I admit it. Freebies are awesome. Whether it’s a free portion of dim-sum in exchange for car advice, or a mowed lawn in exchange for storing industrial machinery at my auction holding yard. I relish the word free. To paraphrase Gordon Gecko, “Free is good!” and I’ll gladly Sawyer my way through the daily grind in pursuit of it. But there’s always a catch.
Free has to pass the integrity test. You have to either offer ‘something’ of value in exchange, or you accept the freebie knowing that it won’t end up hurting other folks. If we judge all the bailouts and stimuli done by the federal government we have an epic fail in this regard. The managers of GM and Chrysler have more or less been given a freebie. So have all the pensioners and autoworkers who can now enjoy benefits that were never earned. Politicians? Hometown constituents? Consumers? Suppliers? Dealers? Old School Car Rags? All on the free train. $60 billion plus paid for by the majority of future US citizens. How do you stop it?
Boycott. Yes, I love America and want it to be strong. That’s why I’m going to do the patriotic thing and keep my money far away from activities that inflate the national debt. New car? Nope. I’d rather contribute my money to worthy causes. Like my kid’s education and companies that don’t H1-B their way to profitability. A house? Bought one 13 years ago and tax credits had nothing to do with it. A used car? Well, for me they’re investment assets. But for most of America I guarantee you that cars are essentially die-vestments. For the enthusiast . . . it’s a guilty pleasure. For librarians . . . it’s a transportation module tuned to NPR. So what’s left?
Everything that’s used. A lot that’s new. But in the end it almost always pays to simply keep what you got and fix when needed. The politician may frown at the measly $20 registration fee you pay for the daily beater. But you probably didn’t elect the empty suit or his panderers in the first place. Keep your damn car. Screw the government. As for the rest, invest in quality goods and quality businesses. Either do that or send it to me. For a small one time fee I’ll teach you how to live by spending it on a Hawaiian cruise. I may even send a postcard as a thank-you, which is more than what most Americans will get in the current giveaway.
The pensioners benefits were part of their contract that they negotiated with the company’s management.
They presumably sacrificed part of their wage increase in order to get them.
Explain how that is not earned?
What? I thought there was no way C4C was going to increase car sales! So why is a boycott necessary?
If you have to offer something of value in exchange for something, how is it free? That’s not free, that’s just bartering. It’s also a very sensible alternative to applying a numeric value to all objects and services on the planet.
Great job Steven! I’m with ya 100 percent.
No new GM or Chryco vehicle. (I can buy a used one if I really want it) And I’m not parting with my gas guzzlin pickup.
If Americans would boycott Guvmint Motors and the newly-once-again foreignUAWguvmint owned Chrysler, it would be a great “teachable moment” for the neocommies.
They presumably sacrificed part of their wage increase in order to get them.
Explain how that is not earned?
Actually, it’s a case of killing the goose that laid the golden eggs. The murderers were management and unions. You get what you can negotiate, but that doesn’t mean that you earned it. And it doesn’t mean that you can keep it after the homicide. The only Detroit cars I will consider in the future are Fords.
A house? Bought one 13 years ago and tax credits had nothing to do with it.
So you don’t take the mortgage deduction?
Steven,
So I guess it’s fair to call you a neo-mellonite.
To quote Bill Gross in discussing Secretary of the Treasury Andrew Mellon’s response to the start of the Great Depression:
Better, some thought, to have followed the advice of early 1930s Treasury Secretary Andrew Mellon: “Liquidate labor, liquidate stocks, liquidate the farmers – purge the rottenness from the system.” The Mellons of the world argued that bailouts were akin to pouring gasoline on a fire, adding trillions of dollars of new debt to a domestic and global economy that had broken down because of, because of, well, because of – too much debt.”
Look what happened when the neo-mellonites were in charge in Japan in 1990. The failure to act promptly and aggressively resulted in a debt load 3x as high as the US.
Japan with its 3rd tier AA credit rating and sovereign debt load approaching 200% of GDP (vs. 60% for the US.) And why? Because they followed your destructive neo-mellonite advice.
