X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Will these US$ 819 bn save the world? - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jan 29, 2009

    Will these US$ 819 bn save the world?

    Obama government's first triumph
    In what can be called the first triumph of the Obama-led government, the US House passed Barack Obama's proposed US$ 819 bn stimulus package, aimed at lifting the economy out of recession through tax cuts and more than a half-trillion dollars in new spending. The package would provide money for initiatives including US$ 40 bn for health-care coverage to the jobless, US$ 38 bn for education, US$ 30 bn for highway infrastructure projects, US$ 20 bn for food stamps and US$ 18.5 bn for energy efficiency programs.

    The bill which will now seek the approval of the Republicans is, however, expected to face some encumbrances as the opposition has already complained that it included items unrelated to boosting the economy, including US$ 1 bn for the 2010 census and US$ 400 m to study global warming. Further, it is also estimated that the long-term cost of the economic recovery package could rise to US$ 1.2 trillion over 10 years, as the government will borrow to fund the plan and pay an estimated US$ 347 bn in interest. The Congressional Budget Office has also estimated US' fiscal deficit to rise to 10% of GDP including the stimulus package. Nonetheless, the agency expects the package to create between 1.2 m and 3.6 m jobs by the fourth quarter of 2010. We wonder whether this repeated attempt at offering life support to the economy that is the largest consumer of the world's resources will help save the rest of the world as well.

    Meanwhile, the benchmark US indices rallied yesterday as investors drew comfort from the government's initiatives at stimulating credit flow and creating job opportunities. While the Dow Jones gained 2.5%, the S&P 500 and the Nasdaq gained 3.4% and 3.6% respectively. Those gains were sustained through the close after the Federal Reserve pledged keeping the interest low and doing 'whatever it can' to help get credit flowing again.

    30 m people yet to lose jobs
    If you think we are exaggerating, we are not! This is what the International Labour Organisation has to say. As per the organisation's Global Employment Trends report, even in the best case scenario, the global economic downturn could see 30 m more people lose their jobs by the end of the year, taking the unemployment rate to decade high levels. The projected worldwide unemployment level of nearly 230 m people in 2009 will be nearly 21% higher than at the end of 2008. This would hike the global unemployment rate to 6.5% from 6.0% in 2008. It may be noted that over the last ten years, the global unemployment rate has ranged from 5.7% to a peak of 6.3% in 2003. The unemployment rate would also relegate 26.8% of the world's workforce to the class of 'working poor' i.e. unable to earn more than US$ 2 (Rs 100) a day. The potential loss of jobs is particularly perilous for large populated economies like India and China and needs to be contained to evade social unrest.

    Bank losses to double to US$ 2.2 trillion
    If the loss of jobs thanks to the trillion dollars of bank losses were not enough, the IMF believes that we have not yet seen the end of it as global bank losses from toxic US assets is set to double to US$ 2.2 trillion. The figure is nearly 60% higher than the fund's earlier prediction of US$ 1.4 trillion losses. With the global growth rate shrinking to a miniscule 0.5% in 2009 (the weakest postwar growth rate) as per the fund's estimates, several advanced and developing countries could be seeking more than just fiscal stimulus packages.

     

     

    Equitymaster requests your view! Post a comment on "Will these US$ 819 bn save the world?". Click here!

      
     

    More Views on News

    Insider Leaks Equitymaster Stock Picks (The 5 Minute Wrapup)

    Jul 25, 2017

    Equitymaster HQ has been infiltrated. Valuable stock ideas have been leaked. Who's responsible?

    Raymond and Other 'For Profit' Companies Who Don't Care about Shareholder Returns (The 5 Minute Wrapup)

    May 27, 2017

    What happens when minority shareholders are short-changed in the normal course of business?

    Why Commission Driven Model In Mutual Funds Should Be Eliminated... (Outside View)

    Feb 15, 2017

    PersonalFN believes SEBI has taken a step back-apparently in the admission of it going overboard with the regulations.

    This Book Changed How I Looked at the World of Man and Money (Vivek Kaul's Diary)

    Aug 24, 2016

    And here's your chance to claim a free copy of this book...

    The Developed World is Dying because of Demographics, Debt, and Deflation (Vivek Kaul's Diary)

    Aug 12, 2016

    And Why India's demographic dividend could turn out to be a doubtful debt...

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    MARKET STATS