A Second Term, a Second Stimulus

With so many Americans taking positions for or against Democratic and Republican fiscal positions, the time has come to consider one that nobody is discussing: economic stimulus.

This economy is in dire need of stimulus and, despite modest growth indicators, it is still very fragile and susceptible to shock. In the past three weeks, governments of the European Union, China and Japan have turned their gaze back to potential stimulus packages to prop up their economies.

Japanese stock indexes responded positively to reports on November 29 of a $10.7 billion (880 billion yen) domestic stimulus, according to Bloomberg News.

The Japanese economy faces real inflation woes and the opposition party had campaigned on monetary restrictions and fiscal austerity until currency inflation was brought to 2 percent. The call for belt-tightening lost at the ballot box and, despite inflation concerns, domestic and international businesses want to see government initiative on the stimulus front.

One week later, on December 5, stock market shares soared in Shanghai as word spread of a new economic stimulus from Beijing, according to The Wall Street Journal.

The Shanghai Stock Exchange (SSE)  Composite Index, which was hovering near four-year lows, climbed 2.9 percent the day following a Communist Party announcement that the government would step up urbanization plans and public housing construction. Beijing has already spent $172 billion (1.08 trillion yuan) on housing construction this year.

Booming markets are not the only stimulus story of the past three weeks. On December 6 European and American stock markets reacted with mixed returns after the European Central Bank announced that it would not follow the lead of Japan and China to initiate new economic stimulus, according to the Associated Press.

International businesses and investors are clearly supportive of economic stimulus to prop up lagging economic growth. The stimulus initiatives in Japan and China will be spent directly on putting people to work while contributing to the public good. Such projects are easy for China with its booming trade surpluses, but even in debt and inflation rattled Japan stimulus remains the best option.

The United States needs to get with the times and follow the lead of Japan and China, while learning from the example set by Europe. This country needs a new stimulus program.


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