At the G-20 summit in Toronto later this week, a battle may surface between the "immovable object" and the "irresistible force." Germany and the United States are at odds concerning the world's proper public policy stance at this stage of the financial crisis.

Germany is emphasizing that credit market and economic conditions are healthy enough to move forward with deficit reduction and related stimulus exit strategies, Bloomberg News reported Monday.

Have the free economies of the world reached the limits of Keynesian economics?

That's the view of PIMCO's Anthony Crescenzi. Nations have reached a "Keynesian endpoint," Crescenzi wrote, in an e-mail note, Bloomberg News reported Tuesday. "Time, devaluations, and debt restructurings might be the only way out for many nations."

Keynesian economics refers to the policy advocated by economist John Maynard Keynes, who argued that fiscal stimulus is an effective tool to stimulate demand until business investment and consumer spending rebound.

In an about face, G20 finance ministers dropped their support for fiscal stimulus. The communique from Saturday's meeting in South Korea stated: "The recent events highlight of sustainable public finances and the need for our countries to put in place credible growth friendly measures to deliver sustainability."

Back in April the G20 group was hep on continuing their stimulus programs. Their statement then called for fiscal support to "be maintained until the recovery is firmly driven by the private sector and becomes more entrenched."

A year into the U.S.'s record $787 billion fiscal stimulus, which will in fact total an $862 billion stimulus package, here's where the nation stands:

• The free-fall in employment rolls has stopped. While the U.S. unemployment rate has risen to an unacceptable 9.7%, the unemployment rate would have been much higher without the roughly $800 billion in economic activity generated by the stimulus.
• Tens of thousands of local police officers, fire fighters, teachers, and other public service personnel have retained their jobs -- helping to stabilize the local economies where these civil servants work and live.

Tracking U.S government spending often is a byzantine process -- the stuff that only public officials, policy wonks, and scholars would pour over: it can be an intimidating and complex task. And, frankly, many Americans are obviously occupied with other, important tasks.

And that goes for the $787 billion fiscal stimulus package designed to jump-start the U.S. economy. However, there are two user-friendly sites that provide ample detail on your tax dollars at work.

The Obama administration has a page detailing dollars spent, by state, county etc., with contracts scheduled. MSNBC has a comparable site.

Just call it the first, major adjustment of the post-financial crisis era: PIMCO's Bill Gross said Wednesday investors and markets need to prepare for the eventual reduction in monetary quantitative easing funds and the end of other stimulus programs.

If exit strategies proceed as planned, "All U.S. and U.K. asset markets may suffer from the absence of the near $2 trillion of government checks written in 2009," wrote Gross, who heads the world's largest mutual fund, in a PIMCO commentary published Wednesday.

New York Times (NYSE: NYT) columnist Paul Krugman argues quite persuasively that the major problem with the fiscal stimulus package was that it was too small, given the financial crisis and the large economic crater the accompanying, pronounced recession created.

Further, the fiscal stimulus' many benefits -- including substantial job retention in essential public services such as education -- are harder to see and not likely to translate into too much political gain for President Obama and Congressional Democrats, he said. That's consistent with a political science axiom -- often repeated by U.S. Rep. Barney Frank, D-Massachusetts -- that "Congress gets little credit or benefit for averting something." Indeed, retained jobs are hard to see, and the fact that a local public school system is is still operating with as many teachers is an accomplishment, but one that most American voters will take for granted, and not give Democrats credit for.

The market absolutists and economic conservatives in the audience will no-doubt abhor the thought, but there's still a quite plausible scenario in which the United States will need to pass another fiscal stimulus package. Here's why:

True, the U.S. economy appears to be heading toward recovery (assuming no additional collapses in financial institutions that create systemic risk), but the recovery may not be strong enough.

The Dow is set to end another week with a close above 8,000. In fact, the U.S. stock market is at a crossroad of sorts.

Right now, Dow 8,000 is not an issue: 5 consecutive weekly closes and roughly 400 points above 8,000 suggest that battle has been won by bulls.

Still, the bears will argue that the Dow is not that far above the psychologically-important 8,000 level and that this market is more than capable of wiping out that cushion in two sessions. Further, the bears also argue that while the Dow has closed above 8,000 for about a month, it hasn't been able to both make and sustain new highs above 8,600, then 8,800 and 9,000 etc.