Yup, jmo, the worst thing that can happen to a country’s debt load is when GDP doesn’t grow. If the money you spend grows GDP, you’re actually going to end up carrying a lesser debt burden than if you didn’t spend any money and GDP stays stagnant (or shrinks).
Trading two items of value doesn’t make either of them free.
Government gives $3,500 or $4,500 vouchers, many to people who do not need a new car, but want one (that’s okay).
The 14% of the population that actually pays more in taxes than they receive in benefits pay for the program (not okay).
Dealers and manufacturers, with few exceptions, roll back incentives and rebates when CFC is implemented (not okay).
Consumers pay as much, if mot more, for that new car, even with the vouchers, than they would had CFC never been implemented (not okay).
The estimated cost of each trade-in under CFC to the taxpayer is between $24,000 and $43,000, depending on the analysis (not okay).
Dealers and manufacturers essentially get the full benefit of the vouchers, rather than consumers, at the expense of the taxpayer (not okay).
Prices of used cars rise as supply shrinks (not okay).
Salvage yards and recyclers get screwed (not okay).
Working class and working poor get shafted as there are fewer used cars to choose from at higher prices (not okay).
More Americans, even if not all who traded in a car, go into deeper debt, at a time when the economy blows, and they should be building a cash cushion (not okay).
This program is a real POS all around, unless you are a dealership, work at one, or are a automobile manufacturer.
The estimated cost of each trade-in under CFC to the taxpayer is between $24,000 and $43,000, depending on the analysis (not okay).
Evidence please.
Cash for Clunkers May Cost Up to $45,354 Per Vehicle
http://seekingalpha.com/article/152909-cash-for-clunkers-may-cost-up-to-45-354-per-vehicle
ohsnapback,
To quote from your link:
The government is shifting tomorrow’s demand to today, stealing from tomorrow to pay for today, but at great cost to the taxpayer.
Exactly – that’s what you do during a recession. You seem to prefer following the disastrously discredited path of Andrew Mellon and Ryutaro Hashimoto?
“jmo:
Look what happened when the neo-mellonites were in charge in Japan in 1990. The failure to act promptly and aggressively resulted in a debt load 3x as high as the US.
Japan with its 3rd tier AA credit rating and sovereign debt load approaching 200% of GDP (vs. 60% for the US.) And why? Because they followed your destructive neo-mellonite advice.”
With all due respect your understanding of the Japanese policy response to the collapse of the 1980s debt bubble is exactly the opposite of what really happened. Rather than defaulting the bad debts and liquidating them and allowing companies to fail, as Mellon might have suggested, the Japanese papered over the problems and kept insolvent banks and zombie companies afloat. Adding on several rounds of huge spending on infrastructure and that’s how they got to a debt load over 200% of GDP. Defaulting bad debts and liquidating them removes those debts from the system it doesn’t increase debt.
Japanese policy makers made lots of mistakes in dealing with the collapse of their bubble economy but to call them “neo-mellonites” is crazy. The mistakes that the Japanese made in the 1990s were on the opposite end of the spectrum from Mellon’s mistakes of the 1930s.
Adding on several rounds of huge spending on infrastructure and that’s how they got to a debt load over 200% of GDP.
Japan pursued three major fiscal stimulus packages totaling 6 percent of GDP between August 1992 and September 1993.
The effects on the economy of these extraordinary stimulative measures were limited. Growth recovered only slightly–to just over 1 percent in 1994–for several reasons. First, the Bank of Japan was late to initiate its easing. By the time of the first rate cut in June 1991, Japan’s nominal GDP growth, which in the long run should not be allowed to fall below policy interest rates, had dropped to about 2.5 percent, headed down to a negative level by 1994.
The key fact is the stimulus began in 1992 nearly three years after the crisis started. In our case TARP and the stimulus was passed within months rather than years after the crisis began.
pnnyj,
You really need to understand the time frame in which Japan reacted to its banking crisis.
