A real solution that can buy us the time we need...

Quote from DisciplinedHedg:

Your solution is little different than what has been done. Banks have been given low cost capital for lending. But they are not lending. Businesses are declining in this economy, so why would they lend?

Employers given low cost workers will still not hire as much as you think. Again, businesses are declining in this economy, so why would they hire?
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The analogy with the TARPP holds no water. The funds went down a black hole of worthless markers, they added nothing to the bank's balance sheets, you have to get back to par before you do that and they are still so far under par.

I can only go by my own experience and that of fellow business owners and I can assure you that there would be a hiring frenzy. There is plenty of work. Even if only 4M were added back to the rolls the resulting economic activity would account for another 500k-1M hires alone.
 
Quote from Mvic:

The analogy with the TARPP holds no water. The funds went down a black hole of worthless markers, they added nothing to the bank's balance sheets, you have to get back to par before you do that and they are still so far under par.

I can only go by my own experience and that of fellow business owners and I can assure you that there would be a hiring frenzy. There is plenty of work. Even if only 4M were added back to the rolls the resulting economic activity would account for another 500k-1M hires alone.
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True, one reason banks are not lending is that many are insolvent. My point was that there is also the matter of return on capital. Why would they lend when assets are depreciating, unemployment is increasing, and business revenue is declining everywhere?

I've spoken to neighbors and friends who own businesses as well and they are not hiring. They acknowledge that they could hire on the cheap since so many are looking for jobs, but it matters little. They still are not hiring. Why would they? Conditions are worsening.

Maybe your business contacts are all in unique niches of the economy. But "hiring frenzy" and "there is plenty of work"?

Please elaborate.
 
Quote from Mvic:
Seriously though, thank you for your input, unfortunately the reported stimulus does little to create the economic activity you describe (I assume you have not read it as it bears no relation to your post) where as hiring 4M-8M would do exactly what you describe. In a normal cycle I agree, you would be correct but I think you will have to agree that what we are facing is far from normal and not caused by the normal boom bust of a business cycle. This is a temporary fix for a crsis of confidence in consumers and credit, just as the stimulus is. The people who have been laid off were doing work before they left, they weren't just sitting around doing nothing, infact many of my IT freinds complained of being worked harder than ever with each successive round of layoffs so I take issue with the work not being there.
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Excellent points! I freely admit that I've not read the 700 some-odd pages of the stimulus bill. I would hope (perhaps in vain) that the jobs created by the stimulus bill would be the kinds of jobs that create more jobs rather than the kind of make-work jobs that merely keep people off the street.

I do agree that this is no minor business cycle burble. The U.S. economy has serious structural issues that won't be fixed by throwing a few extra dollars in people's wallets. This crisis is less about confidence and more about an economy that has far too many houses, too many car factories, too many retail outlets, etc. Most of all, the U.S. economy contains far far too much debt (as you rightly point out). Until the U.S. economy can redeploy or redevelop it's assets so that it does not depend on a merry-go-round of borrowing, it won't recover.

I think your proposal for subsidizing job creation is good, timely, and cost effective because it gives power to entrepreneurs who know that they could generate more economic activity if they could just afford a bit more labor. That's very powerful. I doubt it would help all sectors of the economy (e.g., we still have too many autoworkers, housing contractors, and retail clerks), but it would go a long way toward restructuring the economy.

The experiences of the newly laid-off and the over-worked folk who are left behind speaks volumes about the threat of deflation. Your observations suggest that some companies clearly have work to do, but they don't have the revenue to pay for that work. Company's inability to keep prices high enough to keep all their workers on the payroll shows how weak the economy is. Subsidizing new jobs lets companies deflate labor without paying workers less.
 
Quote from DisciplinedHedg:

True, one reason banks are not lending is that many are insolvent. My point was that there is also the matter of return on capital. Why would they lend when assets are depreciating, unemployment is increasing, and business revenue is declining everywhere?

I've spoken to neighbors and friends who own businesses as well and they are not hiring. They acknowledge that they could hire on the cheap since so many are looking for jobs, but it matters little. They still are not hiring. Why would they? Conditions are worsening.

Maybe your business contacts are all in unique niches of the economy. But "hiring frenzy" and "there is plenty of work"?

Please elaborate.
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The hiring in my area, Boston, would be in healthcare (nurses, techs, secretaries, social workers etc), and IT(programmers systems guys) that I know of. I am sure here would be a lot of hiring that I in areas that I am not familiar with (for example I asked my mechanic this evening if he would hire an additional worker if he got a check from the government for 66% of the worker’s salary, he said in a heartbeat!) Did you ask your friends and neighbors if they would hire someone if they received a matching grant for 2 years from the government? What business are they in and what area of the country (I will admit that here in the Boston area things may be a lot better than elsewhere and that might be skewing the responses that I am getting). As far as IT goes I talked to a friend who works at HP and another at Novel, both of them have escaped several rounds of layoffs and are saddled with more work than they can cope with, the guy at HP is working late in to the night just to keep up and not get laid off and he is in his 50s and has been at HP for 12 years! The work is certainly there for re-hires in those companies. Literally hundreds of social workers have been cut here in the Boston area and they were snowed under will ridiculous case loads BEFORE the cuts! The work is there.

If I am wrong and only a million are hired or rehired, well then the cost is that much cheaper, only $26B, but the point is that this is the most effective way to get $ in to the economy again and generate economic activity. In this respect this plan is a no lose proposition. The upside is that a lot of people are hired, if the money is not applied for by companies because they don't hire then it is at least not money poured in to useless initiatives that fail to provide any benefit. Here there either is a benefit and someone is hired or there is not and no money is disbursed.


