Kerajaan bercadang umumkan pakej rangsangan ekonomi kedua tidak lama lagi untuk bantera krisis global yang sedang melanda negara. Timbalan Perdana Menteri merangkap Menteri Kewangan, Datuk Seri Najib Tun Razak, minta rakyat jelata berikan pandangan dan cadangan mengenainya. Beliau minta kita kirimkan komen ke blog www.1malaysia.com.my. – Ruhanie Ahmad
NAJIB: MALAYSIA PERLU PAKEJ RANGSANGAN EKONOMI KEDUA
PEKAN, 24 Jan (Bernama) -- Timbalan Perdana Menteri, Datuk Seri Najib Tun Razak berkata langkah progresif Malaysia dalam memperkenalkan pakej rangsangan ekonomi kedua adalah perlu dalam ketidaktentuan ekonomi global pada masa ini.
"Adalah baik bagi kita melakukannya secara progresif kerana kita tidak tahu saiz masalah global itu tetapi menurut penilaian kita, pakej kedua itu amat perlu.
"Sebaik sahaja kita memenuhi penilaian itu, maka, bermulakan proses pembentukan pakej kedua itu," katanya. - BERNAMA
http://www.bernama.com/bernama/v5/bm/newsbusiness.php?id=385888
NAJIB: MALAYSIA PERLU PAKEJ RANGSANGAN EKONOMI KEDUA
PEKAN, 24 Jan (Bernama) -- Timbalan Perdana Menteri, Datuk Seri Najib Tun Razak berkata langkah progresif Malaysia dalam memperkenalkan pakej rangsangan ekonomi kedua adalah perlu dalam ketidaktentuan ekonomi global pada masa ini.
"Adalah baik bagi kita melakukannya secara progresif kerana kita tidak tahu saiz masalah global itu tetapi menurut penilaian kita, pakej kedua itu amat perlu.
"Sebaik sahaja kita memenuhi penilaian itu, maka, bermulakan proses pembentukan pakej kedua itu," katanya. - BERNAMA
http://www.bernama.com/bernama/v5/bm/newsbusiness.php?id=385888
5 comments:
Puteramaya,
Salam Siber!
Siri The Bridge Talks
(naungan ym raja nazrin raja muda perak)
Saya amat bersetuju dengan saranan geliga anda ini!
Najib perlu tanya pendapat Che Det, Tengku Razaleigh, Musa Hitam, Abdullah, MoF2 dan siarkan pendapat-pendapat mereka ini kepada pengetahuan rakyat agar kita dapat menilaikan dan turut serta dalam proses memertabatkan ekonomi negara dalam keadaan ekonomi dunia yang lesu dan kian sakit.
Kita tidak perlu tergesa-gesa dalam merecanajayakan langkah-langkah yang semestinya pragmatik bagi memperkukuhkan ekonomi dalam waktu yang amat mecabar ini yang peleknya kita tahu memberi kesempatan dan peluang yang baik untuk kita lebih pintar berdayasaing dalam ecana ekonmi global dan membuktikanya dalam tindakan kita.
'wacana' ini bunyi macam orang jepun pintar ekonomi di dubai, mas!
Another Round Of Backgrounders
(bung senangkan kerja najib dan nazir)
Stimulus 101: What's in the Bills
by David Goldman
Tuesday, January 27, 2009
The plan by Obama and congressional Democrats to revive the economy is taking shape. Here's what we know so far.
You've probably noticed: The Obama administration and Congress are talking about spending an unprecedented sum of money to try to revive the economy.
President Obama and House Democrats laid down the marker with an $825 billion package of spending and tax cuts.
Dozens of proposals. Hundreds of pages of legislation. Billions of dollars.
What are some of the headline proposals, and what is the debate all about? The legislation is a work in progress, but here is an overview.
Infrastructure
The case for: By investing in renewable energy, health care, education and modern construction projects, the Obama administration expects to create between 3 million and 4 million jobs and address key sustainability issues.
