Stimulus Status; Success or Flop?

Today, world news is clamoring about mayhem and chaos related to the financial state of nations. In Jamaica, the government deployed the army as a disaster prevention measure before they announced "tax increases on gasoline, cigarettes and other consumer items."In 1999 riots erupted and 9 were killed when a gas tax was introduced. The Times online states "EDF Strikers Cut Power to French Homes" in an attempt to gain more salary from the French government and "to push back the capitalist logic which has crept into the company;” all an apparent attack on perceived failures of capitalism. Apparently as a reaction to Germany's declaration that GDP will shrink 6% in 2009, The Telegraph declared "Germany's slump risks 'explosive' mood as second banking crisis looms." The Social Democrats presidential candidate claims that "'the mood could turn explosive" over the next three months unless the government takes drastic action;"

So what kind of drastic action do these countries need to take?

Joe Biden claimed "we do believe that this [the stimulus package] is what is necessary to get the engine going again in the States." POTUS postulated that such an "unprecedented crisis" "calls for unprecedented action!"

World citizens have now seen what this unprecedented action is. The Obama administration is now responsible for engaging every man woman and child in the U.S. in debt unfathomable for the entirety of their existence. Team Obama, Geithner, Reid and Pelosi has now committed us to $12.8 trillion which will take decades to pay off.

So what's the consensus of the stimulus package?

Geithner, with apparently nothing better to do, wrote in the financial times Thursday, that the "economy has shown signs that the worst of the recession may be easing." Well this is GREAT news! It's call for celebration. So how'd it happen? The stimulus must be working, right? Well not exactly.

According to this morning's Wall Street Journal, "Stimulus Spending Gets a Slow Start, GAO Finds." Apparently "states had yet to spend 'significant amounts'" of their money. Only three states, South Dakota, California and Illinois, have completed the application to receive the "State Fiscal Stabilization Fund" (of course Illinois has). A meager $49 billion is set to go to the states and communities by September 30. Most wont get the majority of their money, $108 billion, until FY 2010 and the remaining $123 billion for states and communities wont fully have trickled out until 2016. Please see this page for details.

So what are the reasons Geithner can say the "economic downturn may be slackening?" It certainly doesn't appear to be from the stimulus package. So where's it coming from? I would argue that this is a direct result in Adam Smiths argument that there's an invisible hand in economics that helps the market move. I would also argue that Joseph Stiglitz is completely wrong with his statement that the invisible hand "is often not there."

The economy is rebounding. We can see evidence of this in market performance; we can see it in increased sales of some consumer goods. What is not happening however is the economy rebounding tremendously from increased spending or from the stimulus package. Recently Obama decided he was going to petition members of his cabinet to use both sides of their paper, shake pens to get all the ink out, and even reuse coffee grounds in an effort to save money. Obama would show more of a gesture by taking one for the team and announcing he's suspending his salary for a year. In case your interested and to fully comprehend the size of a trillion dollars and what Obama proposed cut, see the chart to the right.