I was reading about debt deflation and there was a section about Keynesian economics and priming the pump (
$700 Billion).*
Said what went wrong during Great Depression is that they didn't create jobs, which is what I believe $150 - $300 billion public works project will be about:
"Once preventive action has failed, Keynesians advocate corrective action. In case of debt deflation, Keynesians advocate "pump priming" or government creation of fiat money. As witnessed since 1990 in Japan, and in the 1930s in the USA, this policy is not very effective unless government creates employment via public works projects or military manufacturing." Link
(I'm not an economist, so I have no idea if that is right or wrong, or likelihood of success if premise is correct; just repeating what I read)
* Warren Buffett previously said that U. S. residential housing market used to be worth $20 trillion. He assumed 20% loss, for total net loss of $4 trillion. I've seen commentary that true cost of bailout will be
$2 trillion ($700 billion is just cap on amount of toxic assets that the Fed can
launder at any given time):
"And then there is a huge arbitrage opportunity as well so that everyone makes money for years to come. According to the conference call, the pricing on offer from the Treasury will be a bit below Level 3 pricing. The toxic assets will be repackaged and resold with a new AAA wrapper, possibly priced well below what the Treasury paid, assuring a huge profit on both immediate liquidation by the banks and ultimate maturity by investors. The Fed gets its cash and Treasuries back; the banks make huge profits; the foreigners and off-shore tax avoiders get disguised ownership of the American financial system; the taxpayer gets ripped off. What?s not to love?"