The case against: Opponents argue the spending will lead to a rapidly increasing and unsustainable deficit. They also say that a majority of infrastructure projects will take too long to implement.
Construction projects: $90 billion. Fund the rebuilding of crumbling roads and bridges, build clean water and flood control mechanisms and provide funding for mass transit systems.
Education: $142 billion. Rebuild thousands of schools by modernizing classrooms, labs and libraries. The plan would also increase funding for Pell Grants.
Renewable energy: $54 billion. Double production of alternative energy in the next three years. Weatherize low-income homes, modernize 75% of federal buildings and update the nation's electrical grid with a new, cost-efficient "smart" grid.
Health care records: $20 billion. Modernize the health care system by computerizing all of the nations' medical records in the next five years.
Science, research and technology: $16 billion. Invest in science facilities, research and instrumentation to create new industries, new jobs and medical breakthroughs. Expand broadband Internet access in rural and underserved areas.
State Relief
The case for: As states face budget shortfalls, Obama's plan seeks to help states pay for Medicaid and unemployment benefits. State fiscal relief will be allocated to prevent increases in state and local taxes.
The case against: Opponents say the bill should focus on job creation that will make an immediate impact the economy. Republicans have specifically criticized a provision that would expand a government matching program for states that provide abortion and contraceptive funding through Medicaid. A Democratic official told CNN the House Democratic leaders are planning to remove the provision.
Medicaid: $87 billion. Increase Federal Medicaid Assistance Percentage so states do not have to cut eligibility for Medicaid due to budget shortfalls.
Law enforcement: $4 billion for states and municipality funding for law enforcement.
Safety Net
The case for: Obama proposed temporary programs to protect those most vulnerable to the effects of the recession.
The case against: As with state budget relief, opponents say the bill is too big and should simply aim to create new jobs. Some lawmakers have said some of the "safety net" spending provisions are wasteful, and many have called the bill unfocused.
Unemployment benefits: $43 billion. Extend through December 2009 emergency unemployment insurance assistance to states. Increase weekly unemployment benefits by $25, and provide incentives for states to expand unemployment coverage.
Cobra: $39 billion. Tax credit for recently laid-off employees to help pay for discounted health care. Obama estimates the plan will help 8.5 million people who recently lost their jobs.
Feeding the hungry: $20 billion. Increase food stamp benefits by 13%, and provide support for food banks, school lunch programs and WIC.
Tax Cuts for Individuals
The case for: The president proposed the so-called "Make Work Pay Credit" as part of an effort to spend at least 75% of the package in the first 18 months after its passage. Obama hopes that fast-spending provisions like tax cuts will quickly help low- and middle-income workers in need of spending money.
The case against: Opponents say the size tax cuts do not go far enough and on the whole don't make up a big enough portion of the entire package. Furthermore, they oppose giving tax breaks to people who do not pay taxes.
Middle-class tax cut: $145 billion. Tax cut amounting to $500 a year for individuals and $1,000 for couples. The full credit would be limited to those making $75,000 or less ($150,000 or less for workers filing joint returns).
Low-income tax cut: $5 billion. Expand the Earned Income Tax Credit, which is a refundable credit for low-income workers. Furthermore, the Make Work Pay Credit would be refundable, meaning that even tax filers without any tax liability -- typically very low-income workers -- would receive one.
Child tax credit: $18 billion. Temporary increase in the amount of the child tax credit that would be refundable.
Tax Cuts for Businesses
The case for: In an attempt to get money out quickly to low- and middle-income workers, the president has pushed for tax cuts for certain individuals.
The case against: Opponents say too small of a percentage of the total package -- 2.7% -- goes to small businesses. They also say that much of the proposed tax relief essentially amounts to spending, due to the provisions Democrats placed on the tax credits.
Small business write-offs: Obama would increase the amount of expenses small businesses can write off to $250,000 in 2009 and 2010 from the current $125,000 level.
