Ron Paul: Stimulus Packages Will Turn Recession Into A Depression

[DaShi]

Right. So no response then. Expected as much from you. Who's left?

[Victor Galis]

Hmm it looks like the Buy American Provisions were put back in.

Lovely

Contrast him to Ezra Klein, who says if he was a Republican, HE would vote against the stimulus package as that is the sane political option for the GOP at this point.

I would vote for it too, if I thought it could pass without my vote. I would also make non-disingenuous arguments against it.

Of course, now I see where all this is coming from: "congressional conservatives have continued to attack the stimulus plan with a series of false and disingenuous arguments."

When they argue that it's "generational theft" and we can't afford it, then immediately propose billions of dollars in tax cuts...

[The Mad Monk]

Right. So no response then. Expected as much from you. Who's left?

[DaShi]

Don't you have something to say about the issue at hand? You were quite vocal until challenged at it.

[DaShi]

Now scurry to save your egos!

Can I call them or what? However, I wonder if "scramble" would have been a better choice. "Scurry" sounds more haphazard and blundering, which is what I was going for; but I'm not entirely sure that that meaning came out. It also doesn't seem to really strike the point as hard as I'd like.

[The Mad Monk]

Looks like my state may yet beat California to bankruptcy.

Kan. suspends income tax refunds, may miss payroll
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By JOHN HANNA
Associated Press Writer

TOPEKA, Kan. - Kansas has suspended income tax refunds and may not be able to pay employees on time, the state's budget director said Monday.

The state doesn't have enough money in its main bank account to pay its bills, prompting Democratic Gov. Kathleen Sebelius to suggest transferring $225 million from other accounts throughout state government. But the move required approval from legislative leaders, and the GOP refused Monday.

Budget Director Duane Goossen said that without the money, he's not sure the state can meet its payroll. State employees are due to be paid again Friday.

Goossen said the state stopped processing income tax refunds last week.

GOP leaders are hoping to pressure Sebelius into signing a bill making $326 million in adjustments to the budget for the fiscal year that ends June 30.

Legislators approved that bill last week, but it has not reached her desk.

Goossen said the state might also have to delay payments to public schools and to doctors who provide care to Kansans under the Medicaid program.

The state has transferred funds before when it has been short of cash in its main bank account. Most recently, the state issued the special certificates required in July and December for transfers totaling $550 million.

Each certificate requires the approval of the State Finance Council, which consists of the governor and eight top legislative leaders.

The council was scheduled to meet at 1 p.m. Monday, but Goossen said Sebelius canceled the meeting because Republican leaders told her they would not authorize the internal borrowing.

Some Republicans question whether such borrowing would be legal. When the state issues a certificate, it must promise that the money can be paid back by the end of the fiscal year. But the state already is projected to have a deficit in the current budget.

The legislation approved last week is designed to fix that.

Goossen said Republicans told Sebelius they want her to sign that bill first. Senate Minority Leader Anthony Hensley, D-Topeka, called the tactic "blackmail."

Republican leaders planned a news conference to discuss what happened.

http://www.kansas.com/735/story/701750.html

[Darius871]

Looks like my state may yet beat California to bankruptcy.

Ok seriously, is it even legally possible for a dual-sovereign state to file Chapter 11 (or Chapter 7 for that matter) in a federal court? I see the term thrown around a lot but my shysterized brain can only see its distinct legal meaning. If it's not bankruptcy then call it what it is, insolvency.

If they don't cut a budget deal, wouldn't the state just institute layoffs and decrease disbursements in a pro rata manner because it just doesn't have the funds? What's the eventual upshot if a budget deal isn't reached? Is there even precedent for this in the U.S.?

[The Mad Monk]

I don't believe there is; I use the term because it's the closest thing I have to what I think we're looking at.

It's a brave new world.

[Darius871]

I don't believe there is; I use the term because it's the closest thing I have to what I think we're looking at.

Nah, that'd be insolvency. Less coming in than what's going out. Bankruptcy is merely a statutory process to remedy insolvencies, if they qualify. I hear the word thrown around so much (even in reference to Uncle Sam which is particularly ridiculous) that I needed to vent. Just my Elok-esque language nitpick of the day.

[The Mad Monk]

Okey-dokey.

[notyoueither]

I give up.

