In the big picture this is not a major suggestion. Think of it as something that can be done with no downside and long term benefit.
I personally don’t think a stimulus package of checks or rebates to the consumer will work. I believe consumers are so beaten up and fearful of the future that they will put it in the bank. Of course 20 years ago that would have been a good thing, These days banks don’t appear to be lending those deposits. So there is no primary or secondary stimulus impact.
Instead, having the government spend money on public works, which in turn creates jobs, will have a quick and positive economic impact. As much as it pains me to write those words, a drowning economy can’t worry about its form as it tries to get back to the surface. Sometimes you have to win ugly.
Private money is going to stay on the sidelines because we all know that there are unbelievable bargains available out there. Our money is waiting to go to equity and debt where we think we will get outsized returns. If and when those returns happen, money will come back in as new capital investment. Until then, the only liquid investor willing to put non current assets on their balance sheet is the government.
My little idea on where the government should spend money in public works projects ?
Parks and Schools.
Maybe this is obvious to those in the coming administration, but I think we should be buying up foreclosed homes in areas that have been overwhelmed with them . Tearing them down, and replacing them with parks and schools.
Of course municipalities will have to get involved with eminent domain, but a guess is that if we buy occupied homes in communities with a large base of foreclosures, we would be rescuing many homeowners from huge declines in the market values of their homes. Something many will not be upset with.
The upside of this program of course is that not only will you be improving areas that have come across tough times with parks and schools that will act as attractions to potential new residents, but the inventory of homes will be reduced as well.
Two years ago creating parks and building schools was a local endeavor that few municipalities could afford. Today they are an investment that can bring suffering communities emotional and financial relief
On to the subject of the Inauguration. Four years ago I suggested that the Bush administration cancel the inauguration parties and instead ask corporations to donate that money to the victims of the Tsunami.
Its fair to ask where I stand on the coming inauguration and whether parties should be canceled and money sent to the victims of the tragedy in India.
When the tsunami hit, it was a devastaion of epic proportions. Raising money for the survivors and rebuilding was a responsibility we as a nation accepted. We had telethons, events and fund raisers to try to help. The unfortunate situation in India, at least as it stands today, is not one that can be helped by contributions to the survivors. Thoughts and prayers, yes. Potentially support for anti terrorism programs, yes. But re-routing funds from anything to India, as least as far as I am aware, won’t help survivors or hostages at this time.
In addition, the 2005 inauguration was President Bush’s 2nd term. That it and of itself makes it a completely different set of circumstances.
That said, the coming inauguration is not off the hook. Some of the costs for housing, events and tickets I have seen and been offered are absurd. President Elect Obama should recognize and address the fact that in these economic times, corporations that are laying off people or getting bailout money should not be spending money sponsoring inaugural events.
Is there any doubt that the next “bailout scandal” will be banks and other bailout recipients sponsoring Inauguration events or spending boatloads of money to attend ?
Note to PE Obama, have your staff scrub the sponsors list and look for the words “bank”, GM, Ford and Chrysler and then google all sponsors for the word “layoff”
Eminent domain is very bad. I’ve watched it be abused. Even when it isn’t being abused it’s an awful thing to sacrifice the individual and freedom for someone’s idea of “the greater good”. Eminent domain should only be used in the most extreme of situations. Economics, depression, recession are not such a situation.
Comment by sugarmtnfarm -
as usual, Mark, I agree. that’s why I read this blog, although I’ve been absent lately. nevertheless, public works and infrastructure is where the next stimulus should go. highways, roads, schools, etc. to give it to consumers would be a waste and encourage the kind of wasteful consumer spending that got us into this mess in the first place.
there are somewhere around 15k jobs coming into MD due to BRAC, which means about 60k jobs overall, considering all the extra jobs created by bringing in 15k new workers to an area. where do we put them? baltimore city should be lining up to demolished acres of condemned buildings to build parks and schools and encourage people to move into the city. combining this new area with the surrounding poorer areas will hopefully create some balance economically and socially and improve the lives of the poor in the city, as well as generate more income for the city, which encourages more people to move there, ad finitum.
now is also the time to see more rails, bike paths and car-free zones put into place. no more bulding roads. people need to learn to live closer and build communities.