Tax cuts for companies suffering losses: $17 billion over 10 years. Obama would temporarily broaden the "net-operating loss carryback" to five years, up from two years currently. The provision would let companies apply their 2008 and 2009 losses to past and future tax bills so they can get money back on taxes they've already paid or would otherwise have to pay.
initah cara orang amerika berfikir kerana menghapdapi cabaran yang mengunung sebegini?
Bank bailout could cost $4 trillion
Banks don't have enough capital to fix their problems, which means the Obama administration may need a lot more money to clean up the financial mess.
By Colin Barr, senior writer
Last Updated: January 27, 2009: 11:21 AM ET
NEW YORK (Fortune) -- The cost of the bank bailout is likely to be much higher than $700 billion.
While the Obama administration hasn't asked Congress for more money yet, some experts warn that government spending on support for struggling financial services companies will ultimately reach into the trillions of dollars.
The first half of the controversial $700 billion program to help banks has already been spent -- mostly on buying up preferred shares of troubled banks.
Part of the remaining $350 billion may be used to purchase troubled assets from bank balance sheets and place them in what Federal Deposit Insurance Corp. chief Sheila Bair has dubbed an "aggregator bank."
And while taxpayers will surely recover some of that sum eventually, more money is likely to be needed in order for the bank rescue to work.
"The amount of working capital you'd expect the government to take into this would be around $3 trillion to $4 trillion," said Simon Johnson, a senior fellow at the Peterson Institute for International Economics and author of its Baseline Scenario financial crisis blog.
Johnson, who until last year was the chief economist at the International Monetary Fund, said that banks will need more rounds of capital from the government because their cushion against losses is too thin. He also said that there is a need to get rid of some of the toxic assets weighing on financial institutions before they can recover.
With that in mind, he thinks that the net cost to U.S. taxpayers for a broadened bailout would be about $1 trillion to $2 trillion, or between 5% and 10% of U.S. gross domestic product. He said this figure is "in line with the experience" of other nations that have tried massive banking system restructuring.
Johnson isn't the first to estimate that the final cost of a bank bailout will be well north of $1 trillion. FBR Capital analyst Paul Miller said in November that just the top eight U.S. financial institutions alone needed at least $1 trillion in new common equity.
Plunging stocks increase the sense of urgency
But calls for a comprehensive response from the government have increased in recent weeks following the free fall of bank stocks.
The KBW Bank index has dropped 35% in January after a 50% plunge in 2008, as investors worry that the government may be forced to nationalize some banks -- and wipe out shareholders in the process. Shares of Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500) have been particularly hard hit.
"The big banks are a hope trade right now," Johnson said.
Though the Obama administration hasn't said it will need more money beyond the second $350 billion installment of the Troubled Asset Relief Program, or TARP, officials have not ruled out the possibility of asking Congress for further funds.
Vice President Joe Biden said on CBS' "Face the Nation" Sunday that the first task for the likely new Treasury secretary, Timothy Geithner, will be to assess whether the remaining $350 billion in funds available under TARP will be enough to stop the bleeding.
Geithner said last week that he didn't yet see the need for more money, but stressed that the Treasury may have to "act flexibly" if the problems in the economy and the financial sector deepen.
While officials will have to spend huge sums upfront to show the market that they won't let important institutions fail, Johnson said taxpayers won't have to end up on the hook for the entire amount of money that's being injected into banks.
Johnson said the government could get warrants in banks receiving assistance that would convert to common shares once the government sells them. He also said the government could hire private equity managers to oversee the assets the government takes on -- and sell them when the time is right.
These arrangements, he said, should allow the Treasury to extract some gains for taxpayers when the economic free fall ends and the banking system starts to recover.
Some observers believe asset values are so depressed right now that as long as the government has a well designed plan that restores investor confidence, taxpayers should profit from the financial bailout
"I think we have seen prices fall to a point where the government could very easily make money, though I'd be very happy if we end up breaking even," says Gary Hager, president of Integrated Wealth Management in Edison , N.J.