China apparently will announce a new fiscal stimulus package in an attempt to jump-start growth in the world's third largest economy.

Chinese Premier Wen Jiabao is expected to announce "a new stimulus package" in his annual address to the nation's legislature, Li Deshui, ex-statistics bureau head told reporters in Beijing Wednesday, Bloomberg News reported.

The most sweeping fiscal stimulus in a generation is about to be signed into law by President Obama. It amounts to $787 billion and includes tax incentives, infrastructure projects, renewable energy developments, and payment to state and local authorities.

However, investors appear to be skeptical as indicated by the performance of the markets today for a variety of reasons:

• Some estimate that as much as 75% of the spending will not reach the economy until 2010.
• There are questions as to how many jobs in the United States will actually be created.
• People are uncertain as to how productive the spending bill will be and how much is actually just wasteful "pork."

The manager of the world's largest bond fund, PIMCO, has laid-out in unambiguous terms the problem facing the global economy in the quarters ahead: The U.S. and global recession will worsen -- with a "second wave" of turmoil -- unless governments increase fiscal stimulus and spending plans.

"The economic setback is still in its early stages," Koyo Ozeki, head of Asia-Pacific credit research at Pimco's Tokyo office, wrote in a report published on PIMCO's web site. "Any further decline in housing prices could accelerate the downturn, intensifying the pernicious feedback loop and possibly leading to a second wave in the financial crisis in the next six to 12 months."

One of the benefits, when you are a child of privilege growing up in or near the center of civilization, the capital of the world, is that you receive opportunities to experience the extraordinary.

For example, in addition to having two attentive parents, when you're a child of the fortunate you also have an uncle who, along with doting on his own three kids, doted on you like you were his kid. An uncle who worked in one of those banks in the city. A cigar-smoking, good-natured executive who just happened to personally know anyone-and-everyone who worked in The House That Ruth Built.

And suddenly, there you are as a third-grade student, two hours before they open the gates, and four hours before game time, sitting in your uncle's season-ticket, mezzanine box seats. Bathed in warm, spring morning sunshine, you squint your eyes under your baseball cap so you can see your heroes taking batting practice on the emerald-green field, with the art-deco frieze overhead and the sound of your idol's bat hitting the ball echoing through The House, the way Gehrig's poignant voice did generations ago during his farewell.

Two internationally known economists converged Tuesday on a common point regarding the link between stimulus and the U.S. economy's recovery -- but from different vantage points.

U.S. Federal Reserve Chairman Ben Bernanke, in a speech before the London School of Economics, said fiscal stimulus won't be enough to create a lasting recovery, unless it is accompanied by strong measures to stabilize the financial system.

Meanwhile, New York Times economist Paul Krugman underscored the need for both a large fiscal stimulus capable of providing an immediate boost to the economy and providing stimulus 18 and 24 months out.

In a CNBC interview Tuesday, Krugman underscored the need for a large fiscal stimulus -- a critical mass of fiscal stimulus, if you will -- to counteract the massive amount of stimulus taken out of the economy from declines in consumer spending, business investment, home price depreciation, constrained credit by banks, and stock market declines.

Krugman added that the $700-850 billion proposed fiscal stimulus package is too small. Earlier, in his column in The Times, Krugman said both shovel-ready and longer-term infrastructure projects were required to keep a lid on rising unemployment for the next two years.

Those investors, including market absolutists, who interpret the current economic state-of-things as just a typical downturn that a few tax cuts and some good, old-fashioned, free market-based supply side economics can solve, may want to stop reading the economic data points in the months ahead. At least, that's the view of one economist.

Nouriel Roubini, the once obscure New York University economics professor, who two years ago predicted the current global financial crisis and recession, said the worst is still ahead for the U.S. economy and for economies around the world.

"In the next few months, the macroeconomic news and earnings reports from around the world will be much worse than expected," Roubini wrote in a column for Bloomberg News, adding that the aforementioned will put downward pressure on prices of risky assets.

Further, Roubini said the U.S. economy will remain in recession through at least the end of 2009, with only a mild recovery starting in 2010 -- with GDP growth in the initial recovery year of 1%. For 2009, Roubini also forecasts continued recessions for the United Kingdom, euro zone, Japan and Canada. Russia will also fall into recession, as will Brazil, and China will experience a hard landing, with growth slowing to 5%, he said. India's economy also will slow substantially.