Another Gigantic Stimulus Being Pushed Already

The ink is barely dry on Bush’s signature on the $700 billion “TARP” legislation bill and already there is talk of another nearly as large.  CEOs are already urging the Obama administration to implement another quickly:

A group of business executives on Tuesday urged President-elect Barack Obama to “quickly implement” a large stimulus package soon after taking office.

The stimulus should be in the range of $500 billion, said Roger Ferguson, chief executive of asset management company TIAA-CREF, an amount much larger than has been mentioned by Democrats in Congress.

The recommendation on the stimulus echoes comments made by a top Obama adviser late Monday. In a speech to the conference, Larry Summers cited a report by Goldman Sachs that suggested the stimulus should be in the range of $500 billion to $700 billion.

Earlier this month I made the following prediction for 2009 (see 2009 Predictions):

10.  The federal government will find another huge bail-out necessary as the economy teeters on the brink of recession.  This time the package will top a trillion dollars.  Much will be devoted to infrastructure and renewable energy projects.

Predicting that another stimulus package would be coming isn’t that much of a stretch, but I doubt that many would have predicted a trillion dollars.  OK, so what’s being asked for here approaches $700 billion, but that will come early in the year.  If that’s all it is, I look for more down the road.

It’s easy to make these calls when you understand the following:

  1. The U.S. is completely bankrupt.
  2. The trade deficit continues to drain $700 billion per year from our economy.
  3. The only way to keep the economy afloat is for the government to print at least that much money to make up the difference. 

Restoring a balance of trade is the only action that can break this cycle. 

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