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Stimulus Trade Wars, Smart Grids and Bank Nationalization

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Stimulus Trade Wars, Smart Grids and Bank Nationalization

Lawmakers propose applying a “buy American” restriction to projects funded by the economic stimulus package.

Energy companies lobby for subsidies for a national “smart” electrical grid.

Economists debate whether the federal government should nationalize troubled U.S. banks as part of the bailout plan. 

More headlines: listen to the LibertyWeek podcast.

1. CONGRESS 

Lawmakers propose applying a “buy American” restriction to projects funded by the economic stimulus package.

CEI Expert Available to Comment: Special Projects Counsel Hans Bader on the diplomatic response from Europe: 

“The European Union is threatening a trade war over provisions in the $800 billion ‘stimulus’ package backed by Obama and Congressional leaders. The Great Depression resulted partly from the trade war that followed the Smoot-Hawley Tariff signed into law by Herbert Hoover, which Congressional leaders wrongly thought would help end the recession that followed the 1929 stock market collapse.” 

 

2. ENERGY

Energy companies lobby for subsidies for a national “smart” electrical grid.

CEI Expert Available to Comment: Senior Fellow Iain Murray on the easiest way to encourage smart grid development

“There are two ways for government to incentivize investment in a smart grid. One way is to pony up taxpayer cash, to cover the costs of the regulations it has imposed. The other is to suspend or get rid of those regulations [that bog down new infrastructure projects] - and then they won’t have to take money out of our pockets (and our children’s pockets). Liberate is the best way to stimulate.” 

 

3. BUSINESS

Economists debate whether the federal government should nationalize troubled U.S. banks as part of the bailout plan.

CEI Expert Available to Comment: Senior Fellow Eli Lehrer on why nationalizing banks would be a recipe for disaster

“Long-term government bank ownership, in any case, would simply make the country poorer. Banks actually create money when they lend it out, but doing so only has positive overall economic consequences when the loans get repaid. Government-owned banks would face enormous, understandable pressure to lend to politically powerful groups and industries that can’t reasonably repay their loans. Even the best managers couldn’t overcome this pressure.” 

 

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