Where Has All The Money Gone?
Maybe you’ve been wondering. Where has all the money gone? With governments around the world, led by our own, pumping literally trillions and trillions of dollars into addressing the economic crisis, why hasn’t this money dribbled down to you and me and most everyone else we know?
One reason, of course, is that the banks have scooped it up. Money given to these institutions in hopes they would turn around and lend it to businesses and consumers has been kept in house instead. They receive but giveth not back.
The other major reason that so many trillions have so far failed to enrich or even made partially whole most folks is neatly summed up in a headline that appeared on the Wall Street Journal’s website today: “Stocks In The Black On Gusher of Cash.” The stock market, by this weekend actually up for the year while economies were sinking, has gobbled up a huge chunk of this government largesse.
I gotta be honest. Knowing Ben (at the Fed) and Timmy (at Treasury) have done so right by best-and-brightest bankers and stock peddlers with huge infusions of public money, all borrowed, all that will be repaid in years to come either via lower living standards or ruinous inflation, may strike some people as world class economics. Personally I’m appalled.
And since this site attracts many visitors interested in politics, let me offer this political prediction: the policies of Bernanke and Geithner and Summers, unfortunate continuations of their predecessors Washington bungling, will ultimately cause the Obama tenure in office to be viewed as a failed presidency. Too bad. He’s a good man and deserves better. As do we all.
9 Responses to “Where Has All The Money Gone?”
Michael, I'd like to see the stimulus focused on national priorities, as I've suggested here before. The part of the stimulus that works best, IMO, is that spent on energy, the only part that has helped me personally. I would like to see a giant slice of the 'stimulus' focused there.
There are 124 million homes in America in need of energy efficiency upgrades. Every dollar spent there addresses 5 national goals:
Employment – local installers have to put on new roofs, blow in insulation, install solar, seal leaky windows and doors. There's no way that gets outsourced to China.
Manufacturing – national manufacturers make the products that local installers use.
Energy – We desperately need to achieve more energy independence, and already, conservation is by far our cheapest “new” energy.
Economy – creating a green economy is the growth industry for the next century. Jump-starting that industry is absolutely the best thing we could do for our economy.
National Security – the less we rely on hostile regimes for energy, the better. What we pay to Middle Eastern regimes is accurately termed by Pickens “the greatest transfer of wealth in world history.”
I wish more of it had gone to roads and bridges where it ought to have gone.
Defective bridges are well known and should have been “attacked” right from the start.
What about roads and streets and even alleys (as well as driveways and parking lots) in the eastern USA? So much is ripe for rebuilding, and they can be rebuilt in a “green” manner that's also a “cool” manner, reducing heat buildup and air conditioning loads in a way analogous to savings from “cool” roofs of structures. Look at the following Detroit “green alley” project and consider what could be done in the eastern USA especially (with many a Dem stronghold), not only in cities but in suburbs, exurbs, and where not only dirt road might be upgraded to gravel or paved, but where (including here in Michigan) more-lightly-traveled paved roads are being “demoted” to gravel to reduce costs substantially.
[Detroit green alley project -- note additional features such as advanced street lighting, something else on which stimulus money could probably be expended]
http://www.detnews.com/article/20090610/BIZ/906…
http://www.detnews.com/article/20090601/SPECIAL…
And why haven't some electricity transmission projects been undertaken? I've advocated work on ultra high voltage and six-phase (higher phase order) transmission, though these are properly more in the realm of R&D that could be funded. But what about just upgrades and sensible replacement of some of the infrastructure? For example, AEP wants a new 765 KV overlay (new infrastructure with its own new right-of-way) for Michigan and Ohio, but why not save some money but make progress by just using the existing right-of-way and upgrading from 345 to 765, and even using new environmentally and asthetically pleasing tower structure designs?
The problem with handing over cash for “economic stimulus” is that, once you hand over the cash, you lose control of it.
The money that went to banks wasn't supposed to help people, as far as I can tell. It was to help banks stay afloat. It was to “solve the liquidity crisis.” Once that was solved – by a huge deposit of cash in their coffers, it's only natural that their stocks look much better.
I honestly can't say where any of the stimulus would help most people. Each sliver of it was aimed at helping a different group. For example, money dedicated to restoring infrastructure will help construction folks.
I do have to say that I am personally getting some benefit – my unemployment benefits include an extra $25 per week from the economic stimulus. I don't mean to sound ungracious, but I just don't really feel stimulated by it. I'd honestly rather have a job.
Where has all the money gone?
I’m pretty sure it has something to do with the Jews……….
Has anyone checked Gandelman’s bank account lately?
(put the torches down, this was only humor)
good suggestion, DLS. Fits well with the green economy too, as you note. A roofer in my area got together with a paving company and pioneered a “roofs to roads” method for recycling torn off roofing materials into pavement. And just as I think the green economy is obviously an industry for the future, electronics and web work are, so your suggestion of upgrading transmission is excellent. We need to upgrade our web access too, to catch up with India Japan and Korea. As transportation becomes costlier, telecommuting, online marketing and remote presence meetings will replace their suburbs, shopping mall and airport hotel counterparts.
I disagreed with the bank bailout. But the failure to see that money go back into the economy is the Obama administration's fault. They are the ones that developed the 'stress test' that dictates the new amount of reserves a bank must carry (the ration of assets to loans). As the overall reduction of asset prices have reduced that, they were forced to eliminate lending to maintain the levels required of them.
Where Has All The Money Gone? | The Moderate Voice…
But the failure to see that money go back into the economy is the Obama administration’s fault. They are the ones that developed the ‘stress test’ that dictates the new amount of reserves a bank must carry (the ration of assets to ……
I guess it depends on what the goal is, AR. If it was to make the banking sector healthier, having some reserves isn't a bad thing. If the goal was to get money back into the economy, why do it through bank loans? To me, it would have made more sense to put more of it directly into buying green things and infrastructure we're going to need for the future. You know I'm more on the main street than wall street side, but I have to admit that the moderate market recovery seems to be making a difference. However that was achieved, and however it might have been done better, it's not a bad start for his first 5 months. I think there are huge systemic problems still.
This article was about 'why have the banks kept the money'. I have ALWAYS been on record opposing the bailout.
I also have no confidence in the current market rise, as it is a profitless rise in the face of worsening economic indicators. All that says to me is that the market overacted in the first place.