Re: Stimulus Package ...

nick,

It's an issue of timing. Paulson says it's 'fast-tracked', and that the
checks will be mailed within 60 days of passage of the package, expected in
May. So until July, nothing changes on consumer spending beyond psychology,
and I don't think many consumers will rush to spend, even when they have the
money in-hand.

For business, there will be a extra deduction for new equipment purchases.
That could have a more immediate impact, except that few businesses are
rushing to expand by buying new equipment in uncertain times. We shall see.

The stimulus does temporarily allow Fannie and Freddy to purchase mortgages
up to $625,000 instead of the $417,000 current limit. As only a small
percentage of at-risk mortgages are in the range between $417K and $625K, I
don't see how it can help much. The housing mess deepened today, as December
existing home sales dropped a more-than-expected 2.2.% from November.
Year-over-year, the decline is now at 22%. Unsold inventories continue to
rise.

The package did not extend unemployment benefits, or provide additional food
stamp aid.

The most positive market number released today was Unemployment Claims. The
number was about 7% less than expected. IMO, at this point, nothing is more
important than maintaining employment. If that goes, the unsecured consumer
credit delinquencies (and thus reserve requirements) could dramatically
extend the 'banking and credit malaise', and I'd expect some banks to crack
under the stress.

As for the stock market, I'd expect a short-term recovery of sorts. But I
did say short-term.

Allan

--
One asks, many answer, all learn - Plato, on the 'Forum
--
True civility is when every one gives to every other one every right
that they claim for themselves.

"nick c" <nchen711@xxxxxxxxxxxxx> wrote in message
news:pT5mj.6016$Yl.1522@xxxxxxxxxxx
I've been thinking about this stimulus package that's supposed to give
people back certain amounts of money to hopefully spend in the marketplace
and stimulate the economy. I think folks think this is going to be free
money, being given back because you are loved. I'm of the mind whatever is
given back will have to be declared as additional income when next they
file their tax forms. Then, it will be payback time and it may hurt at a
time when you shouldn't be hurt. Nope, I don't believe there is a free
lunch being distributed. One shoe is being dropped while the other shoe
may be waiting to clobber you. <g>

Anyone have any opinions?



.

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