Originally posted by KarlG
Sometimes I get confused by what Warren Buffett says too.
once he said something like "you can't have a baby in two months by impregnating six different women" and I had no idea if he was criticizing the
US govt's "split" tactics in restoring multiple sectors of the economy simultaneously, or if he was critcizing the US citizens for expecting growth
so soon, i.e. to "have a baby in TWO months."
He is soo confusing.
He was criticizing the U.S. citizens for expecting growth so soon.
Buffet is only saying what hundreds of responsible economists are, and have been, saying.
It looked at first like the two stimuli (Bush's and Obama's) were "taking" and in fact they have done good things for the economy. But now it
looks like there may be a need for a third, as they haven't completely jump-started the economy. The fact is, no economists could gauge precisely
how much good they would do until they could measure some of the effects.
The keys to an effective stimulus are the timing and the size. Especially the timing. It has to be big enough, fast enough to do much good. On
Obama's package the Congress jacked around too long and watered it down too much to make it as effective as it could have been.
In truth, nobody knows for absolute certain what will work to get the economy going again full steam. We can only base our assumptions on what has
worked in the past.
For sure fiscal conservatism was tried during the last Great Depression in the 1930's. Herbert Hoover, who was president at the beginning of the
depression in 1929, cut back government and all other spending and told the citizens to save their money. Because no money was going back into the
economy, of course it got worse. The tent cities that were erected by the unemployed and homeless were called "Hoovervilles" in his honor.
It took FDR and the New Deal and also the onset of World War II to get America out of the Great Depression.
In truth, I think we need something like the New Deal now, where millions will be poured back into the infracstructure and not only improve America
but provide millions of jobs for the unemployed. It's not just the banks and big financial institutions that need the stimulus right now but also
the average guy or gal on the street.
I think, if left to his own judgment, Obama would have done more along those lines but of course he had to negotiate with Congress, especially the
opposition, and try to make everybody happy.