Let’s Get Fiscal (Vamos olhar mais o lado Fiscal)

Prof. Paul Krugman, em sua coluna de ontem em The New York Times, conclama as todos (principalmente americanos) a serem mais pró-políticas fiscais!

Let’s Get Fiscal

By PAUL KRUGMAN
 
Published: October 16, 2008

The Dow is surging! No, it’s plunging! No, it’s surging! No, it’s …

Nevermind. While the manic-depressive stock market is dominating the headlines, the more important story is the grim news coming in about the real economy. It’s now clear that rescuing the banks is just the beginning: the nonfinancial economy is also in desperate need of help.

And to provide that help, we’re going to have to put some prejudices aside. It’s politically fashionable to rant against government spending and demand fiscal responsibility. But right now, increased government spending is just what the doctor ordered, and concerns about the budget deficit should be put on hold.

Before I get there, let’s talk about the economic situation.

Just this week, we learned that retail sales have fallen off a cliff, and so has industrial production. Unemployment claims are at steep-recession levels, and the Philadelphia Fed’s manufacturing index is falling at the fastest pace in almost 20 years. All signs point to an economic slump that will be nasty, brutish — and long.

How nasty? The unemployment rate is already above 6 percent (and broader measures of underemployment are in double digits). It’s now virtually certain that the unemployment rate will go above 7 percent, and quite possibly above 8 percent, making this the worst recession in a quarter-century.

And how long? It could be very long indeed.

Think about what happened in the last recession, which followed the bursting of the late-1990s technology bubble. On the surface, the policy response to that recession looks like a success story. Although there were widespread fears that the United States would experience a Japanese-style “lost decade,” that didn’t happen: the Federal Reserve was able to engineer a recovery from that recession by cutting interest rates.

But the truth is that we were looking Japanese for quite a while: the Fed had a hard time getting traction. Despite repeated interest rate cuts, which eventually brought the federal funds rate down to just 1 percent, the unemployment rate just kept on rising; it was more than two years before the job picture started to improve. And when a convincing recovery finally did come, it was only because Alan Greenspan had managed to replace the technology bubble with a housing bubble.

Now the housing bubble has burst in turn, leaving the financial landscape strewn with wreckage. Even if the ongoing efforts to rescue the banking system and unfreeze the credit markets work — and while it’s early days yet, the initial results have been disappointing — it’s hard to see housing making a comeback any time soon. And if there’s another bubble waiting to happen, it’s not obvious. So the Fed will find it even harder to get traction this time.

In other words, there’s not much Ben Bernanke can do for the economy. He can and should cut interest rates even more — but nobody expects this to do more than provide a slight economic boost.

On the other hand, there’s a lot the federal government can do for the economy. It can provide extended benefits to the unemployed, which will both help distressed families cope and put money in the hands of people likely to spend it. It can provide emergency aid to state and local governments, so that they aren’t forced into steep spending cuts that both degrade public services and destroy jobs. It can buy up mortgages (but not at face value, as John McCain has proposed) and restructure the terms to help families stay in their homes.

And this is also a good time to engage in some serious infrastructure spending, which the country badly needs in any case. The usual argument against public works as economic stimulus is that they take too long: by the time you get around to repairing that bridge and upgrading that rail line, the slump is over and the stimulus isn’t needed. Well, that argument has no force now, since the chances that this slump will be over anytime soon are virtually nil. So let’s get those projects rolling.

Will the next administration do what’s needed to deal with the economic slump? Not if Mr. McCain pulls off an upset. What we need right now is more government spending — but when Mr. McCain was asked in one of the debates how he would deal with the economic crisis, he answered: “Well, the first thing we have to do is get spending under control.”

If Barack Obama becomes president, he won’t have the same knee-jerk opposition to spending. But he will face a chorus of inside-the-Beltway types telling him that he has to be responsible, that the big deficits the government will run next year if it does the right thing are unacceptable.

He should ignore that chorus. The responsible thing, right now, is to give the economy the help it needs. Now is not the time to worry about the deficit.

Economy stalls, but Google’s 3Q profit still rises (Economia, dos EUA, paralisa, mas lucro do Google, do terceiro trimestre, ainda cresce)

Mais uma evidência de que a Economia Real americana está resiliente!  Matéria de hoje do http://finance.yahoo.com.

