Stimulus Application Form 2008: Fill & Download for Free

“What if Trump was elected in 2008, would his policies have had helped the US recover faster and better than Obama’s policies?”The mood of the Republican party at the time of the Bush Crash was one of extreme austerity. Every Republican propaganda organ trumped austerity, and would brook no Keynesian intervention.In fact, a number of states underwent austerity regimes between 2009 and 2015, together with tax cuts and other incentives. Every state which embraced austerity took longer and recovered more slowly than those which did not. The best example is Kansas, of course, which executed severe tax cuts while cutting government and suspending regulation. Virtually the entire Trumpian program, encapsulated.In the end, Kansas NEARLY COLLAPSED after cutting welfare, transportation, health care and education. Even an austerity government could not raise enough tax revenue to offset costs and debt. It paralleled precisely the debt spiral that Greece found itself in. In 2017 the Republican Kansas legislature finally rebelled and raised corporate taxes to try to bring sanity back to the state.Now imagine a US economy headed by Trump in 2009, with 800,000 jobs per month being lost, a party hostile to the Fed and unwilling to spend anything to salvage the economy. If you’ll recall, Treasury Secretary Paulson came to Congress in late 2008 and begged them to create a $trillion-dollar fund to save the US - and world - financial structure, whose collapse was imminent.On inauguration day, 2009, the economy was in free-fall. The financial world was in full-fledged panic. Markets had already collapsed by half and would fall another half in the next two months. Most people who had relied on 401k’s were eviscerated; over the next year many of those targeted investment funds, components of the 401k world, would collapse and merge.Banks refused to lend money to other banks overnight. They could not be guaranteed the security of those funds, even through the Fed. Lending to business froze. Any business which relied on credit or forward sales of receivables to make month-end payroll faced immediate closure. That’s why layoffs were increasing, not decreasing.Counterparty risk was at the root of the financial failure: the hundreds of $trillions in derivatives all looked to someone backing them when they matured. The biggest of these was AIG. The potential for counterparty failure in 2009 dwarfed all the bad things that had happened so far - and threatened to throw the world so deeply into debt that it could never have emerged. We’re talking about many multiples of global GDP.Over the next three years, seemingly every corporation cut its dividends. Investors, retirees and pensioners dependent on those payouts were cut off at the knees.So here’s the thing. Let’s say Trump comes in and does his tax cut thing. So absurdly and totally ineffective that it’s just gas on the fire. I mean, even more absurdly ineffective than it is today. At the same time, he castrates government and with his new Republican congress goes full-bore into austerity mode. Hits the ‘consultant’ community hard, rolls back minimum wage on everyone else. The federal government lays off a million workers; state governments are forced to lay off millions more.[In fact, the austerity states did lay off hundreds of thousands, mostly education employees, in an effort to (a) stymie Obama’s success and (b) cripple government unions. They took a full point off national GDP in doing so, and eventually legislated successfully against union power. Which is holding down wages today, even under full employment.]The global financial panic intensifies. Business lending evaporates. Half the business in the country disappears; the other half teeters. The world follows suit. Due to losses, virtually no business owes or pays tax in 2009, 2010, or 2011. Or 2012. Or 2013. By the beginning of 2010, the government has no national income with which to offset the national debt, and enters its debt spiral. It tries to offset by issuing Treasuries, which eventually fail. The government cancels all payments for medical and senior and welfare aid. The over-65 population is immediately thrown out onto the street. Widespread hunger and sickness envelopes the bottom half of the population. Hospitals close everywhere. Senior, assisted living and nursing homes collapse. No city can afford to maintain a public hospital; private hospitals disappear, with the entire medical support network. Maternal and infant mortality rise to third-world levels, even higher than in Texas today.The world goes into complete financial and economic collapse within a year. Virtually anyone in the US who owes a mortgage, defaults. Banks collapse everywhere; most cities are deserts. Depository banks, no longer subject to the regulatory restrictions of Glass-Steagall, collapse en masse as their investment portfolio losses overwhelm their depository obligations. Deregulation is a fine thing, isn’t it?Obama, in contrast, nationalized GM’s employment and risk. (Over loud Republican opposition.) Then he nationalized AIG and its counterparty risk. (Over extreme Republican opposition.) Then he nationalized Fannie Mae and Freddie Mac and eliminated the counterparty risk on their mortgage portfolios (overcoming implacable Republican opposition and a chorus of NO’s). He worked TARP and stimulus programs through Congress, supported and rescued business wherever possible. He put money into taxpayer’s hands. Republicans hated, hated, hated that.Meanwhile, Bernanke began a program of rescuing banking systems around the world, exploding the Fed’s asset base and practically forcing banks to resume interbank lending. Even Europe, after years of unsuccessful austerity that was doomed to cost them the entire southern tier of nations, began to follow suit after the US rescued D-bank and numerous others.The two succeeded, by mid-March of 2009, in halting the bleeding due to financial panic. The markets turned around (after most portfolios had lost 75% of their value) and peaked quickly through 2011, recouping a big share of the loss.In 2008–12, Republicans were all about austerity, applauding European and Red State efforts to slough off the dead weight of bad business so that new shoots could appear. But they didn’t. Spain, Italy and Greece were being written off. Kansas was on the verge of debt implosion and Louisiana under Jindal wasn’t far behind. Even a decade after the Crash, few of the Red State austerity economies have come roaring back the way the Blue State economies did.So the likelihood is that, in the US, city centers would be plagued today by extreme hunger, sickness and poverty, with most of their taxable realty vacant (foreclosures began trailing off around 2014, lagging the employment crisis).The likelihood is that authoritarian states, like Russia, would be the most powerful reconstructed countries in the world, dictating to third-world countries like the US.So, yes, we still have that.[Edit: it is true that the GSE’s were placed into conservatorship in early Sept of 2008, placing $1 Billion in senior preferreds plus warrants for nearly 80% of the stock in Treasury hands - against a $5 Trillion liability. Whatever you may call it, Treasury effectively owned the GSE’s at that point. Virtually every GOP organ screamed in anger. Obama spent the next five years working to recapitalize the GSE’s and ensure that any subsequent liability was a private, not public, responsibility. I suspect Trump would have taken the opposite course, immediately selling the Treasury assets and letting the GSE’s float to whatever harbor, if any, would receive them.The Treasury release at the time whined that action was taken because “ambiguities in their Congressional charters created a perception of government backing” (Treasury Office of Public Affairs release, Sept 7, 2008).GSE mortgage securities were held in the asset vaults of banks all over the world. They were the basis for slice ’n’ dice derivatives written against them, and derivatives written against them, and so on. When the world discovered that the CDO’s and CMO’s they had in their vaults were NOT truly AAA-rated, a few hearts stopped beating. The potential liabilities were simply breathtaking.It was during that September that the word “Trillion” first became associated with dollar amounts, and liabilities, in common parlance.][Edit 2: The package passed in October of 2008 was Paulson’s desperation package. It gave him $700 billion to add to bank reserves. He was able to force those reserves into the banks in exchange for some of their deeply-soiled assets. The assumption was that it would be used for lending. However, nearly all of it sat as cash in bank vaults, never to be filtered out to businesses gasping for it. It was thought that $700B would be a huge stimulus - but it landed on the financial floor with a thud, and was scorned by the right as a “bailout”.Following the absorption of the principal market-makers into the nation’s top-tier banks, nothing really improved. The country was in the midst of the worst credit freeze it had seen in a century, a crisis which had begun in the middle of 2007. The stock market, which began its crash in September, collapsed with grim losses through the end of the year. Debt instruments were laughable as regulators were about to connect rating agencies and woodsheds. Auction-rate preferreds, which relied on monthly auctions, received no bids - and that market utterly disappeared along with the huge dollar financing it represented.In September, 2008, a money market fund - the Reserve Primary Fund - petrified the financial and consumer worlds. It “broke the buck”, with an NAV of only 97 cents. MMFs are the staple for parking loose change, the safest of the safe in short-term money. But they were no longer safe. In October, 2008, nothing was safe. Nothing. For instance, in April, 2008, oil had broken $120. Ten months later, WTI crude listed at $34. Strong people wept.In early 2009, Obama was able to obtain an $800B package that he did wield as stimulus, though its application stretched through his term.]

