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ArthurG

The claim "this is just another case where the market's solution of lower prices in response to lower demand has provided a much better solution than the government alternative" makes no sense.

Comparing the size of the 'commodity rebate' with the size of the stimulus 'rebate' has no relationship to whether the free market or government stimulation is superior. If the analysis had shown that the 'commodity rebate' were the smaller of the two would it have demonstrated the opposite - that government stimulation is superior? Of course not. (If that had been the case you probably wouldn't have published the analysis. Rather, you'd have searched until you found another analysis that supported your ideology.)

In fact, what's going on is that many (but not all) commodity prices have dropped significantly because 1) they were at historical highs before this recession, and 2) demand has fallen rapidly in this recession.

Overall, this drop in commodity prices is good for consumers, although in some cases it has been problematic for producers. See, for example, the issues with Ethanol production.

In addition, the collapse of the poorly secured lending bubble, intertwined with the collapse of the US housing market, has kicked off a global recession that threatens to be long and deep. The primary cause of the lending bubble was the greedy, risky behavior of semi-regulated US investment banks and lenders, from citi and merrill to B of A and Countrywide. Govt. and borrowers also contributed.

The recession's threats to the nation's wellbeing has necessitated an unprecedented intervention in the markets by many federal agencies: treasury, the fed, congress and the white house.

Dr. Klaus P Wagner

I concur with the above comment. The drop in commodities has been a reflection of the implosion of the world economies, due to the reasons cited above, among others, while the stimulus, in my view, is intended to at least slow the downward spiral by retaining jobs and to give time for remedial actions to be put in place and become effective. These include infrastucture, health and energy initiatives which will hopefully create viable jobs, assuming we have people with skills available to carry out these tasks. Obviously, we have a long way to go, and many elements of the plan have to fall into place in a coordinated manner. Commodities prices and the current "savings" have no bearing on this bigger picture. In any event, these savings cannot be expected to last.

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