What could go wrong
If the history of previous banking system rescues is any guide though, there's also a good chance that removing toxic assets from bank balance sheets could leave taxpayers with a significant tab.
When Congress created the Resolution Trust Corp. in 1989 to clean up the mess left by the collapse of the savings and loan industry, legislators gave the RTC $50 billion to close or resolve troubled institutions.
But the RTC wound up needing three additional infusions of taxpayer funds over six years, as regulators confronted an industry whose health was much worse than feared.
In the end, taxpayers took a $124 billion loss on the RTC's operations, according to a 2000 study published by FDIC researchers Timothy Curry and Lynn Shibut.
The RTC resolved 747 institutions, with total assets of $394 billion, according to the study. That means taxpayers lost 31 cents on each dollar of assets handled by the RTC -- an institution that, because it was simply disposing of the property of failed institutions, didn't have to pay for assets it later sold.
In contrast, the widely discussed aggregator bank would be paying institutions that participate for their assets.
Details of how the aggregator bank would decide how much to pay for toxic assets have yet to be determined. But whatever method the aggregator bank uses, it could mean significantly higher startup costs than the RTC had.
So expect to see the Obama administration coming back to Congress for more money...soon.
bagaimana mahu dipertahankan nilai dan faedah dollar US sebagai fiat currency? apa kata orang rusia, orang tiongkok dan tok arab?
pada hemat saya che det kita telah pun siasat fikiran pakar ekoomis jepun: korupsi menghalang pembangunan naegara!
dan mari kita amati tindakan lanjutan dunia terhadap iran...
Puteramaya,
Salam Siber!
Apa Ada Pada ASEAN?
(apa ada pada iran)
Global crisis threatens to break up the Eurozone
By Ulrich Rippert
2 February 2009
The international economic crisis is having an ever more devastating impact on Europe. A few weeks ago German Finance Minister Peer Steinbrück (Social Democratic Party—SPD) was still speaking of a financial crisis centred in America. Since then it has become clear that the crisis has developed into a worldwide recession with increasingly serious consequences for industry and jobs.
At the beginning of last week came warnings of the possible bankruptcy of several European states. Since then there have been mounting reports of a potential breakup of the sixteen-nation Eurozone and the collapse of the European currency, the euro.
The current issue of Der Spiegel magazine warns: “The possibility of the disintegration of the Eurozone has become a burning issue on financial markets.” On January 29, Die Zeit commented: “The crisis is widening the gap between the euro countries. Serious economists are wondering when the first state will go bankrupt. After that it’s only a short step to catastrophe—the collapse of the currency union.”
Such a breakdown of the European currency is entirely possible because the crisis has exposed a fundamental problem in the European currency union: The countries that share the euro lack any common economic policy.
The economic position of the individual Eurozone countries is extremely diverse. At the beginning of the 1990s, the so-called “stability pact“ was adopted on the insistence of Germany. The introduction of the euro seven years ago was tied to firm conditions concerning financial policy. Each accession country had to commit itself to strict budgetary discipline. The annual deficit of a country was to be limited to a maximum of 3 percent and its total debt to 60 percent of the country’s gross domestic product (GDP).
First and foremost, it was Germany that urged the adoption of these criteria as a means of maintaining the stability of the euro. The euro was to be strengthened not only to compete with the US dollar, but also to ensure the dominance in Europe of the German economy, which was certain to profit from a stable currency owing to its position as the leading exporter.
A few weeks ago the German finance minister was still trying to defend the stability pact. His opposition to costly economic stimulus programmes led to heated conflict with the French and British governments. Since then, the crisis has largely destroyed the stability pact. Every European government—including the German government—is doing its best to save its own industries and economy.