Indeed:
Official Hesitation
It was not until late February 1998 (almost 9 years after the onset of the crisis) that a systemwide framework for capital injection was passed into law; then, only a modest amount of its spending authority was actually injected into the banking system (1.8 trillion yen from an endowment of 30 trillion yen). This was deemed vastly insufficient by the market, triggering a disastrous collapse in confidence.
Costs
The direct cost of Japan’s bank recapitalization, net of assets recovered, amounted to 6.5% of the country’s annual GDP, or $255 billion. However, the broader costs were much higher, as the economy tipped into the worst recession of any economy under the Organisation for Economic Co-operation and Development since the 1950s.
Japan did too little too late – having learned from that we are doing a lot soon.
Neo-mellonites
From AEI “The post-1989 collapse of Japan’s equity bubble was, at first, welcomed by the Bank of Japan.”
There was a significant faction within the BOJ and the MOF that welcomed a recession. They hoped it would, as Sec. Mellon might say, “purge the rottenness from the system”.
…So have all the pensioners and autoworkers who can now enjoy benefits that were never earned
They may have helped bury the goose, but they didn’t kill it. Where I come from a deal is a deal. It wasn’t the UAW that welched, it was the car companies. In the late 90’s when they were renegotiating all their obligations they could have at least attempted to realistically face VEBA et al. Instead they chose chose the Disco Stu route-“if these trends continue (the popularity of disco circa 1978 and the popularity of large SUVs in 1998) then, aayyyy.”
Let me reiterate so it is perfectly clear: if I negotiate a deal to do some work for you now for which you will pay me at a future date, you can bet your @ss that I am going to hold you to that future obligation.
“Cash for Clunkers May Cost Up to $45,354 Per Vehicle”
The so called analysis in that Seeking Alpha piece is a bunch of bs. Catchy headline, but an empty story.
What’s funny is that more Americans will probably benefit from this silly 3 billion dollar program than from all the hundreds of billions spent to prop up our greedy and derelict bankers. I’m real happy that 13 billion tax dollars funneled through AIG to pay off Goldman’s lottery tickets…er, I mean their credit default swaps is going to a worthy cause: Goldman’s 11 billion dollar payout to its top execs.
Good luck getting a piece of that.
In our twisted ideological landscape, you bail-out the bankers to the tune of several trillion and rising, and you avert financial and social Armageddon.
But throw a couple of billion to the average Joe? You might as well crawl in bed with Karl Marx while Chairman Mao wipes that sticky stuff off your chest with the Declaration of Independence.
I hate to be crass, but let’s retain some perspective here and save our ire for the real waste and squandering going on in the tangled web of power between New York bean counters and Washington politico-hacks.
smedley, Goldman Sachs obtained 17 billion as a result of the 170 billion dollar bailout of AIG (because of private party credit default swaps – sort of like life insurance on a corporation).
I don’t mean to be too technical, but let’s never underestimate Goldman Sach’s appetite for greed and corruption.
Matt Taibbi of Rolling Stone penned a fantastic expose’ on Goldman Sachs, and whether he’s 100% correct, 75% correct, 50% correct, or even 25% correct, he’s correct enough to expose Goldman Sachs and their ilk for the true cancers to the American Economy and working class people of this nation that they are.
http://www.rollingstone.com/politics/story/28816321/the_great_american_bubble_machine
After all, if AIG hadn’t owed such monies to firms like Goldman Sachs and JP Morgan, surely the government wouldn’t have been nearly as free spending with your and my tax dollars to ensure Goldman Sachs got paid.
Okay, let me get this straight…
The government is serving my interests by using my money to pay for other people’s cars.
Who are these wise souls?
Are they the ones who have decided to let the manufacturers jack up their prices… to benefit the consumer? (Go to carsdirect.com and check out Chrysler’s MSRP’s)
Are they the ones who want to protect my nest egg by inflating the currency in the order of trillions of dollars? Well, I guess that worked in Zimbabwe so why not here.
Or is it something different… perhaps?
It could be that most Americans ARE actually getting screwed by this program among many others. When you set up a system where the worst abusers get the greatest rewards, all accountability gets chucked in the ravine. That’s how we end up with a record number of unemployed and trillions of dollars wasted.
