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OFF-TOPIC Stimulus Package

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Bilgefisher

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This subject borders on political, so if you feel it crosses the guidelines, please let me know and I will delete it.

I just wanted to hear everyone's thoughts on the stimulus package that is being presented. Do you think its good, bad? Do you think it will stimulate the economy or is it pouring money down the drain?

Correct me if I am wrong, but it is a 250 billion dollar package to give $500 per person.


edit:
I propose we take a new direction in this thread....

What will YOU do if you get this $600 per person in your household?
Great idea andviv!
 

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kurtyordy

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As someone who will be recieving $2400 under the house plan, I will be happy to take it. As an American, it disgusts me what they have done to our country.
 

WheelsRCool

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The economy I believe will self-correct, especially with how strong and resilient it is nowadays. I don't know if trying to "stimulate" the economy will work or not, it will depend on whether people save the money or spend it and what they spend it on I'd venture.

As an American, it disgusts me what they have done to our country.
Mmm....economically, I'd say they've done very well. Other matters, that's subject to more debate.

I say I think they've done well economically because the fact that this economy has been able to weather 9/11 (something that would have crippled the economy in earlier years), Katrina, War in Iraq, high oil prices, sub prime disaster, housing bubble, etc...yet still keep maintaining strong growth overall and low unemployment is a testament to how strong the economy is nowadays. Government should concentrate on keeping taxes low and spending in check.

Government usually doesn't have a whole lot to do with the state of the economy unless they try to actively manage it or regulate too much or tax too much. Otherwise, free-market economies go up and down, that's how they function.
 

kurtyordy

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I say I think they've done well economically because the fact that this economy has been able to weather 9/11 (something that would have crippled the economy in earlier years), Katrina, War in Iraq, high oil prices, sub prime disaster, housing bubble, etc...yet still keep maintaining strong growth overall and low unemployment is a testament to how strong the economy is nowadays.
so far, but the proof will be in the next ten years how these issues were handled.
 

8 SNAKE

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Bilgefisher; said:
Do you think its good, bad? Do you think it will stimulate the economy or is it pouring money down the drain?
I'm no economist, but I just can't see this plan stimulating anything more than electronics retailers. Most people are going to take their "free" money and buy a new TV, ipod, camera, etc. I can already visualize the Best Buy and Circuit City ads...
 

WheelsRCool

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Yeah, that's what I was thinking. It might do more damage.

The U.S. economy is strange and the public's perception of it varies. The economy under Carter was filled with high unemployment and high inflation, but those weren't necessarily his fault. The largest recession since the Great Depression, the Volcker Recession, occurred during the early Reagan years, this wasn't his fault either. The economy was good under the first years of the term of George Bush Sr, under the last years many thought it was very bad and in recession, even though during that "recession" it grew 4% in his last year (which was pretty good).

During President Clinton, to many people it was a bad economy, as they lost their jobs and had massive layoffs. To others, it was the greatest period of economic growth in history, ending in a spectacular bust. Under President Bush Jr, the economy has remained fairly strong, but also shown an incredible ability to absorb many things that would have hurt it a lot in the past. Real-estate boomed, but as always happens with such bubbles, it popped. The credit industry had a bubble that popped, private equity is booming and also may be in a bubble, etc...Inflation is low, unemployment is low, growth is pretty strong, a recession might occur, but those occur in free-market economies, technically a recession is just a slow-down of the economy, it's not the end of the world the way the media like to make out, etc...in general, as long as government keeps taxes low and doesn't try to actively manage the economy, and regulation isn't crazy, the economy can recover.

These days, thanks to computers that can do in seconds what used to take days, and how the information can be transferred electronically so quickly, the economy is far more flexible now then what it used to be. It's also a lot larger too.
 

Jill

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I agree with the poster who said that it just depends on how people choose to use it. Just take a look at how the $2K debit cards were used after Katrina as an example of how much of this will be spent. It may provide a short-term boost to the retail sector, but nothing significant for the long term, IMO. Most people will not pay down their credit card balances, I would guess. Most will probably go out and buy goods that are produced by one of our trade partners, further growing the trade deficit. Not trying to sound all cynical.