On January 27, the federal cabinet put forward a supplemental budget amounting to 18 billion euros. It is designed to counteract shortfalls in tax revenue and increased expenditures. It also includes special allocations for investment in a second economic stimulus package. These will come from credits of up to an additional 21 billion euros. Combined with net borrowings of 18.5 billion euros already planned in the budget, the new package will result in total additional indebtedness of well over 50 billion euros for 2009. Never before has a German government had to approach financial markets with such massive demands.
Debt is growing even faster in other countries. Financial experts in Brussel’s European Union (EU) Commission assume that the deficits of the sixteen Eurozone states will increase to 4 percent of GDP this year and 4.4 percent the following year–although such figures have to be corrected upwards almost every day. The stability pact’s 3 percent cap on debt is being exceeded in all the Eurozone countries.
Consequently, a competition for access to credit has begun. This is sharpening antagonisms within Europe and pushing the Eurozone to the breaking point. Despite the single currency, government bonds of different countries attain widely different values on the financial markets. Some countries—like Spain, Portugal and Greece—have to pay much higher interest rates because of growing doubts about their credit worthiness.
Italy’s national debt is the third largest in the world at 106 percent of its GDP. With the threat of national bankruptcy looming, it is more and more difficult for the government in Rome to find financial backers. Fixed-interest government bonds, issued in mid-January, attracted buyers only after the return interest rate was significantly increased.
Over the coming two years Greece will need 48 billion euros to redeem old debts. In addition, it also has to finance its recent budget deficits.
Rating agencies are reevaluating downwards the economic status of “problem countries” and, as a consequence, raising the interest rates on the debt they issue. Greek ten-year government bonds now yield 5.75 percent; those of Ireland, 5.25 percent; and Spain, 4.21 percent. A look at German ten-year bonds, yielding just over 3 percent, reveals how serious the situation has become. In contrast to Greek and Irish rates, the German government is obtaining loans for, respectively, 2.66 percent and 2.21 percent less. And this divergent tendency is increasing rapidly.
Up until now, countries with falling credit ratings have devalued their currencies and lowered key interest rates, thereby boosting their economies by creating more favourable conditions for exports. This is no longer possible for the Eurozone countries. “It looks like [some countries] might have to leave the club,” writes Der Spiegel.
Facing this situation, Luxembourg’s finance minister, Jean-Claude Juncker, who is also the prime minister, suggested that the sixteen Eurozone states should issue common debt securities, or “euro bonds.” This was greeted with approval by some of the smaller EU countries, but met with bitter resistence from the Berlin chancellery. Just as Austrian Finance Minister Josef Pröll referred to euro bonds as “a royal charter to get into debt at the expense of others,” his German colleague Steinbrück claimed each country will have to take its own steps to cope with problems arising from the rescue measures for the banks.
Mounting economic and political problems are creating conditions in which self-interest predominates and the project of European integration is rapidly unravelling.
A collapse of the EU would have convulsive consequences. Countries that became insolvent and opted out of the euro club would be confronted with enormous problems. Their credit standing would decline further and the cost of credit would become even higher. Old debts would have to be paid off in euros. In the case of devalued currencies, this would cause additional expense. The inevitable result would be drastic austerity measures and emergency decrees, as in the 1930s.
However, preservation of the EU and the single currency is not the solution. Bridge loans for the most crisis-ridden member states are already being made subject to draconian financial conditions and austerity measures. This has already led to riots and street-fighting in several eastern European capital cities. A few days ago, EU Economic Commissioner Joaquin Almunia demanded painful reforms in the labour markets and welfare systems of Greece, Spain, Portugal, Italy and France.
Notwithstanding the tensions among EU countries, all European governments are using the European Union to shift the burden of the economic crisis onto the general population. To achieve this, Brussels is laying the foundation for a police state.
