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Monday, February 2, 2009

Great Recession Roundup — February 2, 2009

Items of Interest:

The Huffington Post:
Bailed Out Bankers To Be Hauled Before Congress
— Rep. Barney Frank plans to call the heads of major bailed-out banks to testify before his committee next week, two aides to the House Financial Services Committee chairman said. — Frank, a Massachusetts Democrat, has been a vocal proponent …

Jane Hamsher / The Huffington Post:
Obama Financial Team to Taxpayers: You'll Get Nothing, and Like It — As a business person, Warren Buffet quite rightly wanted something for his money when he bought up failed banks that couldn't get help anywhere else. In fact, he wanted a lot. He expected to have the ability to make sure the same …
Jill Tubman / Jack & Jill Politics: We are in big trouble: Scary Charts You Need to See
Bailed Out Bank of America Sponsors Super Bowl Fun Fest — Morgan Stanley Hosts Conference at 5-Star Resort in Palm Beach — Despite a near collapse that required $45 billion in federal taxpayer bailout funds, Bank of America sponsored a five day carnival-like affair just outside the Super Bowl stadium …
Kevin Depew / Minyanville:
Five Things You Need to Know --

2. Point: The Dollar is Doomed... I'll be blunt. The US dollar is doomed.

Today, our country (government and private citizens) are carrying a debt load of more than $53 trillion dollars (almost 400% of GDP), and the borrowing is far from over. To put that number in perspective, consider that one billion seconds is about 32 years, but one trillion seconds is nearly 32 thousand years. Our debt is massive.

Remember, the government can't create wealth and productivity; it can only transfer it from one party to another. As a country, where we were once borrowing this money from the rest of the world, mainly China and Japan, we're now reduced to printing this money out of thin air and the end result will be the inevitable devaluation of the US dollar.

Well, that's one way to look at it. But there's another side to this... ahem... coin...

3. Counterpoint: But Wait, Dollars Are Scarce... While the argument in point 2 does seem logical, let's hold off on making funeral arrangements for the dollar just yet.

It may seem counterintuitive, but this financial crisis is precisely why the greenback is increasing in value. It's called deflation. And what's happening is that people who thought they had a certain amount of dollars in assets they own, such as their home, are now finding when they go to sell they aren't getting as many back as they thought they would. This deflation is creating a dollar shortage....
John Tamny / Forbes: This Budget Deficit Is Different -- And Dangerous
Andrew Leonard / Salon: Saving v. Spending: The Penny-Pinching Paradox
Noam Scheiber / The Plank:
How Quickly Will the Stimulus Kick In? — You may recall how, the week before last, Republicans were up in arms over a CBO report showing that under 40 percent of the estimated $350 billion in stimulus spending projects would hit the economy in the first two years.
Conor Clarke / The Atlantic Business Channel: The Senate's stimulus and the CBO