I just think there are better ways to stimulate the economy. Take that same wad of cash and give people an incentive to start a new business; hire/train/re-train American citizens; create an alternative fuel; develop a better, cheaper way of producing a widget, etc. :idx:
 

andviv

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Please be careful with making comments that are more political than about the economy.
My economic perspective is that, in my opinion, this will translate into more inflation.
 

tbsells

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Its possible that some people might take that $2,000 or so and use it for a downpayment on a house. With an FHA loan on a $100,000 house thats enough to get it done. That might help housing markets in lower cost areas. In spite of what the media would have you believe there are still very low downpayment loans available. So, I can see ways that it might help. When people buy houses they tend to buy appliances, carpet, paint, lawnmowers, etc. which helps the whole economy.

For me personally, I see it as a way to get more people into houses which will help my personal economy. My marketing will soon be telling people that the rebate can be your ticket to the American Dream of home ownership.
 

onmountain

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As far as business is concerned, I had CNBC tuned in today and they had an "expert" talking about how something like 61 cents of every dollar spent in US goes for imports. The argument was, is China making out better from the stimulus package than US (it was 38 cents like 10 years ago)....
I think that is the wrong way to look at it. Anyone in the US can benefit form the money spent, if we make money off of imports. What cut of that 61 cents "going to China" is really profit going to someone on this website ?
We need to collectively figure a way to grab part of the action :)
 

Yankees338

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If the money is used for savings, it will be a good thing. However, knowing about the common American, it will likely be spent on a doodad. Even this, though, could turn out to be okay. While it may be spent on an imported product, many of them are still sold by retailers in the U.S. who will profit from the sale.

On the other hand, it could, as andviv said, create a problem with inflation. Right now, contrary to what many people believe (aside from the brilliant, informed minds we have here :)), we aren't necessarily in a recession. Our GDP is still increasing, which means that our economy is still growing and producing more. We also haven't had to deal with a problem with inflation...yet.

I think that part of the problem is, as usual, the media. Because they like to exagerate everything, many people believe that we're in a stickier situation than we really are. I have faith that our economy will straighten out.
 

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Yankees338

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If people tuck the money away in savings, the "plan" will have failed. The whole idea is to encourage spending to stimulate the economy.
Not necessarily.

If the money is put in savings, it will go back to the banks. Then, they'll have less trouble with defaults on loans, and they can loan out more money again, which will increase the circulation of funds.

I do see your point, though. Personally, I think we'd be better off saving the money than spending it on some doodads. It'd be more beneficial to the economy in the long-run than the short-run, I guess, but I still think that it's ultimately what is best.
 
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Bilgefisher

Bilgefisher

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Not necessarily.

If the money is put in savings, it will go back to the banks. Then, they'll have less trouble with defaults on loans, and they can loan out more money again, which will increase the circulation of funds.

I do see your point, though. Personally, I think we'd be better off saving the money than spending it on some doodads. It'd be more beneficial to the economy in the long-run than the short-run, I guess, but I still think that it's ultimately what is best.
Yankee you make excellent points, but this plan is intended to get Americans to spend their money. The hope is it will "stimulate" the economy. I'll tell you though, if we had more 17 year olds that thought about this stuff like you do, we would be in really good shape. You got your head screwed on right.

I am by no means an economic expert, but I have been reading what a few experts have to say. Its not good. Mostly the concern I see is the money will not be spent on domestic goods. The money has to be borrowed, so basically we are opening a credit card in hopes of generating business. Example (throw something at me if I am off base). Your local grocery store gives you $500 straight up. They ask you to spend it. Now if your are given $500, yes you will probably spend some of it at the grocery store, but you will also spend it elsewhere.

My big concern is we will have to print money to make this work. By printing money, we are causing inflation. I think folks will lose more then the $500 dollars(wild a$$ guess) just due to inflation.

Andviv, sorry not trying to make the mods job harder. I know this thread is walking a fine line. If it derails, blame me. I just wanted the opinions of some folks much much more savvy then me. In this case 90% of the forum.:smx9:
 

8 SNAKE

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Not necessarily.

If the money is put in savings, it will go back to the banks. Then, they'll have less trouble with defaults on loans, and they can loan out more money again, which will increase the circulation of funds.
While I understand your point, I'd also speculate that the people that would put the money into savings for the banks to use would be the same people that have the credit history to obtain loans from the banks now. I don't think that there's a shortage of money to loan...there's a shortage of qualified borrowers.