What we’re doing now is akin to letting a bunch of Nigerian congressman have a $200,000 stipend to redecorate their offices. It’s stealing… but I’m sure if we do enough of it, the results will be ‘real GDP growth’. Right?
No thanks. By the way, economies are far more complex than your undergraduate economics definitions. However there is one constant in every field of study… you’ll never build a good anything by giving the greatest rewards to those who are the least worthy.
Steven,
You are spot on. I’m surprised that no one has brought up the environmental impact of destroying cars with life left in them. Those are cars that charities, the working poor and others will not have use of.
First, it was all about jobs, or was it the environment, or the manufacturing base…
Just more double talk for suckers to fall for.
This cash for clunkers program is nothing more than one of GM’s 0% interest programs dressed up differently.
The H1B (and other skilled visas) is actually close to my heart.
For a start, they exist because the USA has anti-immigration congress critters who failed and continue to fail to understand what made America great – immigrants.
By artificially limiting immigration, the other visa categories had to come into existence. I was on a E3 visa, which is a treaty visa between Australia and the USA. There are 10,000 places per year (compared to just 61,000 H1B visas world wide. The H1B is always oversubscribed on the first day of issue. The E3 rarely is filled to even 1/10th of the total number as most Australians really like it back home. So fears that we would displace US jobs are simply not true.
These visas are for skills the USA simply does not have – at any price. I was on a wage more than most of my US compatriots, so the fiction that H1B / E3 visas cost US folks jobs or save companies money is simply not true.
In addition, we pay taxes at the same rate you do, and we buy stuff in exactly the same way you do.
There are shockingly few people who can do what I can do. If you don’t have me, you simply don’t get to do what I do, and that’s a $130,000+ opportunity cost, not including knowledge transfer to US citizens.
I would have emigrated to the USA if I was able. But the rules are so burdensome that I chose to the much easier E3 visa.
After I lost my job, due to the rules on the E3 visa, I had to return to Australia. Good you say? Actually, it was a financial disaster for us, and it’s a complete financial disaster for the US. The services I do cost $2000 to $2500 per day. The US gets their slice of that action in business, sales and income taxes. If I’m not there, you don’t.
If I’d been on a green card or well on my way to emigrating similiar to the way it was done when the USA was becoming a super power on the back of immigration (you basically turned up), you’d have the remaining 30 or so years of my working life, my retirement savings being invested in the stock market and 401(k)’s, and me buying stuff and helping your country along.
Immigration reform is desperately needed. The folks who WANT to move WILL always do so, like me. When the borders came down in Europe, those who wanted to move did, the rest stayed.
Immigration controls are pointless and costs the US trillions in lost opportunity costs every year.
Andrew
“The 14% of the population that actually pays more in taxes than they receive in benefits pay for the program (not okay).”
With all due respect, looking at a macro-view;
some of that tax money is doled out to assist some of the working poor whose labor places food upon grocery store shelves allowing others to devote time to their specialty that pays a MUCH higher wage then that received by those working-poor.
In an age of specialization some of the lowest-paid folks’ efforts allow those higher-up the socio-economic pyramid an opportunity to amass much more wealth than those performing menial tasks will ever have the opportunity to earn.
If those working-poor did not toil diligently the specialists above would have to devote time and effort to procure basics such as foodstuffs, thus taking time away from efforts that result in acquiring larger amounts of wealth than does tasks such as growing one’s own comestibles.
It’s a team-work thing with taxes, well a small portion of them, used to assist some of the lower-paid team members.
Remember, those harvesting the food you need do not receive over-time pay until after working 60 hours per week and that it is extremely rare for those workers to receive any health insurance, pensions or any other perk such as a 401K etc.
Another consideration, as I learned after decades of hard physical labor; the body does wear out and extreme physical toil can nearly incapacitate some folks. Some are lucky and remain spry at 70 and older.
The unlucky ones face the wrath of nature as muscles and joints constantly complaint to the point of near immobilization.
