with their yaht and third home payments. Luckily our Congress is fighting back against these big wigs and they’ve attached enough strings on the bailout package that there is now a chance that nothing will get done. Down with the Wall Street bailout, up with the Main Street bailout.

The problem is that this IS a Main Street bailout. The idea is to provide liquidity by purchasing toxic assets off of banking balance sheets. Yes, these are the same toxic assets that poor risk management has caused billions in losses at banking institutions. This will provide enough liquidity for normal business and interbank lending. Additional, this will (hopefully) send Banks back to making mortgage loans to people without enough to money to make down payments, credit cards for people with more debt than they make in a year already, and student loans to C students to get full rides at State Colleges. Guess what, big bankers, CEOs, and Wall Street titans are going to do pretty well of off this.

Cancel the bailout, it won’t hit the Wall Street titans or the big banks. They’ll just cut down on low probability lending and ride this one out. It’ll be a rough couple of quarters but they’ll come out ok. And they’ll still make more a small fortune. However, the small businesses that need to make payroll are going to have to cut back. Maybe delay a payment or two. Small banks that need to borrow money from larger ones to shore up their balance sheets are going to be left in the wind. Walmat will have no problem accessing temporary funding for their operations, but Ted’s Hardware probably will.

Other plans, such as mortgage restructuring plans are going to benefit those Wall Street big wigs too.

Now, I think there are plenty of things that can and should be changed in this bailout bill. However, with the popular rhetoric about “Bailout for Wall Street” I suspect we’re not going to get the bailout we need. We will however, get the Bailout we Deserve.

Dems decry Socialist Bailout, desire other Socialist Additions

Paulson urges ‘clean and quick’ OK – Sep. 21, 2008.

Democrats want the measure to include independent oversight, homeowner protections and limits on executive compensation, House Speaker Nancy Pelosi, D-Calif., said in a statement early Sunday evening.

So, the Dems want to decry that this “bailout” destroys market confidence and gives money to people who failed. However, they then would like to add “bailouts” for home owners and intervene in the executive compensation market.

You can be sure that limiting executive compensation in banking or other regulated industries will ensure that our best and brightest avoid these sectors.