I do see your point, though. Personally, I think we'd be better off saving the money than spending it on some doodads. It'd be more beneficial to the economy in the long-run than the short-run, I guess, but I still think that it's ultimately what is best.
I agree that the money is best put toward much higher uses than the latest flatscreen TV or ipod. Unfortunately, we're in the minority there.
 

Legacy Dad

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I just listened to an interesting discussion on this very topic. The economy has merely slowed a bit, we are not in a recession as many doomsday experts predict.

I am still making great gains and as I see it now, some investment areas are on sale.

Real estate in certain markets is becoming largely discounted.

As others posters said, the amount of money people have is not the problem, what they do with it is. Most people will take tax returns and get in more debt or buy liabilities. Again, the problem is financial education.

Another interesting comment I heard was this.

"When Wal Mart has a 30% off sale, people come running by the thousands. When real estate or the stock market is having a 30% off sale, people are running away by the thousands and claiming a recession?"

Lance
 

andviv

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I propose we take a new direction in this thread....

What will YOU do if you get this $600 per person in your household?


In my case, we would get $2,400 so I will probably buy a rental SFH.

And you?
 
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Bilgefisher

Bilgefisher

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I propose we take a new direction in this thread....

What will YOU do if you get this $600 per person in your household?


In my case, we would get $2,400 so I will probably buy a rental SFH.

And you?
I have soooo much to learn. I'm trying to think of how you can purchase a sfr with $2400. Good direction btw. rep+

Initially it(only $600 for me) will go into my investment funds, then I will use it towards my first house for me. I hope to find enough equity in a house to use for a multiplex.
 

PEERless

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As far as business is concerned, I had CNBC tuned in today and they had an "expert" talking about how something like 61 cents of every dollar spent in US goes for imports. The argument was, is China making out better from the stimulus package than US (it was 38 cents like 10 years ago)....
I think that is the wrong way to look at it. Anyone in the US can benefit form the money spent, if we make money off of imports. What cut of that 61 cents "going to China" is really profit going to someone on this website ?
We need to collectively figure a way to grab part of the action :)
I saw the same show this morning. That attitude of "AW CRAP! TRADE DEFICIT!" drives me nuts. If we send $0.61 to China, we get $0.61 of "stuff." Money is a means, but stuff is an end. LET China (or Canada or Montana) have all the money they want, so long as you get the STUFF you want.
 

Yankees338

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Yankee you make excellent points, but this plan is intended to get Americans to spend their money. The hope is it will "stimulate" the economy. I'll tell you though, if we had more 17 year olds that thought about this stuff like you do, we would be in really good shape. You got your head screwed on right.

I am by no means an economic expert, but I have been reading what a few experts have to say. Its not good. Mostly the concern I see is the money will not be spent on domestic goods. The money has to be borrowed, so basically we are opening a credit card in hopes of generating business. Example (throw something at me if I am off base). Your local grocery store gives you $500 straight up. They ask you to spend it. Now if your are given $500, yes you will probably spend some of it at the grocery store, but you will also spend it elsewhere.

My big concern is we will have to print money to make this work. By printing money, we are causing inflation. I think folks will lose more then the $500 dollars(wild a$$ guess) just due to inflation.

Andviv, sorry not trying to make the mods job harder. I know this thread is walking a fine line. If it derails, blame me. I just wanted the opinions of some folks much much more savvy then me. In this case 90% of the forum.:smx9:
Thanks!

...and I'm still 16...for another month at least. :)

Is there anything stopping the gov't from limiting the use of the credit to only domestic products?

While I understand your point, I'd also speculate that the people that would put the money into savings for the banks to use would be the same people that have the credit history to obtain loans from the banks now. I don't think that there's a shortage of money to loan...there's a shortage of qualified borrowers.
Interesting...

Personally, I took it a little differently. With the credit crunch we're in right now, there are banks going under because they cannot handle the foreclosures and defaults. They are not getting their money, and they do not have enough to stay afloat; thus, some banks have been put in some pretty shitty situations. If more money was saved, wouldn't that give them more money to use to stay alive?

I'm not sure, but this is the impression I was under.

I propose we take a new direction in this thread....