Comment by simplyscott -
Mr. Cuban, have you considered that parks and schools don’t fit into the
footprint of the average American homes in foreclosure?
Would the government then have to use eminent domain to confiscate, I mean
purchase, the homes next to the ones in foreclosure in order to build your parks
and schools?
And where are you going to get all the kids to attend the new schools? Tear down
the old ones? And build what in their place? Oh yes, parks. And what of the
old neighborhoods of the old schools? How are you going to convince families
with young children to patronize the nice new parks in the ghettos?
Also wondering where the government is going to get all this money. Parks and
school are outrageously expensive and with prices of commodities blessedly
falling every day, I wonder if your building adventures will really employ as many
people as you might predict.
Why don’t we just let home PRICES drop back to their 1999 level, which is where
they were before the housing bubble, and then let smart investors purchase them.
Comment by yorktown12 -
Why stop at parks and schools? Why not baseball, apple pie, and motherhood? How about a Chrysler in every garage and a CDO in every stocking?
Mark, can we please put a time out on all of this Santa Claus Economics? All I’m asking for Christmas is that anytime one of you “experts” mentions stimulus or bailouts, you talk about where the money will come from. Before you talk about all the wonderful things you plan on doing with OPM (other people’s money), you mention all the damage you will inflict on the rest of us who get to foot the bill. There is no free lunch and the government has no resources of its own, just the ability to transfer wealth from the productive and responsible to the wasteful and reckless (e.g. government bureaucracies).
Is there a billionaire out there with the balls to defend the free market? I didn’t think so.
– Kevin Duffy
Comment by kpduffy -
Pingback: Why the stereotype that businessmen would be good politicians is dangerous | blog of bile
Love ya, Mark, but your idea is horrible. I agree with Jack, who writes:
‘There are so many fallacies in the above posts that I could not comment on them all in this space. More Government spending and public works is the absolute worse thing that the Government could do it our current situation. I am appalled that such thinking is widely accepted and supported. It stems from the myth that the notorious FDR “ended the depression with his New Deal”. FDR (and Hoover) and his well intentioned but tragic programs prolonged the depression and are what truly made it “Great”.
‘Bulldozing homes is another ill conceived idea that is eerily similar the FDR’s program to have farmers plow under crops to help support prices. Home prices need fall consumer to save money for future capital outlays. Here is an excellent article on the beauty of, falling prices are what enable consumers and an economy to pull itself out of tough economic times. Price reduction might be temporarily painful but it is needed to clear malinvestment and allow falling prices, http://www.lewrockwell.com/rockwell/force-is-with-us.html.
‘If you are interested learning about sound economic theory I suggest reading Henry Hazlitt’s Economics in on Lesson and to understand the depression read Murray Rothbard’s America’s Great Depression.‘
Hear hear, Jack!
Mark, one of the best reasons to give the Austrian schoolers (a.k.a., Misesians) a serious look is that they’ve always been smeared and snubbed by government, press, and academia (a repetition?) — a direct result of their being both correct and anti-state (definite repetition!). Be well.
Comment by detainthis -
You could give money privately if you issues each taxpayer a “check or a debit card” for x dollars and they had to spend it in a store in the next 90 days.
That would just create an inflationary cycle. Prices would rise because the retailers would know that things are being purchased with “free money.” Don’t be dumb.
Comment by difster -
Mark,
Instead of sticking it to the taxpayers, why don’t you get together with some of your billionaire buddies and buy up those places yourselves and fund the construction of private schools. you can afford it, we can’t.
Keynes is dead Mark! His theories should have died with him. They don’t work. L
Comment by difster -
ts just not a fair system of employment honestly. It is nearly impossible for the average citizen with a typical education and experience to get a local, state, or federal permanent job anymore…
John Petrucci
Comment by emiky2008 -
Mark,
It is astounding to see hundreds of millions of dollars spent on our US elections & surronding festivities when so many Americans are homeless & hungry. We definitely need to get our priorities together.
