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Attack of the Zombie Debtors

In financial lingo, zombies are debtors that have little hope of recovery but manage to avoid being wiped out thanks to support from their lenders or the government. Zombies suck life out of an economy by consuming tax money, capital, and labor that would be better deployed in growing companies and sectors. Meanwhile, by slashing prices to generate sales, zombie companies can drag healthier rivals into insolvency. —BusinessWeek You would think that once was enough, that the failure of the first round was obvious, but no, Congress has done it again. They have released the second half of Paulson’s $700 billion and that shuffling sound you are hearing is the sound of zombies, coming at the smell of freshly-spilled money. According to Peter Coy, writing for BusinessWeek: “The Bush Administration has already ladled out billions o... [Read Full Article]

House Stimulus Bill Hits $825 Billion as Unemployment Hits New Levels As Well

Government and Economy House Democrats Raise the Bailout Ante to $825 billionIn a bid to revive the economy, House Democrats have called for $825 billion in federal spending and tax cuts with strong emphasis on energy, education, health care and highway construction. Unemployment Rises More Than ExpectedThe Labor Department has reported that first-time requests for unemployment insurance jumped to a seasonally adjusted 524,000 in the week ending January 10, higher than the 500,000 new claims they had expected. Congressional Proposal: Cash for ClunkersCongress is mulling over a new proposal to pay people to get rid of all those old gas guzzling cars they... [Read Full Article]

The Final Word on Economic Stimulus

Insanity: Doing the same thing over and over again and expecting different results. — Albert Einstein That, as much as anything coming from the psychiatric community, sums-up insanity. It is the delusion, the break with reality, that provides the force of Einstein’s definition. What he is saying is that for Action X there is Result A and that you can perform Action X (assuming that nothing go wrong in the execution) a hundred or a thousand or a million times and you will always get Result A. It is like gravity. You can stamp your feet, argue and intellectualize against gravity all you like and it won’t matter a bit. Gravity works. The Physics of Economics – Tax Cuts Economics is another sphere where we have empirical evidence that certain things work and certain things do not. When President-elect Obama announced that 40% of his new economic stimulus plan involved tax cuts on business and individuals, his aides admitted t... [Read Full Article]

A Reminder to Remember Small Business in These Bailouts

Government and Economy Democrats Intent on Keeping Estate Tax President-elect Obama and congressional leaders will block the 2010 repeal of the estate tax, going so far as to say it might outlive the "Death Tax Repeal" movement that is working to kill it. Commentary: Remember Small Business in Stimulus Efforts American small business employs more people than the Fortune 500 combined, but since these are not large companies, they risk being forgotten as Washington tries to stimulate the economy. National Ombudsm... [Read Full Article]

The Obama Stimulus Plan: Heavy Tolls on the Road to Prosperity

Government and Economy Spending Our Way to Prosperity President-elect Barack Obama warned of dire consequences if Congress doesn't pump unprecedented dollars into the national economy as he made an urgent pitch for his huge spending proposal during his first speech since his election. SBA Web Chat on Credit and Borrowing The U.S. Small Business Administration’s Web Chat series starts on January 15th with a focus on small businesses and the credit crunch. SBA Associate Administrator for Capital Access Eric Zarnikow will answer questions about credit and borrowing and other resources to help access credit. Fed Fac... [Read Full Article]

New Year, New Tax Cuts

After months of hearing about how Barack Obama and the congressional leaders will raise taxes, spread the wealth, and spend a trillion dollars to stimulate the economy in the best Keynesian tradition, we begin the new year with this news from By Jonathan Weisman and Naftali Bendavid of the Wall Street Journal: President-elect Barack Obama and congressional Democrats are crafting a plan to offer about $300 billion of tax cuts to individuals and businesses, a move aimed at attracting Republican support for an economic-stimulus package and prodding companies to create jobs. The size of the proposed tax cuts -- which would account for about 40% of a stimulus package that could reach $775 billion over two years -- is greater than many on both sides of the aisle in Congress had anticipated. It may make it easier to win over Republicans who have stressed that any initiative should rely more heavily on tax cuts rather than spending. Talk about having to swallo... [Read Full Article]

More Economic Stimulus On The Way and Hiring in a Recession

Government and Economy Pelosi: House Stimlus Bill to be Ready SoonSpeaker Nancy Pelosi says the House will have an economic stimulus bill ready by early January. Pelosi said Tuesday that members of the House are "working on that right now." Promises Promises: Obama Budget Cuts Face Hurdles Barack Obama promises to cut out wasteful programs. But with entire chapters of the $3 trillion federal budget essentially off limits and congressional Democrats ready to defend farm subsidies, weapons systems and home-state pork barrel projects, can he do it? [Read Full Article]

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