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Kapanke 2009

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Kapanke 2009

  1. 1. Taggert J. Brooks, PhD Associate Professor of Economics University of Wisconsin-La Crosse La Crosse Area Economic Forum
  2. 2. Disclaimer: The views expressed today might be my own, but they do not necessarily reflect the views of my host, my employer, or my parents.
  3. 3. Troubled Asset Relief Program Dynamic Government Intervention
  4. 4. Banks: Solvency or Liquidity Issues?
  5. 5. TARP: $700 Billion of which $384.6 Billion allocated
  6. 6. The Stimulus… Obama’s Wager
  7. 7. Stimulus Effectiveness Size Long Run Consequences
  8. 8. State Budgets Spending Cuts and Furloughs…
  9. 9. New Furnace Tax Credits offset Increased Costs
  10. 10. 4.0 High and Low Estimates of ARRA impact on Real GDP 3.0 2.0 1.0 0.0 -1.0 2009 2011 2013 2015 2017 2019
  11. 11. 2.0 Real GDP Relative to Potential 0.0 -2.0 ARRA -4.0 -6.0 Baseline -8.0 2009 2011 2013 2015 2017 2019
  12. 12. Look, we enter the government essentially in a hotel that is on fire. We’re throwing people from the windows into the pool to save their lives and this is the evaluation of the Olympic diving committee: Well, the splash was too big.
  13. 13. The Lost Decade
  14. 14. Long Term Consequences Increase in publicly held debt.
  15. 15. 90.0 Obama US Debt to GDP Ratio Budget 75.0 60.0 45.0 Baseline CBO 30.0 15.0 0.0 1969 1979 1989 1999 2009 2019
  16. 16. 120.0 US Debt to GDP Ratio Obama 100.0 Budget 80.0 60.0 40.0 Baseline CBO 20.0 0.0 1940 1955 1970 1985 2000 2015
  17. 17. 0 50 100 150 200 Japan Greece Italy Belgium Portugal Hungary United Kingdom Austria France Netherlands Poland Iceland United States Turkey Germany Sweden Spain Denmark Finland Korea Canada Ireland Czech Republic Slovak Republic Mexico Switzerland New Zealand Norway Luxembourg Australia 2008 Debt to GDP Ratio for OECD
  18. 18. “Either cuts in spending or increases in taxes will be necessary to stabilize the fiscal situation,” “The Federal Reserve will not monetize the debt.”
  19. 19. Inflation Is not the worry. Overly aggressive monetary policy is…
  20. 20. Long Term Fiscal Problems Medicare and Social Security.
  21. 21. Green Shoots?

Editor's Notes

  • http://www.flickr.com/photos/b-tal/2767650536/sizes/l/The FDR memorial soup line from the great depression.
  • http://www.flickr.com/photos/18805629@N00/1420189899/sizes/o/
  • The American Recovery and Reinvestment Act
  • Effectiveness:The political process robbed the stimulus of its maximum possible effectiveness.
  • Effectiveness:The political process robbed the stimulus of its maximum possible effectiveness.
  • Effectiveness:The political process robbed the stimulus of its maximum possible effectiveness.
  • http://www.businessinsider.com/henry-blodget-austan-goolsbee-answers-the-white-houses-economic-critics-2009-5
  • NYTimes “Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990.”The peak was about 7 million units and it is expected to be down to <4 million in 2009
  • Effectiveness:The political process robbed the stimulus of its maximum possible effectiveness.
  • Effectiveness:The political process robbed the stimulus of its maximum possible effectiveness.
  • As much as 53 Trillion dollars. 34 trillion for medicare (of which about 8 trillion is prescription drugs) and the rest social security.
  • Credit: http://acrossthestreetnet.wordpress.com/2009/02/21/m-c-escher-economist/
  • http://www.flickr.com/photos/innpictime/3204618172/

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