Comment by darryl -
Some formatting issues above
Home prices need to fall, falling prices are what enable consumers and an economy to pull itself out of tough economic times. Price reduction might be temporarily painful but it is needed to clear malinvestment and allow consumers to save money for future capital outlays. Further, falling prices are the symptom of economic downturn not the cause. Here is an excellent article on the beauty of falling prices, http://www.lewrockwell.com/rockwell/force-is-with-us.html
Comment by Jack -
There are so many fallacies in the above posts that I could not comment on them all in this space. More Government spending and public works is the absolute worse thing that the Government could do it our current situation. I am appalled that such thinking is widely accepted and supported. It stems from the myth that the notorious FDR “ended the depression with his New Deal”. FDR (and Hoover) and his well intentioned but tragic programs prolonged the depression and are what truly made it “Great”.
Bulldozing homes is another ill conceived idea that is eerily similar the FDR’s program to have farmers plow under crops to help support prices. Home prices need fall consumer to save money for future capital outlays. Here is an excellent article on the beauty of, falling prices are what enable consumers and an economy to pull itself out of tough economic times. Price reduction might be temporarily painful but it is needed to clear malinvestment and allow falling prices, http://www.lewrockwell.com/rockwell/force-is-with-us.html.
If you are interested learning about sound economic theory I suggest reading Henry Hazlitt’s Economics in on Lesson and to understand the depression read Murray Rothbard’s America’s Great Depression.
Comment by Jack -
You could give money privately if you issues each taxpayer a “check or a debit card” for x dollars and they had to spend it in a store in the next 90 days. If they didn’t spend it, it would expire. In other words, they couldn’t bank it or retire debt with it. The stores would then take the sales receipts and get reimbursed which is when the money would be actually dispersed by the government.
US Population is 305,187,000 approximately. Google it. If the $7 trillion being discussed was sent out to every individual US citizen it would be $23,000 each. Now if every single American had $23,000 or even a fraction of that number, and spent it on goods what would happen. We’d see all the business making boat loads, hiring workers, etc… It would get spent and respent so many times, this whole thing would be over. I believe it would be enough of a jumpstart to help every person that the economy would recover in less than one year. The entire economy.
Comment by Rocky -
“What city in their right mind would destroy houses for parks?
That would be a great way to realize permanent property tax losses.”
Almost none. As a Park department employee I can tell you that eminent domain is rarely used. In an up market properties are too expensive for us to buy and land owners are eager to sell private industry. In a down market landowners are eager to sell to the Parks Department, at the previously inflated prices. Problem is a lack of funds to pay for the new lands.
I am not sure you are aware of how parkland is acquired, but it is usually given as part of a development package or developers pay into a fund that allows a community to purchase land for parks. Without development, parks are generally too expensive for a municipality to develop new.
My personal feeling is that while parks are important to a community and its well being, it is past time the non-sexy stuff was invested in. If the infrastructure crumbles business will leave and the community will die. See Cleveland, Detroit et al.
Comment by Hmmmmm -
The problem with tearing the foreclosed houses down and replacing them with parks and schools is that most these houses are less than 5 years old and still have utility for those needing a home. There is also the issues of forever lost property tax and the small lot sizes that would not be suitable for a school or a park. Typically, an entire neighborhood is not filled with foreclosed homes. The Govt could spend up to $200B buying up these houses and another $200B constructing schools and parks.
Comment by econ365 -
Pingback: theceodaily.com» Morning Update » December 1, 2008
Consideration of more investment in maintaining and upgrading public transportation would be nice.
Comment by nathan -
I definately think infrastructure will do a lot of good. But not if Congress borrows the money from the Federal Reserves banks at interest. This will just create more debt that can never be repaid and increase the total debt service the country must pay, while at the same time adding to more inflation.
The best thing Congress can do is to issue US Notes directly from the Treasury and either spend them or loan them interest free to the states for infrastructure. Many people never knew JFK started issuing US Notes in June of 1963. About $4.3 billion worth.
