Obama to spend more
Well to encourage people to spend. Saving now is the utmost concern for some – confidence is so low can anyone reasonably say that people should, in fact purchase like they did last year?
I don’t know the answer to that, but with more details coming out as to how the Obama administration is going to get the US economy back on track, the markets at least are happy.
But will there be any real sacrifices in what Obama said he would do and what he can actually do?
The tax cut for the middle-class is a must – no doubt about that one.
started working on crafting an economic recovery plan. Obama’s team also must figure out how best to allocate the rest of the $700 billion bailout that Congress passed in October.
Obama said Monday that he hopes the new Congress will begin work on an aggressive economic recovery plan when it convenes in January so his administration can “hit the ground running.”
An economic stimulus package is central to Obama’s plan. Obama on Monday declined to speculate how big the stimulus would need to be, saying, “We are going to do what’s required to jolt this economy back into shape.”
Estimates for how much might be spent on a multiple-year stimulus package range as high as $500 billion to $700 billion. At the center of the plan are investments in the nation’s roads, bridges, schools and alternative-energy infrastructure. Obama has said his plan will lead to the creation of 2.5 million jobs.
That is far from what is happening in Britain.
There it is a matter of not allowing inflation to drop below 2% or there about – and telling the banks that they lend or be nationalised – taking into account the amount of tax payers cash they have received recently.
He said the government “may have to intervene directly” to ensure the banks start to increase their lending.
Mr King added that nationalising banks could not be ruled out.
Turning his attention to inflation, Mr King warned that the risk it could fall below 2% in the medium term has “increased significantly” in recent weeks.
He said this was due to the sharp fall in global oil and commodity prices, and declining consumer demand.
UK inflation fell to 4.5% from 5.2% in October. The government wants inflation to be as close as possible to 2%.
This Bank of England targets the Consumer Price Index, which excludes the effects of mortgage interest payments.
“We will take whatever action is necessary to ensure that inflation is close to target in the medium term,” Mr King said.
UK interest rates are currently at 3% following a 1.5 percentage point cut at the start of this month, and many economists are forecasting a further cut in interest rates in December.
While Mr King would not directly comment on future rate movements, analysts said he did little to cool expectations of a further reduction next month.