At times I fear my only hope for a retirement is to commit a felony of the proper sort so as to be sentenced to “country club” prison where near-immobility will not preclude access to a sleeping spot, vittles, a place to clean up and at least some basic health care.
Even that route will require some tax dollars from you but my decades of relentless efforts ensured the food was there for you and others to easily acquire and at rates proportionately less costly to the consumer than most parts of the world.
Expect the prison population to grow as the Baby Boomers age. Not all of us made out like “big dogs,” amassing ample wealth for those “Golden Years.”
There were many Americans performing the tasks that so many elites and their minions proclaimed Americans will not do.
Balderdash. Not everybody can be a doc, dentist, CPA, CEO, CIA or trust fund baby.
Check out the repeated research showing how few folks in the USA leap out of the class rut they were born into. It is a basic fact of life and society.
Even if an individual climbs upwards and amasses wealth… is an entire class of “team players” supposed to crawl off and perish for society’s good when their useful productive life has ended?
If paying a high marginal tax rate is so odious how about descending the “pyramid” and entering the ranks of the working-poor.
It’s a great place to observe the affects of massive non-legal immigration upon those citizens performing those tasks “Americans will not do.”
Sigh….
Thank you for taking the time to read this diatribe. It is not intended as a denunciation of any poster. It is a commentary about reality. A reality that I believe is present, at least in part, due to class warfare. A war the even Warren Buffet declares exists:
There’s class warfare, all right,” Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning.”
whoa…….
Where did the skilled immigrant hating come in?
Do you know where the USA would be without skilled immigrant ‘labour’ over the past 80 years?
You can start by not having the bomb to drop on Japan…
Who knows where you’d be today… – but it would be somewhere a lot worse without skilled immigrants.
Additionally Mr. Lang,
We can all agree that the govment enacts some brainless policies, but remember where the USA would be without ‘strong’ leadership…
No Currency, No central road system, no strong international trade, etc…
obbop – Well Put!
working for the greater good of society…
seems like a good thing to me…
Mr. Lang, the underlying sentiment of your OpEd resonates with me. Having said that I am curious as to how you came to have the opinions that you have. Would you indulge us with a tiny bio? Career industries, education, geographic history, self assessed class position, etc. Maybe it’d be to politically charged for this info to be revealed in this Hammer Time but maybe RF could be persuaded to create a bio page for the regular contributors of TTAC such as yourself.
It is my opinion that it is not as hard to “leap out of the class rut” as some make it out to be (sometimes portraying it as a near impossibility). With the myriad of opportunities that exist in this country, the first of which is to join the military (with determination anyone can turn the most destitute of situations around in the military) there should be little excuse for not achieving at least middle class status. (I concede that the middle class might be shrinking but I’ll not digress into that discussion while on an auto discussion blog)
Immediately changing subjects (and getting back to the truth about cars): It used to be said that what is good for GM is good for the country. I think the more appropriate phrase for today is: what’s being done to the auto industry and auto economy is what’s being done to the country as a whole and the greater economy. If the C.A.R.S. programs, bailouts, tax credits, shoddy bankruptcies, etc. work and the auto industry stabilizes then it might validate the Keynesian economic theories (I’m not so optimistic about that). If the auto industry takes a header into the shallow end due to the bender it’s now on ala C.A.R.S. etc. then we can expect the same kind of hangover/withdrawal pains in the greater economy as the stimulus money wears out and fears of inflation return. The auto industry is essentially becoming the guinea pig for a greater macro-economic policy.
***A house? Bought one 13 years ago and tax credits had nothing to do with it.***
whoa, whoa, whoa….
I agree with the aim of your op-ed, but we’re verging on a teapot calling the kettle black…
I’m assuming that you itemize your deductions? (eg. mortgage interest which reduces your tax burden just the same as a credit).
This op-ed matches Mr. something J. stein’s op-ed on driving faux pas in the seething, judgmental passive-aggressiveness, but everyone’s entitled to their opinions—so that was mine, lol.
Face it, we’re all part of a capitalist/consumer-orientated economy unless you move to a commune with hippies or the Amish (which by definition is true communism).