He was in good company because Abe Lincoln had Congress issue Greenbacks. Back then when there was gold backing these notes actual constituted debt and the where completely redeemed within 8 years. They funded the Union’s win and the start of the industrial revolution.
Just Google the “Guernsey Experiment” to see how well this direcct issuance works.
If Congress won’t issue what I call JUST MONEY, we need to join together and issue one or more private currencies. Check a very successfull one in Switzerland by googling the “Wir Bank”
Comment by Peter James -
If you’re going to do a stimulus package, you have to put in places that will create an economic return and a money multiplier effect. Putting it into parks & schools will not do that. We need to give it to programs that will both create jobs and put money and profits back into the economy.
Putting money in public works that do not return money into this economy will only continue to stifle the economy and American business.
Comment by Tom Peters -
“Private money is going to stay on the sidelines…”
Mark, forget the sidelines I think private money has left the stadium. I also think that this time in our history is going to cause more businesses to stay private rather than looking for funding in the future. That will likely cause the number of “unbelievable bargains” and “outsized returns” for private money to be greatly diminished.
Comment by Shawn Shepherd -
I love it – terrorism bail outs. Never say never. You should really
tell Warren and Eric (PE Obama’s Cabinet) what to say to Mr. Obama
as you probably have more patriotism/smarts and
good will in you than that cabinet combined.
Comment by Clayton Silva -
I think pumping money into anything public will be the governments
primary objective in creating jobs and you are spot on in your insight
on private money and their sitting on the sidelines.
However, I feel sitting on the sidelines during the biggest market
shake up EVER is silly and that true mavericks realize that some of
the biggest opportunities ever will be forged now and into
the future. This doesn’t mean to invest in stocks, but in new business,
new ideas and new solutions to our problems.
True innovators will innovate and solve our worlds problems and profit
handsomely and ethically.
The new Ford’s, Rockefellers and Chase’s are cutting the new
ethical path to cater to Main Street and to put a stop to snake oil
profits and Gazillion dollar world economy ending mortgage ponzi
schemes. Main Street has had enough and the right plan can really
reach out to them, win them over and start the new economy based
on truth, ethics and paying it forward.
Never in our lives will we see such powerful market forces as the
Ford, GM’s, Citi’s, Chase seem so utterly weak and so easily
conquerable with the proper plan and execution.
New billionaires will be made and instead of tyrants that just take from
the world, they will be saints and saviors of the world and be rewarded
handsomely for the value they bring to the earth and to its people.
Comment by Moe Bedard -
Mark, a fundamental shift from consuming to saving has to take place before the economy will recover in a meaningful way. The government should stop printing and spending as soon as possible and let the imbalances straiten out on their own.
Comment by Mike -
What city in their right mind would destroy houses for parks?
That would be a great way to realize permanent property tax losses.
Comment by Alex -
Dear Mr. Cuban,
I am a postgraduate student at the Chinese University of Hong Kong. I am currently working on a research paper about CEO weblogs and would like to ask you a few questions on this.
I hope you would take a few minutes to provide me with your valuable comments on the questions listed below. Your kind attention and contribution mean a lot to the academia.
Thanks in advance!
Q1. What are the main purposes of your construction of this weblog?
Q2. Who are your anticipated bloggers?
Q3. How do you decide the topics?
Q4. How often do you response (reply) to the postings? Or why not?
Q5. Are you concerned the negative comments (posts) will hurt the reputation of your company?
Q6. What are you going to do with these postings? For file or you select some to respond individually?
Thanks and best,
Olivine Lo
Comment by Olivine Lo -
Hey Mark, You re on the money with the assessment of “stimulus” monies. The little guys are DONE, anyone from the working class is very wary of being done. EVERYBODY with any sense, not knowing where the price of oil, housing etc. will go are holding onto what ever little cushion they do have. What is ironic is that a lot of people that get checks will spend them to pay down thier c.c. debt and mortgages with the same people that screwed the american public. You stated also that the more frortunate individuals will get the “spoils of war” which is always the case. It is however a great time for some of the little guys with cushion left over to get in on the those spoils.Opportuntiy is everywhere now dude. It is like literally walking through the after math of an economic war zone if you will. Its just a matter of where and what you want to take advantage. Thanks for the thoughts.