I understand that the concept of subsidized workers is anathema to many and as somewhat of a libertarian I am one of those but it is clear that we will be having a stimulus of some kind and I think that in this unusual situation some governmental assistance is warranted. My plan offers the most for the least (always mindful that this is borrowed money) while leaving decisions in the hands of corporations, and also leveraging their private money too.
 
Quote from Traden4Alpha:

Excellent points! I freely admit that I've not read the 700 some-odd pages of the stimulus bill. I would hope (perhaps in vain) that the jobs created by the stimulus bill would be the kinds of jobs that create more jobs rather than the kind of make-work jobs that merely keep people off the street.

I do agree that this is no minor business cycle burble. The U.S. economy has serious structural issues that won't be fixed by throwing a few extra dollars in people's wallets. This crisis is less about confidence and more about an economy that has far too many houses, too many car factories, too many retail outlets, etc. Most of all, the U.S. economy contains far far too much debt (as you rightly point out). Until the U.S. economy can redeploy or redevelop it's assets so that it does not depend on a merry-go-round of borrowing, it won't recover.

I think your proposal for subsidizing job creation is good, timely, and cost effective because it gives power to entrepreneurs who know that they could generate more economic activity if they could just afford a bit more labor. That's very powerful. I doubt it would help all sectors of the economy (e.g., we still have too many autoworkers, housing contractors, and retail clerks), but it would go a long way toward restructuring the economy.

The experiences of the newly laid-off and the over-worked folk who are left behind speaks volumes about the threat of deflation. Your observations suggest that some companies clearly have work to do, but they don't have the revenue to pay for that work. Company's inability to keep prices high enough to keep all their workers on the payroll shows how weak the economy is. Subsidizing new jobs lets companies deflate labor without paying workers less.
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Thank you for making the point better than I could have, as I said I am no wordsmith.
 
These fools in DC think that can still play their silly games while the ship is sinking. Mark my words, they will pass this nonsensical stimulus, it will do little to nothing. They will implement their flawed banking save, it will do little to nothing. In less than a year the loss of jobs will not have been stemmed, the banks will still not be lending, the consumer will still not be spending. A new stimulus will be discussed and jobs this time will be a real focus, not just a scare mongering tactic. This time they will say that we have tried the private sector and it doesn't work and they will dredge up the old TVA and projects like it as examples of what has created jobs in the past. Massive government jobs will be created with very low wages but they will cut off unemployment so people won't have a choice. Then people will truly understand the term wage slave. By then it will be far too late for any job creation plan leveraging the private sector anyway.

I feel sorry for the millions in 1st world countries who are about to experience the misery that those in developing nations know only too well. On the plus side there will be lots of cheap assets to buy for those will cash, new Buffet's will be born off the backs of this crisis in the next few years. Time to sit this out and wait for the societal crash, any attempt to stave off what is coming is futile because those in charge of the system either have no incentive to see it saved (the wealthy), or are too myopic to see beyond their group's self interest (most of the dems and gop), or just don't have a clue how the economy works (many of the dems who would take a command economy over a free market any day of the week).

If you have not already made your nut in this world do yourself a huge favor and hoard every penny of cash you can lay your hands on, cut your lifestyle to the core, work a second or even third job while you can and they are still available, move back in with your parents if you can or in with friends or relatives to cut costs and save more, build social and support networks, take up gardening, try and secure a plot in a community garden if necessary. You will be so thankful that you did so this time next year.

The Great Depression 2 is coming and fast. Good luck.
 
Simple is better. Works in trading, works in almost everything in life.

Like a teenager that has overborrowed and overspent, there is no solution. He must get his share of punishment, learn his lesson, and save to pay off his debts.

Maybe Obama should rephrase his own words. "There will be a time for spending. But now is not that time..."

What is the solution? There is no solution. Like the teenager, the deleveraging will be a process and the debts will have to be repaid. He will not be able to buy all the cool clothes, he will not be able to eat out with all his friends. We do not need to help or do anything with that part, just to make sure it happens as it is necessary.

What we can do is make sure he is punished so that he learns his lesson and does his time. What we can do is make sure he does not freeze to death, starve, or get beaten up. That should be the role of government in this situation.

What the government now is asking to do is "Gee, how can we get our little teenager to spend again?"

Simple is better. So yes I agree, government is complicating matters and making things worse with a 1,000+ page Lets-Spend-More-and-More Bill.
 
Quote from DisciplinedHedg:

Simple is better. Works in trading, works in almost everything in life.

Like a teenager that has overborrowed and overspent, there is no solution. He must get his share of punishment, learn his lesson, and save to pay off his debts.

Maybe Obama should rephrase his own words. "There will be a time for spending. But now is not that time..."

What is the solution? There is no solution. Like the teenager, the deleveraging will be a process and the debts will have to be repaid. He will not be able to buy all the cool clothes, he will not be able to eat out with all his friends. We do not need to help or do anything with that part, just to make sure it happens as it is necessary.

What we can do is make sure he is punished so that he learns his lesson and does his time. What we can do is make sure he does not freeze to death, starve, or get beaten up. That should be the role of government in this situation.

What the government now is asking to do is "Gee, how can we get our little teenager to spend again?"

Simple is better. So yes I agree, government is complicating matters and making things worse with a 1,000+ page Lets-Spend-More-and-More Bill.
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I view my jobs proposal as keeping the teenager from living on the streets after his mistake in your analogy. The problem is that I can see that those in charge fall somewhere between wanting the teenager on the street where they are vulnerable, or just don't care if the teenager has to live in the street. The stimulus they put together and G's speech just now confirmed it.
 
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