Now excuz mi whiil I go pickit furrn immigrints arrivin at the aeropert.
Re: Greg Locock:
“The pensioners benefits were part of their contract that they negotiated with the company’s management.
They presumably sacrificed part of their wage increase in order to get them.
Explain how that is not earned?”
The pensioners did NOTHING for the federal government to earn the federal government (taxpayers) paying them off.
By your logic if my boss stiffs me I can break into your house and steal your TV. I’m owed something, who cares who it comes from.
pnnyj –
Nice takedown of jmo’s Keynesian nonsense.
That said, at the end of the day whether or not bailouts work or don’t work, it’s all frankly just unethical and immoral. Not that ethics or morals ever stopped government from doing anything.
Printing money out of thin air and pumping it into the system increasing the debt load on future Americans is just flatly WRONG, period.
I do have to apologize to Andrew for painting with a brush that’s a bit too thick.
If it were up to me, folks with advanced degrees would have a green card attached to their diploma and others without an education would still be given a path to citizenship that wouldn’t cost $$$ in fees. Felons would of course be an exception to that rule, and you still need to use quotas. Although I wouldn’t have the quota done on ethnic or national grounds which I find to be inherently racist.
But that’s a subject for another web site.
H1-B’s have been used extensively in the IT and finance arenas to keep costs down and labor cheap. In my limited experiences at an auto finance company and a mainframe manufacturer. I found that these folks end up getting about 80% of what other folks get in the same position with a similar company.
Andrew may truly do something unique. But in my experiences, most of these folks are simply doing it for less money than a citizen qualified to do the same work. The laws are also a bit too murky for my tastes. A foreign national can get an H1-B from Canada and then make arrangements to work in the US. That bothers me for obvious reasons.
We need laws that make it easier and less costly for folks to become citizens. But I’ll leave it at that. The intricacies of that debate are better suited to another forum.
I like Dave Ramsey’s approach to this whole CARS issue. He calls it “stupid on steroids.” Look at it this way. It is in essence a transfer of debt from the automakers to both the taxpayers and private citizens. My tax dollars pay for your tax credit to turn in your clunker. I’ve already been asked to pony up for pension and healthcare benefits for retired workers via the bailout bucks and the New GM’s $60 billion. You borrow the money to buy the car that would have otherwise sat on a dealer’s lot. You turned in a valuable asset that still got you from one place to another and instead swallowed a bunch of new debt to buy a new car. For those of you who paid cash for the car, congratulations! I hope you got a good deal. I would bet that the vast majority of buyers are now indebted to GMAC or one of the other car finance companies. Our Federal government just loves creating asset bubbles based upon consumer debt. First we had the home price/mortgage fiasco and now we have the prices of new cars bubbling up due to the CARS program. For a country struggling with public and personal debt issues this surely isn’t a place we needed to go.
That said, at the end of the day whether or not bailouts work or don’t work, it’s all frankly just unethical and immoral.
So you’d rather go through another Great Depression rather than persue the correct policy responses. It doesn’t matter if they work and save us trillions in the long run?
What if I have a friend with a qualifying clunker, but who doesn’t want a new car, and I get said friend to trade the clunker in and take the $4500 credit, we split the difference, and he then immediately resells his new car to me?
we split the difference, and he then immediately resells his new car to me?
Other than having to pay sales tax twice – it would work.
@jmo
You might want to rethink your post? Could you explain your logic. Specifically how will their working save us trillions? I think the greater issue here is that we have global over-capacity in the auto industry. As past history has borne out, government attempts to bolster said excess capacity have been disasterous to the long-term health of the economy. Continuing to subsidize workers in high paying but low productive jobs is not an efficient use of capital resources. In fact it drains the system of resources that could be allocated elsewhere to more productive purposes. Let us learn from our friends in Moscow who attempted to control industrial output for over 50 years and ultimately ended up with a bankrupt economy.
Specifically how will their working save us trillions?
If it results in us avoiding a second Great Depression or a Japanese like Lost Decade, then an agressive simulus and bailout could end up costing less than years of stagnation and decline.
