I thought it interesting how some reports confused China's financial actions these past weeks as a "bailout". It wasn't. It was leadership.
No bailout--- this was a stimulus package and talk about "thinking big"! It's early Saturday morning for me so forgive me if these numbers wobble a little but they are so freakin big I am rounding to the closest billion or so:
China GDP is about $4.2T. Their stimulus package was about $586B or 14% of GDP. Why do they need the stimulus- their annual GDP growth is still 9% per year? Why? Because they are not waiting for a crisis-- they are exhibiting leadership.
So far, the US has "printed" more than $2T this year and all of it went to either "prop ups" or "pay offs" for a bunch of institutions that don't look like they are going to make it anyway. And, as I predicted in my post of October 26 more and more people are lining up to "get paid" for their mistakes.
The $168B 2008 stimulus package was a good idea but misguided and too small to make a difference. Misguided--The money didn't go to the people who would actually spend it and rather went to those who wisely decided to pay off some of their credit card debt. Net stimulative effect --> zero.
Maybe it is time to swallow our pride and follow the Chinese. The US Government stimulus program needs to be 14% of US GDP. Hey, but do the math, if we print that much money on top of what we already have printed, we will be insolvent.
I still think we need to sell Alaska-- it's obvious we are not going to use it for anything.
