Roosevelt inherited a deflation crisis in 1932 far worse than anything we have seen so far. Even by the time of the 1936 election, unemployment had still not dropped below 15 per cent. He won the electoral college by 523 votes to eight.

If Mr Obama had taken office at the end of 2006 he would have been buying at the top of a massive bubble market. He has a chance to buy at the bottom.

The effects of federal public works spending were largely offset by other factors, notably a large tax increase, enacted by Herbert Hoover, whose full effects weren’t felt until his successor took office. Also, expansionary policy at the federal level was undercut by spending cuts and tax increases at the state and local level.

Thus, we need major fiscal stimulus:

My advice to the Obama people is to figure out how much help they think the economy needs, then add 50 percent. It’s much better, in a depressed economy, to err on the side of too much stimulus than on the side of too little.”

I have two responses to this.  (1) Krugman assumes the successful impact of a fiscal stimulus without describing why it would work.  (2) Krugman fails to consider where the money will come from for this package  (we are already in a major deficit) and what the impact of generating enough money to implement the stimulus package would be.  If we have to borrow more, it will increase interest rates as our risk of default will go up.  That will diminish economic activity.  If we raise taxes too much, that will diminish both consumer spending and investment. 

The point is that the economy is a dynamic system and a fiscal package would not create money out of thin air.  The package would have collateral consequences that could counteract the effects to the degree that the package could result in a net negative economic impact.
 
I would expect a little more depth of reasoning from a nobel prize winner.

[A] severe deflation could abort any recovery. Its harm would operate through two channels, says economist Desmond Lachman of the American Enterprise Institute. First, debt: As prices fell and old debts stayed fixed, companies would have a harder time repaying; bankruptcies and unemployment would increase; banks would suffer more loan losses; the same process would happen to household debts if wages fell. Second, deferred spending: If people believe prices will be lower next month, they may wait to buy; if too many shoppers wait, the economy spirals downward.
 
The specter of deflation explains much of what many governments are doing. Government central banks — the Federal Reserve, the European Central Bank, the Bank of England — are cutting interest rates. But given the reluctance of many banks to lend and many households to borrow, the effect may be muted. A “stimulus package” of more spending increases and tax cuts would provide extra insurance against an economic free fall. The trick for Obama and other leaders is to ensure that new commitments are temporary — and don’t worsen grim long-term budget outlooks.

So to everyone overseas I say: thanks for your applause for our new president. I’m glad you all feel that America “is back.” If you want Obama to succeed, though, don’t just show us the love, show us the money. Show us the troops. Show us the diplomatic effort. Show us the economic partnership. Show us something more than a fresh smile. Because freedom is not free and your excuse for doing less than you could is leaving town in January.

I am sorry, but I find this to be nothing short of pathetic.  This article basically assumes that George W. Bush, on a personal level, has been the problem for this country, not our policies, not what we do but the fact that we have been led by a Republican white man.  Why would the world do anything differently, absent an actual policy change, simply because we now have a president with different skin pigmentation and party affiliation?  Friedman has bought into the notion that George W. Bush is inherently bad and that Obama, as a symbol, is inherently good.  The world, as Friedman should know, does not work that way.  The leaders of other nations are working for their own (and secondarily their nation’s) best interest, regardless of the personage at the healm of our executive branch.  There is no reason whatsoever for anyone in the world to treat us any differently unless Obama changes key policies.  But is Friedman calling for Obama to pull out of Iraq?  Is he calling for him to stop supporting Israel?  If he is not, then what does he expect to happen?  The whole world to embrace the racial innovation of our new president just because he has and ignore their real policy concerns?

[Note: in case there is any confusion, I do not advocate pulling out of Iraq or stopping support of Israel; I simply note that these are policy changes that could elicit real "love" from the Islamic world, a love that we do not want and that will not come simply because Obama is a black man]

The merits of (1) are obvious: it avoids the discomfiture that accompanies our progression. 