Comment by Frankie from Lawnside -
Not so sure the public works path is going to pull us out of it. Here’s why:
http://saturdaymorningpost.com/2008/11/24/dirty-jobs/
Comment by Staff Writer -
You may need to be careful about government purchase of foreclosed homes – you don’t want it to look like the government is abusing power and pushing people out of a home prematurely or unfairly.
Some sort of policy of brownfield economics might be helpful – abandoned, empty buildings and sites that no on wants to buy could be purhased and cleaned-up for the next buyer or the next use (park, etc). A lot of these properties are industrial in nature. Some may have environmental concerns. People that earned a living at these buildings may be dead and gone for years. To the extent the U.S. is already doing this, the U.S. may want to do more of it.
Comment by nathan -
One more piece on government spending:
http://online.wsj.com/article/SB122792327402265913.html
Comment by Gennady -
Dear Mark, with all due respect, you are the last person I would expect to rely on governement help.
🙂 Really, what have government done and have not screwed up? Everything it touches ends up in shambles. Social Security? Education? Health Care? How about its the main function: protection of US citizens?
The last thing we need now is more schools. We can’t staff existing ones with qualified teachers. Now watch how education will get worse in the coming years. Why? Because
Democrats will move to strengthen unions and, in my view, teachers unions is the main vilain in the problem of education.
Anyway, I do not have historic data on public spending, but here is a
one argument against it (somewhere in the middle of the article):
http://online.wsj.com/article/SB122783239069463007.html
BTW, I am not sure where you get that banks don’t land. My friends bankers from mid size banks are begging for deals. Perhaps it’s lending from and inter bank lending
between Huge banks that stopped for obvious reasons. If only our government let the market solve this crisis and let the culprits fail, there would be plenty banks to step in and lend … well This government action only prolongs the downturn …
Best,
Comment by Gennady -
“Parks and Schools.”
I would not take the parks off the list, but they would be much farther down the list, behind the schools, fixing bridges and roads, improving existing rail transport, and massively increasing the nation’s nearly non-existent light rail infrastructure.
Comment by Michal Daniel -
I do not think the American public can stand another bail out selling off our kids future is something no American parent wants to do!
Comment by Janie -
I’m with you on parks. Here in Los Angeles they just opened the first new park in downtown LA in over 100 years!
Surely a massive public transportation overhaul should be in order with a focus on bringing families out from the exurbs and suburbs and back into the city with rent incentives.
How about we tear down buildings that have been ooo for more than 10 years.
Focus on the ten poorest cities in the country
Detroit, Buffalo, C-Nasty, Cleveland, Miami, El Paso, Milwaukee, Philly, Newark.
Comment by Dan -
Just a quick comment on giving me a check out of the treasury.
(P.S. Having my comment run off the end of the entry form is a
little annoying)
But here is what I would rather the government do with the money they
would send me. There is what I would call a big issue that seems
only to be addressed by NFL network commercials. That is that in
today’s educational environment, many high schools and a lot of
secondary (Jr. Highs) are no longer supporting Physical Education (PE)
classes due to a lack of funding. We all know that American’s today
are less than active – many parents are both working an 8-5+ job, not
able to get their kids out to do the physical exercise every kid needs.
You figure that each class, on the good side, would have 30 kids per
class, 5 periods a day – that is 150 kids. Figure 1.1 kids per
family per school and we are closer to 130 families. The average
check per family was approximately $900. Therefore 130X $900 – $117K
per year for PE. Take that $ and create the necessary programs to get
our youths exercising. Teacher salary of about $70K (including
benefits) and the school would have $47K to improve nutrition,
provide nutrition counseling, etc. Healthy kids now – will create jobs.