The EU Commission has become a synonym for deregulation and the dismantling of workers’ rights. Instead of reconciling social and regional antagonisms, it exacerbates them. This bureaucratic colossus–with 40,000 generally high-paid officials, unhindered by democratic control and subject to the influence of an army of lobbyists—manifests itself more and more openly as a tool of the leading European powers and the most powerful corporate interests.
The working class must prepare itself for major social and political confrontations and advance an international socialist programme that counters escalating economic nationalism and protectionism with a struggle to unify Europe on socialist foundations.
Inikah sebenarnya pekara yang dikhuatiri ramai mereka di WEF2009 Davos yang mana mereka mengesyorkan bank-bank mereka yang bankrup dan yang telah gagal patut diselamatkan dan disaat yang sama mahukan pendekatan bebas 'protectionism' diamalkan?
Dan bagaimana pula kita dengan ASEAN yang telah mengatakan bahawa permintaan ekonomi China tidak mampu menampung pengeluaran perindustrian ASEAN?
Dimasa yang sama berapa ramaikah jumlah pengangguran di negara kita yang sebenarnya? Sekiranya kita tidak dapat menjamin nilai masyarakat dan taraf hidup yang baik untuk rakyat apakah perlu untuk diadakan 'police state' bagi menangani masalah jenayah yang ada natijah yang amat sekiranya kita yakin dengan saranan Prof Bob Engel III yakni terrorisma did sebabkan oleh kemiskinan?
Dan di mana peranan Iran salam semua ini? Adakah Iran akan dikenali sebagai 'agent provocatuer'?
Joseph, Joseph Where Art Thou?
(interest is such sweet sorrow)
DAVOS 2009
As bailouts mount, IMF weighs issuing its own bonds
By Nelson D. Schwartz
Published: January 30, 2009
DAVOS, Switzerland: In a sign that more national bailouts may be needed to prevent what has become a global financial crisis from worsening, the International Monetary Fund is expected to borrow $100 billion from Japan and may even issue bonds, an unprecedented step in its 64-year existence...
World worries how U.S. will pay for stimulus
By Nelson D. Schwartz
Friday, January 30, 2009
DAVOS, Switzerland: Even as the U.S. Congress looks for ways to expand President Barack Obama's $819 billion stimulus package, the rest of the world is wondering how Washington will pay for it all.
Few people attending the World Economic Forum question the need to revive America's economy, the world's largest, with a package that could reach $1 trillion over two years. But the long-term fallout from increased borrowing by the U.S. government, and its potential to drive up inflation and interest rates around the world, seems to be getting more attention here than in Washington.
"The U.S. needs to show some proof they have a plan to get out of the fiscal problem," said Ernesto Zedillo, the former Mexican president who helped steer his country through a financial crisis in 1994. "We, as developing countries, need to know we won't be crowded out of the capital markets, which is already happening."
Zedillo said that Washington, unlike most other countries, had the option of simply printing more money, because the dollar was a reserve currency for the rest of the world.
Over the long run, that could force long-term interest rates higher and drive down the value of the dollar, undermining the benefits that come with its special status.
Until now, most fears about surging government debt have focused on borrowing by European countries like Spain, Greece and especially Britain, which is also in the midst of a sizable bank bailout. That bailout recently pushed the British pound to a 23-year low against the dollar.
While the dollar's status as refuge in a time of turmoil should prevent that kind of sell-off for now, a number of financial specialists warned that if fundamental factors like the lack of American savings and bloated budget deficits did not change, the dollar could eventually fall sharply.
"There aren't that many safe havens," said Alan Blinder, a Princeton economist who is a former vice chairman of the Federal Reserve in Washington, explaining why the dollar's status as a reserve currency was unlikely to be threatened.
Instead, he suggested, it is the dollar's long-term value against other currencies that is vulnerable. "At some point, there may be so much Treasury debt that investors may start wondering if they are overloaded in dollar assets," Blinder said...
to be or not to be?
tanya si-muslim
Sepatutnya dari Sdr Ruhanie Ahamd kepada Sdr Mohd Najib Abdul Razak:
Jan 31, 2009
Depression economics: Four options
By J. Bradford DeLong
WHEN an economy falls into a depression, governments can try four things to return employment to its normal level and production to its 'potential' level. Call them fiscal policy, credit policy, monetary policy and inflation.