On the short run, a stimulus seems to be the only source of encouragement. However, that incentive has to both be applicable, and invest in needed infrastructure. There seems to he mostly a misalignment unemployment: people don't have the skills needed. Encouraging high-end manual labor, robotics, clean energy will allow business plan in those area to safely assume competent workers will match their growth, and complement the stimulus.

I will focus on US universities.In the period from 2002 to 2007, many Americans still considered university to be essential for those who wanted to work in business, which is where most of the brightest and most ambitious students (both US and international) wanted to go.However, in 2008, there was the US subprime mortgage meltdown, which had a huge effect, not just in the US, but worldwide. The Chinese government, then under President Hu Jintao and Premier Wen Jiabao, were frightened by the depth of this recession, and injected about US$1.4 trillion into the Chinese economy to prevent it from going into a tailspin, and to preserve economic, social and political stability.The US economy was split into two by the 2008 subprime meltdown: those who were able to service their debt did well, while many of those who had bought homes in the period from 2002 - 2007 were not able to service their mortgages, often ended up underwater, with their mortgage payments costing more than the remaining value of their homes.The meltdown also had a profound effect on US universities and colleges. Many US students depended on partial and full scholarships to attend university, and many were simply not able to afford to go to university. Second-tier and lower tier universities and colleges, many of which are for-profit, quickly discovered that unless they were able to find students which paid full tuition, they were in danger of going bankrupt.They discovered that there was a ready source of full-tuition students: international students, and specifically students from China. Because of the emergency stimulus package introduced by the Chinese government, many Chinese families were still flush with cash, and they wanted their only child to go to university in the US.Many of these US universities and colleges admitted cash-paying Chinese students by lowering their admissions requirements in order to stay economically afloat. The American universities wanted full-tuition paying students, and the Chinese parents wanted their child to have US degrees, even if they did not good grades or were not able to speak English. For many of them, it didn’t matter which US university they went to, as long as it was a US degree.Whole new services quickly sprouted up to exploit this situation including:Professional essay writers who “helped” Chinese students to write application letters;Test preparation centers which helped the Chinese to take TOEFL and other exams;Ghost writers for academic papers;It just went on and on.In a way this is unfortunate, because all students from China, including students who are honest and academically gifted now have a stigma attached to them. That is, unless they go to the best US Big Ten universities.The value of US university degrees have gone down much in China, and in 2016, it is not unusual to meet recent Chinese graduates who have returned to China, who cannot have a casual conversation in English.Most Chinese and western employers now play much closer attention to which universities the recent US university grads attended, and ask much more probing questions before hiring.The halo which formerly went to all who graduated from a US university gets much closer scrutiny now.