What will YOU do if you get this $600 per person in your household?


In my case, we would get $2,400 so I will probably buy a rental SFH.

And you?
I just asked my dad about this because I was wondering what he was planning on doing with it. First, it appeared that he didn't have a clue about it. I think he just wasn't aware that this plan could (or will?) become a reality.

He needs another car, and he doesn't like buying used (I guess it's too risky and a hassle?), so I guess it'll go towards the down payment on his next lease.
 

phlgirl

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Its possible that some people might take that $2,000 or so and use it for a downpayment on a house. With an FHA loan on a $100,000 house thats enough to get it done. That might help housing markets in lower cost areas. In spite of what the media would have you believe there are still very low downpayment loans available. So, I can see ways that it might help. When people buy houses they tend to buy appliances, carpet, paint, lawnmowers, etc. which helps the whole economy.

For me personally, I see it as a way to get more people into houses which will help my personal economy. My marketing will soon be telling people that the rebate can be your ticket to the American Dream of home ownership.

I am with you!! We see this as a great opportunity for people to get into starter homes. The key will be educating the potential buyers that this is actually possible for them. We plan to offer to walk our tenants through the process - help them understand their credit, hook them up with an FHA lender, etc.
 

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T

TheGreatBear

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This is just transferring debt from one entity to another, garnering support among some sheep who are clamouring for the gov to do something and causes a half a day rally in the stock market that goes into the red by afternoon.
 

andviv

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the "cash your check" industry will be in a great position here... I can see lots of people borrowing against that rebate, paying very high fees. Not that different than tax returns loans, but maybe even more expensive.
 

tbsells

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the "cash your check" industry will be in a great position here... I can see lots of people borrowing against that rebate, paying very high fees. Not that different than tax returns loans, but maybe even more expensive.
True. And sad. That industry might make more from this than anyone. Its scary how undisciplined alot of people have become. Geez...why can't they just wait another week or two?
 
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Bilgefisher

Bilgefisher

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I have also seen scams pop up. Plenty of emails claiming they need to get you your check, but just need a few simple things like SSN, bank account number etc. Sad part is some people will fall for this.
 

Andrew

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To correct some of the numbers given in the thread:


"The House package -- which would inject an estimated $161 billion into the economy over the next two years and cost the Treasury $117 billion over the next decade -- won unusually broad bipartisan support, passing 385 to 35.

It would allow single filers to get a $600 rebate that would begin phasing out for taxpayers with adjusted gross incomes over $75,000. Married couples would get $1,200; that rebate would start to phase out at $150,000. Parents would get $300 for each child."

The larger Democratic package failed to go through: http://www.latimes.com/news/printedition/asection/la-na-stimulus7feb07,1,2385014.story

I propose we take a new direction in this thread....

What will YOU do if you get this $600 per person in your household?


In my case, we would get $2,400 so I will probably buy a rental SFH.

And you?
Here is an idea, figure out how you can make sure you won't qualify for the "stimulus."
$0 - $150k is a tax bracket you want to be out of as fast as possible!! I won't be collecting a penny from this and you can bet I am happy about it.
 

NoMoneyDown

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I won't be collecting a penny from this and you can bet I am happy about it.
I have a feeling if you're outside the income bracket you will be getting a lot of pennies from it - indirectly, of course. :smxB:
 

hakrjak

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The thing that bugs me about most of the plans I've seen is that they are giving rebates to people who haven't put in any bait.

Taking money from a guy like me (In the form of not paying me a rebate because my income is too high) and giving money to a person who has not paid a dime in taxes amounts to redistribution of wealth, which amounts to softcore Communism in my book.

Cheers,

- Hakrjak :boxing_smiley:
 

8 SNAKE

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The thing that bugs me about most of the plans I've seen is that they are giving rebates to people who haven't put in any bait.

Taking money from a guy like me (In the form of not paying me a rebate because my income is too high) and giving money to a person who has not paid a dime in taxes amounts to redistribution of wealth, which amounts to softcore Communism in my book.

Cheers,

- Hakrjak :boxing_smiley:
While I completely agree with you, I'm afraid that this thread is steering toward a political debate that's beyond the scope of this forum.

Instead, we should focus in on what we do best...take the hand that we're dealt and outplay everyone else at the table. :smx9:
 

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