Charlie Munger is Warren Buffet's long-time partner at Berkshire Hathaway. He penned the op-ed below, as was passed to me by my friend in Nashville. My read is that Mr. Munger supports the stimulus, although like me, he seems to focus more on how the heck to pay for it by the end of the letter.
http://www.washingtonpost.com/wp-dyn/content/article/2009/02/10/AR2009021003122.html
Despite Charlie's somewhat unsupported view of the stimulus, I am not sure what he had in mind was Rohm Emmanuel's view of the "message" below:
http://online.wsj.com/article/SB123449249590080699.html
I especially like the paragraph that says:
"In three weeks, the president has secured what Mr. Emanuel called the most sweeping single piece of economic legislation ever, extended health insurance to 11 million children, righted a clear wrong by making it easier for women to sue for wage discrimination, and reoriented U.S. foreign and environmental policy with his orders to close the prison at Guantanamo Bay, Cuba, end torture, and allow states to pursue higher fuel economy standards to combat climate change."
Really?!? Really Administration?!? Really?!? I have no problem with the points Mr. Emanuel supports above, but how by any stretch of the imagination these things go to creating the hoped for 3.5 million jobs, I have no idea! I have not wanted to go here, but it sounds like most of the "stimulus" is going toward Mr. Emanuel, et al's overall policy agenda and not toward true stimulus and the 3.5 million jobs.
Call a spade a spade. Ultimately, history will judge the decisions made today by the effect they have on future generations. With no plan to pay for it by either less spending or higher revenues (i.e. taxes), this is not a stimulus to create jobs, it is a short-term attempt to appease whatever special interests can get their hands in the cookie jar - and at this point it seems there are a lot of hands!
This is just a link to the stimulus package to see for yourself where the money is going. I hope to itemize and report back with what I think may actually be stimulus:
http://online.wsj.com/article/SB123458384689487271.html
-2outof4
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John,
ReplyDeleteI think you may be confused about what Rahm Emmanuel is saying in his statement that you quote above. Clearly, the stimulus is described as the "most sweeping single piece of economic legislation ever," but all the items that follow are separate pieces of legislation (SCHIP and Lilly Ledbetter) and two executive orders that have been passed or executed in the last 30 days. They are not meant to stimulate the economy. Maybe you understand that, but it doesn't seem clear from your writing above.
Also, I'd be interested to hear your thoughts on the first stimulus effort that President Bush pushed since you clearly don't seem to like the one that will be signed into law today.
GDB
That is a very valid point. After a thrid reading, I agree that Emanuel is not discussing the stimulus in the quoted paragraph above.
ReplyDeleteFor purposes of not rewriting history or my mistakes, of which there will be many, I will just leave the original Post as written. But certinaly agree that the paragraph should not be used as a point to critique the "messaging" of the stimulus. Thank you for pointing this out for us.
Fortunately, the overall point is not lost, even if you just delete that paragraph and linkage to the following paragraph. In a new post I'll breakdown the stimulus.
As for the First Stimulus effort, if you mean the February 2008 tax rebate that went out in May, I think it temporarily ticked up consumption, but was overall misguided policy. I hold the view that Americans need to reign in consumption to a more normalized level, rather than artifically boost it at the expense of the government's balance sheet. If you mean, the initial $700 billion TARP from October, I think it was misguided and misimplemented. I believe that as much as possible, governments should not prop up dying entities at taxpayer expense. They can facilitate the dying with the least amount of pain for the average citizen because there is no other entity to accomplish that task, but just throwing good money after bad does not makes sense.
And it does not matter what side of the isle the politician sits on, in times of constituent induced stress he or she is equally qualified to send the good money after bad.
Yes, I was discussing the first stimulus plan that provided everyone with tax rebates.
ReplyDeleteI agree with what I believe to be one of your main points -- that government essentially not spend what it doesn't have. But, the Federal government is the one government entity that can deficit spend. What's the alternative? To do nothing and let our economy implode? That doesn't seem like a very feasible alternative to me.
With regard to TARP, there has been one major thing missing from all discussions of it: the Federal government has bought assets that in the future can and will be sold. Now, some of those assets may lose value, but others may gain in value prior to being sold. When the government has bought similar assets in the past, albeit on a much smaller scale, they have made money. I hope they do this time as well.
I look forward to your breakdown of the stimulus. I also thought the following article was right on point (once you get past the tongue in cheek beginning) and I'll bet you didn't see it:
http://www.washingtonpost.com/wp-dyn/content/article/2009/02/05/AR2009020503413.html
GDB
Whoa! No one puts 2outof4 in a corner! I love the Post, and not just for keeping up w/ Gil and Clinton (Portis, that is). I had not read this particular article, but there are a couple of salient points.
ReplyDeleteMoney spent is indeed money spent, and there should be at minimum a short-term uptick in consumption. I am looking for more though. I want to see the Pols have some semblance of an idea of how to close the spending loop. There is nothing glaringly wrong in the referenced article, but in my world of financial prudence I worry about the "hows" as well as the consequences of paying for all this.
My advice is that if a financial advisor is selling you a product today that locks in 5% for five years, run the other way!
My tough question for you is this: What is stimulus if this isn't it? I see many people - not just you - deriding this bill as wasteful and ineffective. What would be an appropriate use of the money? Or would you rather see no government intervention at all?
ReplyDeleteGovernment intervention is necessary - but it would be refreshing if instead of quick fix there was a clear larger strategy and more focus on the long term. Otherwise we are potentially flushing a lot of money down the drain (money we don't even have) with little to show for it in a few years time. Someone compared the stimulus to buying a $300 condom.
ReplyDelete