Perhaps now you will have spare time to convince these guys.

http://www.theglobeandmail.com/servlet/story/RTGAM.20090218.wfedeconomy0218/BNStory/crashandrecovery/home

Fed lowers economic forecast

JEANNINE AVERSA
Associated Press

February 18, 2009 at 3:48 PM EST

WASHINGTON — The U.S. Federal Reserve Board on Wednesday sharply downgraded its projections for the country's economic performance this year, predicting the economy will actually shrink and unemployment will rise higher.

Under the new projections, the unemployment rate will rise to between 8.5 and 8.8 per cent this year. The old forecasts, issued in mid-November, predicted the jobless rate would rise to between 7.1 and 7.6 per cent.

The Fed also believes the economy will contract this year between 0.5 and 1.3 per cent. The old forecast said the economy could shrink by 0.2 per cent or expand by 1.1 per cent.

The last time the economy registered a contraction for a full year was in 1991, by 0.2 per cent. If the Fed's new predictions prove correct, it would mark the weakest showing since a 1.9-per-cent drop in 1982, when the country had suffered through a severe recession.

The bleaker outlook represents the growing toll of the worst housing, credit and financial crises since the 1930s. All of those negative forces have plunged the nation into a recession, now in its second year.

“Given the strength of the forces currently weighing on the economy,” Fed officials “generally expected that the recovery would be unusually gradual and prolonged,” according to documents on the Fed's updated economic outlook.

Against that backdrop, unemployment — now at 7.6 per cent, the highest in more than 16 years — will keep climbing and stay elevated for quite some time, the Fed predicted.

Fed officials anticipated that unemployment would remain “substantially” higher than normal at the end of 2011 “even absent further economic shocks.”

The Fed forecast calls for the jobless rate to dip to between 8 and 8.3 per cent next year, and to between 7.5 and 6.7 per cent in 2011. All those projections are worse than the Fed's previous estimates and would put unemployment higher than the normal range around 5 per cent.

Employment is usually the last piece of the economy to heal once the country is out of recession and in recovery mode. Businesses are usually reluctant to ramp up hiring until they feel confident that any recovery has staying power.

Under the Fed's new projections, the economy should grow between 2.5 and 3.3 per cent next year. Fed officials “generally expected that strains in financial markets would ebb only slowly and hence that the pace of recovery in 2010 would be damped,” according to the Fed documents.

Fed officials, however, predicted the economy would pick up speed in 2011, growing by as much as 5 per cent, which would be considered robust.

Still, given all the economy's problems, there are risks that the Fed's forecasts could turn out to be too optimistic.

And a few Fed officials — none are identified — feared that it could take five or six years for the economy and employment to get back into a sustainable mode of health.

On the inflation front, the weak economy should mean that companies will keep a lid on price increases this year as they try to lure skittish consumers.

The Fed expects prices to rise between 0.3 and 1 per cent this year, down from a projection of between 1.3 and 2 per cent in the fall. Prices will pick up slightly in 2010 and 2011 as the economy strengthens.

For now, Fed officials are more worried about falling prices, than rising ones.

The Fed didn't use the word “deflation,” which is a dangerous bout of falling prices, but officials noted “some risk of a protracted period of excessively low inflation.”

Falling prices sound like a gift at first — at least to consumers. But a widespread and prolonged decline can wreak more havoc on the economy, dragging down Americans' wages, and clobbering already-stricken home and stock prices. Dropping prices already are hurting businesses' profits, forcing them to slice capital investments and lay off workers.

America's last serious case of deflation was during the Great Depression in the 1930s. Japan was gripped with a period of deflation during the 1990s, and it took a decade for that country to overcome those problems.

[Naked Gents Rut]

The last time the economy registered a contraction for a full year was in 1991, by 0.2 per cent. If the Fed's new predictions prove correct, it would mark the weakest showing since a 1.9-per-cent drop in 1982, when the country had suffered through a severe recession. ...

Under the Fed's new projections, the economy should grow between 2.5 and 3.3 per cent next year.

Wow, really sounds like we're heading for a depression...

[notyoueither]

And a few Fed officials — none are identified — feared that it could take five or six years for the economy and employment to get back into a sustainable mode of health.

...

The Fed didn't use the word "deflation,” which is a dangerous bout of falling prices, but officials noted “some risk of a protracted period of excessively low inflation.”

Nice euphemisms.

[Naked Gents Rut]

Come back when you can make sense of what you're reading, Ben...

[Agathon]

The Fed didn't use the word "deflation,” which is a dangerous bout of falling prices, but officials noted “some risk of a protracted period of excessively low inflation.”

Is that like "negative growth"? I personally want to shoot the **** who came up with that phrase. It's like calling death "negative life".