26
Jan
09

Differences in International Economic Stimulus Packages

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Every country is suffering economical difficulties and each, depending upon how there systems are configured, have different approaches to resolve there own situation.

Online Time as summarized five other countries and there implementation plans with these varying strategies:

United States:

By Justin Fox

Sometime in the next few weeks, Congress is likely to approve a stimulus plan for the U.S. economy that could total $825 billion over two years. That’s about 3% of gross domestic product a year — on top of a 2009 budget deficit already expected to top $1 trillion. Will it work? Maybe. But the odds are much better if other countries around the world do more to goose their economies as well. Here’s a roundup from some of the world’s major economies.

Germany:

By Justin Fox

The Germans have an obsession with fiscal and monetary prudence born of past economic disaster. In November they approved a €23 billion ($30 billion) combination of tax holidays, subsidies and infrastructure investments. Now Chancellor Angela Merkel is adding another €50 billion ($65 billion), which includes reductions in health-care contributions and tax breaks for those who buy new cars. Over two years, these plans together add up to about 1.5% of GDP — much smaller than the U.S. stimulus.

France:

By Justin Fox

The European Commission, which normally frowns on deficits, has recommended stimulus spending of about 1.5% of GDP throughout the region.

United Kingdom

By Justin Fox

In November, Prime Minister Gordon Brown led the way with a £ 20 billion ($28 billion) stimulus package of tax cuts and spending plans. In December, German Finance Minister Peer Steinbrück made headlines criticizing the British approach as “crass Keynesianism,” but with the U.K. economy in a deep funk it’s now looking as if — at 1% of GDP — it won’t be nearly enough.

Japan

By Justin Fox

Japan has been trying to stimulate its economy for 15 years, with mixed results. A sudden collapse in the exports has brought calls for more. The current plan: a five trilion yen ($50 billion) package, the biggest part of which is a cash giveaway to families. That’s just 1% of GDP, but after years of big deficits, there are limits to what Japan can do. Infrastructure spending is actually down from the high levels of the 1990s.

China

By Justin Fox

China’s dramatic November announcement that it would spend four trillion yuan ($585 billion) stimulating its economy has set a standard — about 14% of GDP — that so far no other country has equaled. But there are still big questions about whether the spending is really anything new. China was already putting big bucks into infrastructure — what matters most to the global economy is whether it can find a way to get its consumers to spend too. One step in this direction is the government’s just announced plan to spend $123 billion over the next three years to establish universal healthcare, which could encourage people to save less and spend more freely.

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3 Responses to “Differences in International Economic Stimulus Packages”


  1. January 26, 2009 at 10:10 PM

    I vaguely recall that Benelux started this bank-bailout frenzy at least a week before Gordon Brown ‘saved the world’ … if I’m not mistaken, as soon as the news blasted out that Bush’s bailout plan could be rejected, Belgium, Netherlands, Luxembourg and Austria banged their gavel in favor of bailing out their most risky banks …

  2. 2 Mike B
    June 22, 2009 at 12:18 AM

    — what matters most to the global economy is whether it can find a way to get its consumers to spend too.
    .
    The whole corporate world wants us to spend!

    When too many widgets are made, nobody needs a widget even if you can finance with 0% interest. There are too many widgets period paragraph. In the U.S. widgets equals cars and houses. rarely will an older car be seen on the street. (well maybe among the undeserving welfare class), When corporations build too many high end 6000 sq. ft. homes, who can afford them? Also again, when more homes than people exist then who will buy these houses?

    Governments need to reduce various taxes to near nothing then they can pay off their debt. and then spend spend spend………….

  3. 3 Paul Orrock
    July 2, 2009 at 8:12 PM

    I am a big big fan of what China is doing. I have witnessed the throwing away of money here in Australia in two stimulus packages where a significant portion of the money went directly into the pockets of a section of the tax paying public (no, I didn’t get any). The Government in Australia and the reporting agencies have been bullish in response to the recent Retail figures showing increased demand for the last Qtr, but now the stimulus package has been spent.. what now.

    China on the other hand poured a majority of its stimulus into infrastructure, and I liked it. Whilst understanding they have a considerable advantage when it comes to manpower I would have liked Australia to have taken an approach like the Chinese did.

    Example – China : See that Highway program we had planned to take five years, lets throw another 50,000 workers at it and get it done in 12 months. Equals employment, revenue retained through taxation receipts, as well as increased consumer spending though fuller employment.

    Compare this to the major thrust of Australia’s stimulus package.

    Example – We will provide to the population earning below a certain level approx $2300 in stimulus payments in two tranches. One before Christmas, and the other from May time frame. Go and enjoy your new Plasma, Wii, PS3, BlueRay, or other commodity item. Yes, lets import the products you will buy with the stimulus package and essentially support two industries. Retailers and Importers….. thus, Exporters from other countries and manufacturers outside of Australia.

    You tell me, which would you prefer. For my bit, I would prefer seeing a bucket load more people employed to deliver a major project well in advance of time as opposed to a country with a gazillion more electronic devices purchased overseas.

    To be fair, a BIG amount of $$$$ went to National and State based infrastructure based projects but these were ruled by a Government timetable and a Government formulae that seemed flawed in its selection of Service Providers. ie: The stimulus package attracted every high priced quotation due to the time limits applied and State Governments eager for the cash approved at a whim…..

    Result – Australia pissed allot of money (Billions) against the wall trying to put out an Economic Bushfire, it was like taking a garden hose to an inferno, form over function.


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