Healthy kids in the future will assist with aspects for the economy
that I believe is unfathomable.
Comment by Michael Patterson -
Mark, the country is bankrupt. Foreginers holding our debt obligations k
know it. Running up indebtedness further printing more bogus fiat Fed
Reserve Notes to “Fix the Economy” is just hastening the USD’s total
collapse and replacement, to suit int’l bankers and globalists’ designs.
You’re not getting the macro picture of where this is headed, IMO.
Comment by Patrick Henry -
I agree with spending stimulus money on public works, but I think it should be on more pressing infrastructure needs – sewer systems and the power grids. Remember when the pipes exploded in New York? Our communities are living on top of century(ies) old plumbing and it’s going to start falling apart. And that leads to contamination of the water supply and that is real trouble. We trail the rest of the world in hard capital investment by our governments – you see it in our public transportation and airports – and it’s time to fix that, and put people to work. As for house prices: they need to come down. In many cities they are upwards of 6, 7 and in L.A. 10 times the income of the people trying to buy them. Foreclosed homes should be let to sit and bring down the prices. Creating artificial value in property is no different than what just happened – it’s a bubble that will eventually burst.
Comment by Steve Abrams -
Couldn’t agree more.
Comment by Jonos -
Cuban, With regard to Obama’s inauguration you are a hypocrite of epic proportions. “Not off the hook”? If you think Obama’s party isn’t going to dwarf Bush’s ’04 inauguration you are more clueless than your socialist plan of buying private homes and building public parks idea make you look already. I think you do know that Obama and his cult-like minions are going to throw a party of ridiculous excesses and enourmous costs. I think you are just like every white Obama supporter and you all will give him a free pass on anything he does from now to socialism.
For the first time in my life I am proud…
Comment by -JP- -
I will soon lose my local contract job with the local city because of funding problems. My state (oregon), could be facing a 5% reduction across the board, and I am one of the first to go. The city wants to save money soo badly that they don’t hire many “public employees” anymore (to save money on benefits, pension, retirement, etc), and instead are replacing those positions with temporary contractors. Its saving the city bundels of money…but at the same time, they are funding other silly projects(public bathrooms) that could be used instead to hire public empolyees, like myself. I am upset, because the city employees slack off and don’t work hard(and can’t get fired basically)…while I work really hard and don’t get hired; its just not a fair system of employment honestly. It is nearly impossible for the average citizen with a typical education and experience to get a local, state, or federal permanent job anymore…and its increasingly going to be difficult for me to stay employed by the government because of budget cuts, etc.
I woud really like to see the government get enough funding so that the average citizen, with a college education, can get a job and to be permanently employed for a long period of time. I don’t see that too much anymore, and government jobs are increasingly sparce. I will be lucky if I can get a job in this state in the next year.
Comment by Evan -
Mark,
I hope they shutdown Wall-Street, and turn all public companies into private ones!!! no more bets, only hard work and creativity? I don’t see why we entertain greed when our creativity is king!?
Comment by Mitchell -
If I had to pick between giving up my freedoms and going through another great depression, I would keep my freedoms and weather the depression. Common guys WAKE UP.
Comment by Jeffrey Harmon -
Of course municipalities will have to get involved with eminent domain, but a guess is that if we buy occupied homes in communities with a large base of foreclosures, we would be rescuing many homeowners from huge declines in the market values of their homes. Something many will not be upset with.
” http://www.makkale.blogcu.com “
Comment by makkale.blogcu.com -
Pingback: » Public Works, The Inauguration and the next BailOut Scandal « blog …
Well said – private $ will remain on the sidelines. It must be public $ that makes change happen. But what if we try and kill a few birds with our public money stone? Here are two posts that I wrote recently – one about the auto industry (http://interacc.typepad.com/synthesis/2008/11/bailout-madness.html) and one about the lending crisis (http://interacc.typepad.com/synthesis/2008/10/lending-crisis.html).
In a nutshell – we can find simple and creative ways to reassert this economy with a market-driven approach to stimulus.
Comment by Shafeen Charania -