The US economy is down in the dumps, everyone knows it.  Job losses are mounting, shoppers aren’t shopping and everyday is something negatively new for the stock market.  But help is on the way and may continue to be as we enter the holiday season and beyond.  Between corporate bailouts and fiscal stimulus packages, there still seems to be hope on the horizon for the world‘s largest economy and its currency:  the US Dollar.

1. Citigroup Bailout
Seen as the potential financial bankruptcy to end all bankruptcies, the Citigroup bailout was undertaken after investors witnessed an 80 plus percent drop in the company’s stock over the span of a couple of months.  However, fears were dismissed after the government swooped in like a knight in shining armor, offering cash and plenty of guarantee support.  The plan is not only likely to keep the bank afloat in the short term, but create a firm foundation for the financial sector.

2. Auto Bailout
Following a Presidential order, the Big Three automakers will receive over $17 billion in fresh cash to stay alive through the end of the year.  This will help in not only keeping US branded autos in circulation, but also support thousands upon thousands of workers that would otherwise be joining unemployment lines. For now, Detroit has a lifeline.

3. Reducing Interest Rates
Always a tool of the Federal Reserve, further rates cuts will help to spur businesses and homeowner privileges by allowing money to be lent at a cheaper rate.  Instead of paying 6 percent on a loan of $100,000, business owners can now be a little relieved that the same $100,000 may cost them 3-4 percent.  The hope remains that the extra money saved can be invested in other parts of the country.

4. Creating Swap Lines with Foreign Nations
More complicated than they really are, swap agreements enacted by the US Treasury simply offer countries an opportunity to trade for more dollars.  In times of distress, the US dollar has often been referred to as a safe haven currency.  This boosts demand for the dollar, not only in the US, but other countries as well.  These open lines offer smaller countries access to the US greenback where they otherwise wouldn’t have.

5. Troubled Asset Relief Program (TARP)
Pitted to help out the US financial sector, the Troubled Asset Relief Program was established to buy the so called toxic assets that US banks were holding.  Helping to alleviate the banks of these assets would allow firms to free up capital and move on to other potentially profitable opportunities.

6. Another Round of Tax Rebates
Similar to the tax rebate round under the Bush administration, a proposed rebate under the Obama administration hopefully will spark some sort of spending in the economy and lead to a higher rate of growth.  For the record, consumption makes up 60  percent of overall growth in the US.

7. New Spending on Infrastructure
In the same light as the tax rebate, increased spending in the infrastructure of the country, both on the state and local ends, will help to spur an increase in domestic activity.  Better roads and highways, improved schools and energy efficiency can’t hurt.

8. Readjustments for Mortgage Lenders
In order to aid already existing mortgage obligations, banks at the behest of policy heads, have already begun making adjustments for borrowers.  Granted, the local banker isn’t going to be giving up free money, but at least now they are willing to work towards a temporary resolution.

9. Extending Unemployment Claims
By law, current unemployment benefits can only claimed for a maximum of 13 weeks.  An extension of this process could act in the same way as a tax rebate for those still on the hunt.

10. Tax Cuts – Including Unemployment Benefits and IRA/401k Distributions
Additional tax cuts on income granted under unemployment benefits and retirement distributions act in the same manner as general income tax reductions.  With both facets being treated as income earned, cuts in taxes owed on benefits/distributions will give the consumer more money to contribute to the country’s growth.

This entry was posted on Wednesday, January 7th, 2009 at 9:16 pm and is filed under Currency Trading, Discussion, Stimulus Plan. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.