Daily Investment Interpretations

January 6, 2009

2009-1-6:
      I think it's worth quoting a few lines from Dr. Paul Krugman's latest article, dated Sunday: Fighting Off Depression. In it, he says, "Let’s not mince words: This looks an awful lot like the beginning of a second Great Depression. So will we 'act swiftly and boldly' enough to stop that from happening? We’ll soon find out."
      Today, he followed up his article with back-of-the-envelope estimations of the effect that the Obama Team's $700,000,000,000 -$1,000,000,000,000 stimulus plan might have on unemployment, and concluded that the plan might reduce unemployment by as much as 1.7%. He summarizes:
    "I see the following scenario: a weak stimulus plan, perhaps even weaker than what we’re talking about now, is crafted to win those extra GOP votes. The plan limits the rise in unemployment, but things are still pretty bad, with the rate peaking at something like 9 percent and coming down only slowly. And then Mitch McConnell says 'See, government spending doesn’t work.'
    "Let’s hope I’ve got this wrong."
    Michael Ashbaugh presented his weekly, publicly available technical analysis today: Ashbaugh says 2009 tone is good, so far.
    Alcoa announced today that it will lay off 13% of its staff: Slashing costs to ride out the recession.  
    Dr. Irwin Kellner has this to say about the yin and yang of the government's monetary and fiscal interventions: Kellner's warning on short-term fixes.
    Here are other, perhaps-more-upbeat articles: Stocks end higher on hopes for economic rebound, and Rally Resumes: Are Stocks Forecasting Recovery? (includes video).(In the video, one of the commentators mentions Paul Krugman's limiting case of a Second Great Depression.)