This week, I’ve been swamped with financial analysis, and I haven’t even been glued to the TV. I’ve been editing January issue’s part one of our annual Northeast Ag Outlook, and attending Cornell’s Agribusiness Economic Outlook Conference.
The overwhelming bottom line is: Uncle Sam must spend whatever it takes to “kick-start” the U.S. economy. Don’t wait for a new battery (Obama administration) to spark it.
History tells us that President Herbert Hoover procrastinated in injecting money into the economic system. The result – the Great Depression. Yes, the 2009-2010 federal deficit would grow by gargantuan proportions; but it beats the alternative!
So far, U.S Treasury Secretary Henry Paulson has been acting “Hooverish”, releasing only half of what Congress and the President signed on for. As I write this, Congressional Republicans were foot-dragging on the auto industry bail-out. We got into the mess because congressional leaders failed to address the sub-prime fiasco and assumed housing values would never hit a reversal.
None of them are doing enough to fire up confidence in America’s economy and quench our financial fears. And, you can bet that they won’t fix the policies that led to the sub-prime disaster – which they promised to do in January.
So where do I get this spend thrift attitude?
Peering over his pile of “off the cliff” economic reports, Cornell Economics Professor Steven Kyle pointed out that no more economic stimulus can come via monetary policy. The prime (interest) rate can’t go lower than almost zero.
“To get the economy going,” he emphasized, “there’s only one game left in town – increase government spending! It’s very unfortunate that only half of the $700 billion (financial bail-out) was spent.”
Kyle contends massive federal spending is the only way out – on the order of 10% of gross domestic product. China has already done so. “We don’t want to have to come back and try again after a too-small attempt. And it must be targeted to where it’ll be spent quickly – extending unemployment, aid to state governments, immediately implementable infrastructure projects.”
I won’t steel more content away from a story posted as a “Web exclusive” on this Web site. And we’ll have still more clear thinking in the 2009 Northeast Ag Outlook coming soon in your January issue of American Agriculturist.