[LottiFurmann]

A couple of points:

1) The economy is worse than the Obama team claimed when they demanded the stimulus. I think if they couldn't get it right the first time, why the hell would we think they would get it right the second. Maybe they'll actually read the bill before voting on it?

Indeed, there's also a posibility that maybe they will get things wrong again. But right now the bigget risk is to fall in deflation rather than stimulating the economy too much (read: inflation), IMO.

2) I agree that tax cutting to spur investment is the way to go, but the Obama team is actually proposing exactly the opposite. Cap and trade, massive increases in healthcare, continuing the raising of the minimum wage, let the investment, income, and death tax cuts lapse, etc.

But in a way or another, the tax burden will have to increase for paying for Social Security claims (in let's say 2020).

Cap and Trade is a scheme under which the gov't sells permits to pollute in a market? Sorry but if I know what Cap and Trade, is it's in spanish, not english, so I can't coment on that. Though I think that maybe there should be a federal fuel tax once the crisis ends because the gov't will need the money to fix its finances (and would help the enviroment, give incentives to develop alternatives to fuel, etc).

The basis of Obamanomics, spend, spend, spend, and tax, tax, tax is a well worn path to failure. The truly impressive thing is the utter size and scale that Obama, Pelosi, and Reid are attempting.

Right now the gov't must start spending or lowering taxes to reactivate the economy as long as the recovery doesn't come from the private sector. The spending should not be done in roads and bridges to nothing like in Japan in the 1990s though.

There are really only a few outcomes, and none of them good. We either have significant to massive amounts of inflation, followed by deflation. Think the 1970's or Argentina followed by Japan of the 1990's. Or we just head towards deflation and get it over with. Think Japan of the 1990's to the 1930's.

Wether you look at Blue Chip forecasts or bonds spreads, everything signals that the market expects inflation to stay low for the next 5 years AFAIK, in fact if I ain't mistaken the market expects inflation to stay around 2% in the near future. If expected inflation raises then I'll worry, but not for now. I didn't understand the Argentina followed by Japan idea, both countries were different realities back then (late '80s, Japan's bubble was about to end while Argentina had four-digit inflation).

A more interesting thing would be to see what the Fed's exit strategy is.

My vote is let's get the deleveraging and credit bubble popping over with and move on. The pain is coming, but Obama et al want to throw some gasoline on the fire before letting the fire burn naturally.

Well that depends on, Japan has problems with its deflation up to this day so it isn't that simple. I think that the stimumulus is fine as long as expectations remain anchored at a moderate level (AFAIK the Fed's unofficial target is 2% so I'd say that 2% is a moderate level, by the way it would be great if the Federal Reserve Act was changed so the Fed could finally set an inflation target), and as long as there's a way to pay the debt that it's causing (which means more taxes/less spending in the future).