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Economy stalls, but Google’s 3Q profit still rises
Friday October 17, 1:11 am ET
By Michael Liedtke, AP Business Writer

Despite soft economy, Google’s third-quarter earnings rise 26 percent to top analyst views

 

SAN FRANCISCO (AP) — The economy is sputtering, but Google Inc.’s profits are still accelerating at a rate that suggests the Internet search leader can remain a marketing magnet even when advertisers and consumers aren’t in a spending mood.

Google provided the latest evidence of its moneymaking prowess late Thursday with the announcement of a 26 percent increase in third-quarter profits that surpassed analysts’ forecasts.The performance drew a sigh of relief from investors, who had become convinced that Google will suffer along with just about everyone else as the U.S. economy sinks into what is widely expected to be the deepest recession in a quarter-century.

Google shares surged $36.97, or 10.5 percent, in Thursday’s extending trading after finishing the regular session at $353.02, up $13.85. It marked a dramatic change in sentiment from earlier Thursday as a cascading wave of pessimism pounded Google’s stock price to a three-year low of $309.44.

“People suddenly realized that if there a stock you are going to own through this uncertainty, (Google) is the one,” said Canaccord Adams analyst Colin Gillis.

But not even Google feels immune to the worst financial crisis to grip the world since the U.S. stock market crashed in 1929.

Things are looking grim enough to prompt Google — renowned for its free-spending ways — to hunker down and start scrimping more than it has in the past.

“This may turn out to be the quarter (Google) grew up and proved it can control expenses,” Gillis said.

Google Chief Executive Eric Schmidt also offered some of his most sober commentary yet about the state of the economy. “We’re all sort of in uncharted territory,” Schmidt told analysts during a Thursday conference call.

Google nimbly navigated through the shoals in the third quarter, earning $1.35 billion, or $4.24 per share. That compared to net income of $1.07 billion, or $3.38 per share, at the same time last year.

Excluding costs for employee stock compensation, Google said it would have made $4.92 per share. That figure surpassed the average estimate of $4.75 per share among analysts polled by Thomson Reuters.

Revenue climbed 31 percent to $5.54 billion. After subtracting advertising commissions, Google’s revenue totaled $4.04 billion — about $20 million below analyst estimates.

Google executives have maintained that the company can still thrive because its technology does a better job of finding customers at a lower cost to advertisers than traditional marketing campaigns. Those factors, Google argues, means it could receive an even bigger slice of advertising budgets in a crumbling economy.

What’s more, consumers scrambling to make ends meet may be more likely to use the Internet to hunt for bargains — a quest that could increase the Google search requests that spit out ads.

Schmidt, though, acknowledged that even the Internet’s most profitable company is facing a more daunting challenge now than when the third quarter began.

“It is pretty clear the economic situation today globally is worse than people were predicting a month ago,” he said during the conference call. He and other Google executives dodged questions about how ad sales have fared as the economic outlook darkened during the past month.

Google co-founder Sergey Brin predicted the company will emerge from the turmoil even stronger. “My favorite time to manage is during a bust,” Brin said in a Thursday interview with The Associated Press. “It brings more clarity about what your customers need and what your priorities should be.”

Keeping a closer eye on expenses is a change for Google, which takes pride in spending heavily to treat its employees to free meals and expand the capacity of its data centers that run its search engine, e-mail and other products.

While Google plans to continue feeding its employees for free, the company already has shortened the operating hours of some cafes and, in some instances, is offering two entrees instead of three, Brin said. The company also is reducing the number of contractors it uses.

In another indication of a tightening budget, Google’s capital expenditures in the third quarter totaled $452 million, an 18 percent decrease from last year.

That’s the lowest amount Google has spent on capital expenditures since the fourth quarter of 2006. Chief Financial Officer Patrick Pichette attributed the sharp decline to the company’s fluctuating needs for additional computers, and said spending in that area could rise again.

Google clearly is managing its payroll more carefully. The company hired another 519 workers during the quarter, down from an increase of 2,130 employees at the same time last year. The company now has 20,123 employees.

Even as it curbs its costs, Google’s bank account is swelling. The company ended September with $14.4 billion in cash, up from $12.7 billion in June.

Google also is vying to become an even more dominant force on the Internet by selling ads on behalf of its slumping rival, Yahoo Inc. The alliance has been delayed by an U.S. Justice Department investigation into whether the partnership would undercut competition in the Internet advertising market. Schmidt said he hopes to resolve the fate of the Yahoo deal soon.