Will Obama's stimulus work? How would we be able to tell if it did? Is it an economic master-plan or just a random collection of pork-barrel projects? Does it really contain "one of the largest tax cuts in US history"? Do governments have the ability to end recessions in any case? Did the New Deal work?

Most importantly - how is all of this going to affect Canada?

This is silly, isn't it?

President finds the third rail - earmarks

Whether it could work or not, is too reckless or too timid, too long-term or whatever - there is already a multi-billion dollar spending plan intended to stimulate the US economy, but senators and members of congress still want these earmarks.

'WSJ: Can the government spend $787 billion in a matter of a few years without there being waste, fraud and abuse?

Mr. Devaney: You start with any bucket of money like this. The experts, the people who work in the fraud arena, say there will significant fraud, around 7% lost to fraud in most cases. So if you do the math on $787 billion, not that I have, and you get $55.1 billion. So that would be a normal course of business. Obviously, our challenge is to significantly reduce that, trying to get the percentages down, recognizing that you're never going to eliminate it. A coordinated [inspectors general] effort on the front end should help reduce those percentages.

With all those combined, we have a good shot of keeping the levels of waste, fraud and abuse down. I would never say there will be no fraud.' online.wsj.com

Lots of questions, NNN!

One curiosity of the stimulus bill is that only 23% is slated for expenditure in the first year. That, to me, is clear evidence that it is more of a long-term agenda than a measure designed to stimulate us out of a recession.

To the degree that tax cuts and projects which can proceed immediately (anyone in the development business knows that "shovel ready" by any usual definition is not immediate), the economic pump may be primed. However, when government is the main consumer on the credit market, the capacity of companies to grow and provide jobs is diminished.

We are about at the place in an economic cycle that we should start to see improvement without government intervention. I hope the intervention does not prolong the mess.

As of Monday, I got squarely in the middle of one mess caused by otherwise good intentions on the part of government. I hope this example is written clearly enough for others to follow.

1. The company I work for is a well-heeled bank customer, and has a mission to develop industrial properties (resulting in factories, jobs, etc) in low cost rural areas.

2. The several banks which provide us with credit have real estate projects elsewhere that have gone belly up. These banks have accepted TARP money.

3. The government overseers (yes, there are some) have directed the banks to reduce their commercial real estate portfolios. They can't very well get their money back from failed projects, and it makes no sense to halt projects that are partially complete. So they have demanded that their most credit-worthy clients reduce their borrowings. Thus the bank real estate portfolios consist of fewer good loans, and are now more heavily weighted in bad loans!

4. Further, banks have demanded more restrictive covenants on items such as liquidity. One of the nation's largest developers, with whom we compete is having to sell off its best properties with good paying tenants to raise cash and meet liquidity requirements. It can't sell off properties where tenants are behind in their rent, because those have little market value. Thus the developer is left with a portfolio heavily weighted with companies that are behind on their rent. That particular developer may be bankrupt by year's end.

5. So now we have banks with increasingly risky real estate portfolios, developers with increasingly risky lease portfolios, and a development market that is not building anything.

6. Stimulative, in this part of the economic engine? You tell me.

7. Why am I squarely in the middle of it? We are fortunate that we have the credit still available to build. But if we build speculative projects that do not yet produce income, we get precipitiously close to violating bank covenants on debt coverage ratios. So we may wait. But that leaves me with no job to do.

'...more aggressive and front-loaded policies include massive monetary easing and zero policy rates; quantitative easing; unconventional monetary and credit actions to reduce the spread between market rates and government bond yields; significant--if in some cases still insufficient--fiscal policy stimulus; policies to restore credit growth and reduce the credit crunch; policies to clean up toxic assets of banks; policies to recapitalize banks and take over the insolvent ones; policies to reduce the tsunami of foreclosures and reduce the debt servicing and debt burden of distressed households; policies to support emerging market economies under stress; and policies of appropriate regulatory forbearance to restore credit and liquidity in financial market.

These policies will not restore positive growth in advanced economies until next year, but will reduce the rate of economic contraction to a more moderate pace by the end of 2009...'
Light At The End Of The Tunnel ...

'Right now, [Harper] said, the global economy was showing greater stability and the severity of the recession was easing. By next June's G8 summit he hoped the recovery would be fully under way and exit strategies could be planned.

Fellow G8 member Germany has expressed concern about too much stimulus, while the United States and Britain have suggested more might be needed.

Harper said Canada entered the recession with a budget surplus and would be back in the black simply because of tax revenues increasing as the economy grew again.

By the end of the 2010-11 fiscal year, he said, he anticipated the Canadian economy would be in full recovery...' finance.sympatico.msn.ca

'My prediction, then? Not a V, not a U. But an X. This economy can't get back on track because the track we were on for years -- featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere -- simply cannot be sustained.

The X marks a brand new track -- a new economy. What will it look like? Nobody knows. All we know is the current economy can't "recover" because it can't go back to where it was before the crash.' When Will The Recovery Begin? Never

A suggestion that the stimulus is 'working' only in that businesses starved of consumer spending are now relying on cash and guarantees from the government -

Why the Dow is Hitting 10,000 Even When Consumers Can't Buy And Business Cries "Socialism"