This week, we're planning to talk a lot about the Obama stimulus plan, starting with today's podcast. We're also planning to dive into the proposal for creating a single "bad bank" to buy up and sell off toxic assets.

Obama administration wrestles with the central problems of launching a bad bank. At issue: How to price the stuff no one wants. Meanwhile, the European Central Bank is planning its own "bad bank."

We asked last week whether you've changed your saving/spending habits. After the jump, a note on this from Ian Shepherdson. Plus: Keynesian report of the week.

Shepherdson, chief U.S. economist with High Frequency Economics, looks at the December numbers on personal income and writes:

[R]eal spending on durables fell 0.8%; non-durables fell 1.8% and services rose a mere 0.1%. With incomes falling -- the most recent rise in disposable income was 0.1% back in Sep -- and confidence shattered we have to expect spending to keep falling for some months yet. The concomitant rise in the saving rate, now at 3.6% compared to 0.8% in Aug, is good news in the long run but the key source of pain right now.

The New York Times Magazine wins the award for the week's most Keynesian report, with David Leonhardt's "The Big Fix." Leonhardt's message: Government spending will save us. And maybe he's right, I dunno. I found this part especially compelling:

"As a country we have been spending too much on the present and not enough on the future. We have been consuming rather than investing. We're suffering from investment-deficit disorder. . . .
"Americans are indefatigable buyers of consumer electronics, yet a smaller share of households in the United States has broadband Internet service than in Canada, Japan, Britain, South Korea and about a dozen other countries. Then there's education: this country once led the world in educational attainment by a wide margin. It no longer does. And transportation: a trip from Boston to Washington, on the fastest train in this country, takes six-and-a-half hours. A trip from Paris to Marseilles, roughly the same distance, takes three hours -- a result of the French government's commitment to infrastructure."

categories: Morning Report

10:00 - February 2, 2009

What is this?

Share