Let's talk about the stimulus package....

[Violet_Crumble]

Do you think it'll work? I really don't understand enough about economics and stuff to know if it'll work or not.

[Esra Star]

1. Firstly, nobody understands economics.

It's not like physics or maths. It is more like theology.
Will the stimulus work? Nobody knows.
We have to refer back to FDR:- "The only thing we have to fear is fear itself."
If enough people remain fearful then it will go south.
If enough people, buoyed by the extra liquidity, go out and spend normally, the it will have worked.
The word "economy" can usually be replaced by the word "confidence'.
It's all about the confidence.
Encourage as many people as you can to stand up and be brave.
Can we do it? Yes we can.

[Matilda]

2. I don't know about high finance,

but most of the experts think it will.

I certainly don't believe Turnbull's tax cuts would be the answer, and I have reservations about the $900 handout.
How far does $900 go anyway? It's a very short-term fix, and I think rather a waste of resources.

For my business (entertainment), some regulatory changes would be the best help we could receive, but that means
undoing some of the bad legislation passed by the Keating government, and I don't think they're about to do it.

Job creation is obviously going to help, and if banks and business won't help, the government must. Sadly, I guess
the massive rebuilding task in Victoria will help the hard-hit building industry; just a shame that it's needed.

[Esra Star]

3. "How far does $900 go anyway?"

Matilda,
The $900.00 is handed to the citizenry to go out and spend as they see fit.
The theory is that 40 billion injected into the economy will create enough activity
and that enough businesses will in turn keep the money flowing.
Remember, success is all about confidence.

[Matilda]

4. I agree about the confidence being the real stimulus.

I don't object to being given $900, but the effects can only be short-term, even if everybody who gets it goes
straight out and spends.

What we all need and want is to work, so we can keep earning our pay and not needing handouts. When business gets
nervous and wary of starting a new project, when the banks get nervous and refuse to extend credit to customers
with a solid business and good track record, that's when you get problems. Every time a business cancels a project -
sometimes because a bank refuses to extend credit further - there's a trickle-down effect to all those other
businesses and individual people who would be involved in one way or another further down the line.

I do believe that it's often the fear that makes recession a self-fulfilling prophecy, but how to stop it?

[Esra Star]

5. I think it's all about the fear.

FDR said "The only thing....etc".
The jobs will only come from within the economy.
I guess the question for employers is:- Where is the line that separates bravery from stupidity.
I suppose there will be a signicant number who will inadvertently cross the line.
If everybody hides under a rock. KYAGB
Cheers