Saturday, August 1, 2009

Cash fo Clunkers is About Clunking the Economy

Peter Schiff nails it:

The recently passed “cash for clunkers” program (currently on-hold, as it ran out of funding in one week) is a perfect example of how government policy can make the economy worse. By incentivizing Americans to destroy fully paid-for cars so they can go deeper into debt buying brand new ones, the government weakens an already crippled economy. The last thing we want to do is subsidize Americans to go deeper into debt by buying more stuff. Don’t they realize that is precisely the behavior that got us into this mess?

Think about it this way. If your friend were in trouble because he had too much debt, would you encourage him to take on even more? Wouldn’t a real sign of progress be a reduction of debt, even if he had to cut back on his everyday expenses?

Money misdirected towards new cars, when the old ones are fine, is money that will not be available for investment in other sectors of the economy, where it would naturally flow. It is Obama solidifying the vote of the financially unsophiticated--while he props up the union infiltrated auto industry--all the while distorting the natural flow of the economy.



    From Glenn Beck


  2. The US economy is so distorted at this point, I wonder how much pain would be involved in a true correction free of government interference. I'm inclined to believe that more pain is still coming one way or the other, notably in the form of a lower standard of living. By my way of thinking, its a matter of how much lower and how fast the country gets there.

  3. "Clunkers" also destroys wealth by destroying useful equipment:

  4. I cannot believe that many of these people could have gotten the immediate loan approval, muchless licensing, as they won't be able to pay the increased insurance costs, which is manadtory in Arizona, in order to license a vehicle.

    Seems the car dealers may find themselves in the same positions of Banks who handed out loans for homes people could not afford.

    Do you realize how many new JUNK YARDS of "smashed cars/trucks" this will create? Great addition to environmental concerns.

  5. The dealerships benefiting from the clunker program are the very
    ones who contributed the most to
    Mr.Obama's campaign.
    He already put the dealerships which did not support him out of
    Pure unadulterated payback politics. Thanks for the change we can believe in.

  6. Yes, Peter Schiff did nail it.
    Obama is pandering to the masses that think money grows on trees.

    But then, last fall during his campaigning it became apparent that Obama had little or no economic sense. When he came out for TARP that was a warning sign NOT to vote for him. After election, when he appointed Geithner & Summers, that aroused suspicions that he was something even beyond a financial dubya.

    The epiphany came when he turned a blind eye and stayed silent to his cabinet & the Fed giving Wall St trillions more on top of what the previous administration had.
    All within his first 100 days!

    That was the revelation that the US had been underminded by monied interests to the extent that its government was effectively controlled by the financial oligarchy.

    It's not easily coming to grips that you've become a disenfranchised serf in your own country.