Irene as stimulus

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    Aug 28, 2011 11:31 PM GMT
    Irene wasn't an alien invasion, but the closest thing we can have as a stimulus:
    “We are now upping our estimate of fourth-quarter GDP in the U.S. economy,” he said in an email Sunday. “Billions will be spent on rebuilding and recovery. That will put some people back to work, at least temporarily.”

    Kotok expects GDP growth — which limped along at less than a percentage point for the first half of the year — to exceed 2 percent in the last three months of the year and potentially reach 3 percent.
    Embedded within those projections are questions about whether Congress and President Barack Obama can set aside recent hostilities to make sure there is sufficient cash for the Federal Emergency Management Agency’s disaster relief fund. After blizzards struck last winter and tornadoes this spring, the fund has less than $1 billion available, which means that Congress might have to approve supplemental appropriations.

    “Washington may set aside the usual destructive and divisive partisan political wrangling and act in the interest of the nation,” Kotok said. “That means there will be a flow of federal financial assistance to the disaster areas. We also suspect there will be a rapid response rather than Katrina-type delays. FEMA lives under a microscope these days.”
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    Aug 28, 2011 11:33 PM GMT
    Keynes via Krugman:"If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing."

    Keynes then goes on to explain that the actual business of gold mining — in which basically useless ore is mined and refined at great cost, then sent to sit idle in the basements of central banks — is for all practical purposes identical to his coalmine idea.