Is there any good reason to engage in (2), to wait?  From an experiential point of view, I would say the only benefit is to avoid the sense of unease that accompanies the distracted life.  We can certainly attempt to distract ourselves, but it would take a fundamental reworking of our brains to eliminate all levels of awareness.  Thus, most of us probably are aware of the ultimate path we are taking, whether we know it consciously or not.  Such awareness is not pleasant (at least without further action).  Therefore, so many of us who claim to live the distracted life and claim to be so happy and oblivious to the truth are merely suppressing our awareness but not eliminating it.

I would go so far as to say that the fundamental aspect of our existence is the awareness (whether conscious or not) of our finitude.  As the fundamental aspect of our existence, it should therefore be linkable to all of human behavior in one way or another.  I will explore this in future posts.

The key for now is that option (2) [the conscious awareness, as opposed to unconscious, of our finitude] is probably better than option (1) because at least it sets the table up for us to address our underlying concerns in some way rather than letting them fester and control us and impact our lives in detrimental ways.  This assumes, however, that we have some means of dealing with the awareness.  This too will have to be addressed in future posts.

Cliff Mason:

I admit we probably should, just to avert seeing double-digit unemployment and causing a second great depression, but I wish instead of spending billions rescuing the automakers, our government would instead invest that money in public transportation.

Motor Trend (a little biased, I admit):

Manufacturing — auto manufacturing — is a strategically important business.

If it makes sense to bail out financial institutions like Bear Stearns, or Fannie Mae and Freddie Mac, if it makes sense to spend billions on agricultural subsidies and tax breaks for oil companies, surely it makes sense to figure out a deal to help this country’s largest manufacturing sector.

In contrast, Carly Fiorina:

I don’t think the government can rescue the industry. . . . Whatever the government does, it should not take away the fundamentals of risk-taking. Sometimes it leads to rewards and sometimes consequences, downside. . . . In other words, the auto industry cannot be saved from its own bad bets.

Only the latter seems to understand what drives economic growth in this country.  It is innovation and profitable enterprise, not artificially inflated industries with dubiously “strategic” importance. 

Why in the world should we spend untold billions of dollars of taxpayer money on an unprofitable industry?  That sounds indefensible to me.

The Republican Party, and conservative movement in general, are hopeless if they become the “me too” party when it comes to government assistance and socialist solutions to economic problems.  If they do that (which is what they have been doing) then they lose their raison d’etre.  If the public wants government solutions, it will go to the Democratic Party, the authentic home of such ideas.  The only way to be viable is to offer an alternative, i.e., free-market ideas with a proven track record of success.

Health Care for America has just three central elements:

• the new Health Care for America Plan, which would be open to any legal U.S. resident without good workplace coverage;
  
• a requirement that employers (and the self-employed) either purchase coverage comparable to Health Care for America for all their workers or pay a relatively modest payroll contribution (6% of payroll) to fund Health Care for America coverage for all their employees;
• a requirement that Americans who remain without insurance take responsibility for their and their families’ health by purchasing private coverage or buying into the Health Care for America Plan.

The benefits of the Health Care for America Plan would be comprehensive. Besides Medicare benefits, the plan would cover mental health and maternal and child health and include strict limits on total out-of-pocket spending. (Medicare currently lacks such limits, and Health Care for America would authorize a study of how best to incorporate cost-sharing limits into Medicare in the future.) Health Care for America would also provide drug coverage directly, rather than solely through private plans. And it would allow Medicare to provide drug coverage directly on behalf of the elderly and disabled as well. In addition, a new independent Benefits Advisory Commission would be created to determine what both the Health Care for America Plan and Medicare should cover going forward, allowing the harmonization of the two programs’ benefits over time. To encourage better health, preventive and well-child care and covered screenings would be provided to all beneficiaries at no out-of-pocket charge.

Not sure if this the best plan or if it is workable.  But it is a start.  My goal here is to present different plans and ultimately to consider the merits of multiple approaches to this issue.  Health care is going to be a major issue with the new Administration, and the push will be toward a single-payer, government-intensive approach.  I hope to present some alternatives and we can decide what is the best way to go.