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11 November 2008

Stimulus Package

Analysts say that a stimulus package is needed sooner rather than later. The size of the package could approach $200 billion, but may come in two phases. It is widely held that the components of the package will be for tax cuts, infrastructure, income security and money for the States.

It would be likely that the first phase would be $75-100 billion and include cash, unemployment benefits and medical aid, while the 2nd phase would be tax cuts. If there is no package, many believe that the downward spiral the economy is currently experiencing will worsen. The hope will be that consumers spend the money this time rather than stash it in savings accounts.

Many ask how can we afford to do another stimulus package? Others respond, how can we not afford it? The alternative is a severe deflationary period. With prices so high now maybe that's not a bad thing.

Additionally, analysts believe that money should be provided to the Auto industry. Not for the Auto industry itself as much as for the suppliers that would be hurt by the Auto industry's slide. Many feel that the Auto companies made the mistakes that put them in this hole so they should take their medicine for it, but it would hurt hundreds, if not thousands of smaller companies that supply the auto companies.

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