Monthly Archives: January 2009

How big is big? – or – A trillion here, a trillion there, and soon you’re talking real money…

So, we’ve all been hearing about the various fiscal stimulus packages which governments around the world have been putting together. Most economists—indeed, virtually all of them except for the outer fringes—believe that such stimuli are necessary to restoring the global economy to some semblance of order. The debate now is largely over how large these packages will be and how much spending will be required to restore that sought-after order.

If I recall correctly, President Obama will be meeting with Congress today–a phrase which two years ago I didn’t expect I’d be writing—to discuss the fiscal stimulus package. As it stands, the package involves $825 billion, of which $550 billion is spending (the balance is tax cuts). This is in addition to the $700 billion accorded to the EESA/TARP bill. Ignoring the other expenditures made—because I cannot find them all in the short amount of time I want to write this—this amounts to $1.25 trillion in spending. Certainly appears large, doesn’t it?

Now consider that the estimated GDP of the United States is $14.85 trillion (from the CIA World Factbook). The $1.25 trillion (or $1.525 trillion to count the total cost to the government’s coffers) makes up a “mere” 8.4% ( or 10.3% for the larger figure) of GDP. Now, I am not a professional economist, but some quick examination of past financial crises would seem to indicate that we will be very lucky indeed if this is all we have to spend. A World Bank paper by Caprio and Klingebiel (available here) lists a significant number of financial crises which have occured around the world since the 1970s. Most of them were only resolved with expenditures significantly over ~10% of GDP. Of course, many also involved the deadly “twin” crises of currency and financial collapse, which the US almost certainly will not face. However, many did not have significant twin crisis effects–indeed, to take the example of the US savings and loan crisis, which was vastly smaller than the present crisis we are in, one can see that expenditures of 3% of GDP ultimately proved necessary to restore health to the economy. Then, 3% of GDP was $180 billion; now, it is $446 billion, so expenditures up to that amount shouldn’t even have been in doubt (recall the massive controversy over the $700 billion TARP).

Ultimately, this is all to say that, in my at least mildly-educated opinion, we will be lucky to escape with spending totalling only $1-to-2 trillion over the whole extent of the crisis.  We had a lot of money going into this, and it will take a lot of money to get us out.


So you think you’re going to attend an Inauguration, do you?

You’ll have to deal with the apparently colossal incompetence of the Capitol Police and associated security first.

Yes, they did run a ceremony which went off with nary a security problem to be found. They should be acknowledged for that. However, that essentially ends the positive things I have to say about the ceremony today and the people who planned it.

I managed to get a purple-area standing ticket. Foolishly, I thought that would let me get through the gates into the purple standing area. Many thousands of others did as well. It soon became apparent, though, that no one was running the show in the staging area for the purple entrance. The line from the east stretched all the way from the screening entrance at Louisiana and C streets up 1st Street, left on D street, and then left down the 2nd Street exit ramp from the 395 tunnel at least much of the way though the 395 tunnel nearing the exit on the south side of the Mall. Suffice it to say, many thousands of us purple-ticket holders were standing–quite patiently and good-naturedly, fortunately–in line for hours. That was the Capitol Police’s first mistake: they only opened the gates at 9am instead of, say, 7am. Their second mistake: not having any official presence all along the line–there was no one to stop people from jumping in wherever and getting in ahead of others. No one was around to direct us which way to go, so those of us further back in the line simply followed those ahead of us, who we assumed knew the way. That worked relatively well until the end, when it became apparent that the entrance was actually not where it looked like it was–a large sign said “Purple Gate” at 1st and Louisiana, but the gate had actually shifted a block north for some reason to the aforementioned Lousiana and C intersection.

So, now that the route is out of the way, the incredible slowness of progress becomes the next issue. There were not nearly enough screening stations, as evidenced by the thousands of purple ticket holders who couldn’t get in before they closed the gates in our faces. I was about 30-40 feet from the entrance gate when they closed it. All around me, other purple holders waved their tickets in the air to no avail.

What is sad about this is that, for the area I was supposed to be in, the same number of tickets are always available. This was the standardized standing-area for which tickets are distributed at every inauguration. There is no reason that they should not have been able to prepare for and process all of the people who had tickets, since that number was no more than any previous inauguration–none of which, to my knowledge, had problems with getting ticketed people in.

I ended up seeing nothing and listening to the inaugural address over a radio which someone had the foresight to bring. Extremely disappointing, to say the least.

What compounds the annoyance, though, is the complete cover-my-ass mode which the police chief entered. He initially had the gall to say that all ticketed people were able to get in to see the inauguration. After being called on his complete lie, he suggested that there were some people who couldn’t get in, with purple ticket holders being particularly affected. This WaPo blog post about sums it up: Also, as I was near the gate at the time they closed it, I can tell you that, while it was crowded, everyone was very well-behaved and there was definitely no “surge” to get in that could have hurt anyone. It would seem that the police just reached the time when they had to close the gate and needed an excuse for all the people who couldn’t get in.

Ultimately, I met some nice people with whom I chatted in line, but was worse off than if I’d simply gone onto the Mall and watched it on one of the screens. At least they got to see something…

Perhaps the most useless ticket I've ever had--a nice souvenir, to be sure, but sadly ineffective in fulfilling its primary duty.

Perhaps the most useless ticket I’ve ever had–a nice souvenir, to be sure, but sadly ineffective in fulfilling its primary duty.