Inflation is the most straightforward to explain: The government prints lots of banknotes and spends them. The extra cash in the economy raises prices. As prices rise, people don't want to hold cash in their pockets or their bank accounts - its value is melting away every day - so they step up the pace at which they spend, trying to get their wealth out of depreciating cash and into real assets that are worth something. This spending pulls people out of unemployment and into jobs, and pushes capacity utilisation up to normal and production up to 'potential' levels.
But sane people would rather avoid inflation. It is a very dangerous expedient, one that undermines standards of value, renders economic calculation virtually impossible, and redistributes wealth at random. As John Maynard Keynes put it, 'there is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose...'
But governments will resort to inflation before they will allow another Great Depression. We just would very much rather not go there, if there is any alternative way to restore employment and production.
The standard way to fight incipient depressions is through monetary policy. When employment and output threaten to decline, the central bank buys up government bonds for immediate cash, thus shortening the duration of the safe assets that investors hold. With fewer safe, money-yielding assets in the financial market, the price of safe wealth rises. This makes it more worthwhile for businesses to invest in expanding their capacity, thus trading away cash they could distribute to their shareholders today for a better market position that will allow them to reward their shareholders in the future. This boost in future-oriented spending today pulls people out of unemployment and pushes up capacity utilisation.
The problem with monetary policy is that, in responding to today's crisis, the world's central banks have bought so many safe government bonds for so much cash that the price of safe wealth in the near future is absolutely flat - the nominal interest rate on government securities is zero. Monetary policy cannot make safe wealth in the future any more valuable. And this is too bad, for if we could prevent a depression with monetary policy alone, we would do so, as it is the policy tool for macroeconomic stabilisation that we know best and that carries the least risk of disruptive side effects.
The third tool is credit policy. We would like to boost spending immediately by getting businesses to invest not only in projects that trade safe cash now for safe profits in the future, but also in those that are risky or uncertain. But few businesses are currently able to raise money to do so.
Risky projects are at a steep discount today, because the private-sector financial market's risk tolerance has collapsed. No one is willing to buy assets and take on additional uncertainty, because everyone fears that somebody else knows more than they do - namely, that anyone would be a fool to buy. Although the world's central banks and finance ministries have been devising many ingenious and innovative policies to stimulate credit, so far they have not had much success.
This brings us to the fourth tool: fiscal policy. Have the government borrow and spend, thereby pulling people out of unemployment and pushing up capacity utilisation to normal levels. There are drawbacks: the subsequent dead-weight loss of financing all the extra government debt that has been incurred, and the fear that too rapid a run-up in debt may discourage private investors from building physical assets, which form the tax base for future governments that will have to amortise the extra debt.
But when you have only two tools left, neither of which is perfect for the job - credit policy and fiscal policy - the rational thing is to try both, at the same time. That is what the Obama administration in the United States and other governments are attempting to do right now.
The writer, a former assistant US treasury secretary in the Clinton administration, is professor of economics at the University of California at Berkeley.
PROJECT SYNDICATE
apalah mamat de long ini - orang cakap pasal recession dan stimuli plan, dia heboh pasal -apa?- deflation dan depression!
suruh dia telan(g) 40 biji panadol...siapa?
(anda mesti stress dengan program saujana - jadi lawak bodoh labu-labi dari orang yang menghadapi hari bodohnya; manakan tidak ada yang kata ada adun letak jawatan, ada yang kata ada adun lompat katak, ada orang kata adun sakit dan buat lapuran polis di shah alam(?); tapi fulus pelan rangsangan ekonomi mana pergi?)
namun, tak cukup bakat masuk raja lawak astro! :)
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