Wednesday, March 25, 2009

Churchill - ahead of his time

You can always count on Americans to do the right thing - after they've tried everything else.

~ Winston Churchill

When it is difficult to appease the mob, you throw an array of "Acts" at them.

Act 1: Economic Stimulus Act.
Act 2: American Recovery and Reinvestment Act.

Make it sound bombastic but always end your sentences with ".....and what this means is that it will do (insert undeliverable promise for majority here) for you." *yawn* Rhetoric. Joe Klein from Time will lend unabashed support. No problem.

Plenty of local support here too. The local leadership thinks that the US economy is "fundamentally sound" because of reassurances by US Federal Reserve chairman Ben Bernanke's remarks last month that the economy would pick up by 2010, once the government's stimulus package frees up lending to households and businesses.

Why do I smell a a Principal-Agent problem in the above scenario? Will Mr Bernanke tell China to stop buying more into US government's debt? Sounds like a pyramid scam? Wasn't the whole mortgage loan scandal just a legal form of Madoff scheme??

Singapore says no to protectionism. Everybody criss-crossed their arms to hold hands at ASEAN Summit, vowing to say no to protectionism too.
Malaysia says "Buy Malaysia" campaign. In the same month of the summit.

I like Keynes. But will fiscal stimulus save us? If so, by how much and in return, will there be any cost?

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