In fact it drains the system of resources that could be allocated elsewhere to more productive purposes.
But, if this happens too fast you enter into a deflationary spiral that is nearly impossible to get out of. Indeed, the only method found to be effective historically is a massive war.
Personally, give what we know about the Great Depression and Japan’s lost decade, the policies being implemented now are as close to optimal as is politically feasible.
@jmo
I get your point. I’m not Keynesian so I don’t agree with your analysis. That said, I’m a huge supporter of massive wars! After all if we can reduce the population of young productive individuals via war casualties then the older people can stay productive for significantly longer (written with tongue in cheek). Let’s get back to cars. Thinking about the doom of our nation makes me depressed. Crap I didn’t help since I’m the proud owner of a brand new Subi WRX!
Let me be the first to register my impassioned plea. Please, no more use of the horribly annoying phrase “epic fail.” Please. Please.
I’m with dingram01. Also jmo, you continue to frame this discussion that if we don’t do x, we’ll fall into another great depression. Do you recall the unemployment in the great depression? I believe it was 25% or somewhere thereabout (non-farm unemployment was much higher). We are now probably around 11-12%.
Let’s not let hysterics or scare tactics enter this discussion.
The spending that is being undertaken by this administration I suspect will stain it’s legacy. Most of the stimulus is either rewarding those who got us in this mess or is rewarding the irresponsible rampant consumerism that also got us to this place.
Obama and the Dems are doing the same thing Bush said after 9/11. “Go to the mall… go on vacation… spend money.” It was stupid then and it’s stupid now.
@jkross22 +1
“stupid on steroids” as Dave Ramsey says
Boycotting GM and Chrysler is a sure fire way to make sure we never get our tax money back.
If I own a business, I’m sure as heck going to buy stuff from myself.
And WE all own GM, so buying from Toyota, Ford, et al. just means we’re robbing ourselves all in the name of misguided righteousness.
Buick61
I have a feeling we’re not in Kansas anymore.
We are now probably around 11-12%.
And if we hadn’t done anything unemployment would be lower? I don’t get your point.
Or are you saying we should wait until enemployment hits 25% before we decide to do something?
Steve, how many good work trucks have been destroyed in the Cash for Clunkers program? Here in Texas old pickup trucks are kept alive for decades carrying crap one wouldn’t want to put in a new shiny pickup. I wonder how may jobs will be lost if small businesses have trouble getting off the ground due to a shortage of beater pickup trucks.
jkross, unemployment was calculated much differently in the 30s than it is today.
The government doesn’t count self-employed people, people who have dropped off the unemployment insurance rolls, people who have given up looking for work, people who are part time employed, and a few other categories, in their ‘new math’ calculations of the unemployed.
The current real rate of U.S. national unemployment is at least 16%, and possibly higher (and growing):
http://seekingalpha.com/article/153555-five-reasons-the-market-could-crash-this-fall
It is projected that another 13 million people will no longer be counted as “unemployed” as of December, 2009, as they will have exhausted their unemployment benefits.
By the government’s calculus, these people will no longer be unemployed.
I wouldn’t bet AGAINST another depression, regardless of these silly stimulus plans like CFC, and the criminal ones, such as the AIG/Goldman Sachs/JP Morgan/Bank of America/Citigroup Corporate Welfare Act.
jmo: But, if this happens too fast you enter into a deflationary spiral that is nearly impossible to get out of. Indeed, the only method found to be effective historically is a massive war.
Contrary to popular belief, the Great Depression wasn’t caused by the “do nothing” stance of the Hoover Administration. His administration took what was an activist stance for that time in regard to the economic recession of 1929 (which had been brewing before the Great Crash of October 1929).
The Federal Reserve throttled the money supply at the exact moment it needed to make sure that adequate cash and credit were available. President Hoover was worried about inflation, but these actions were similar to treating a patient for a fever after he has frozen to death.
Then, to compound the error, President Hoover signed into law the devastating Hawley Smoot Tariff, which throttled world trade at a critical moment. In those days, U.S. cars were actually very desired around the world. The retaliatory measures signed into law by other countries closed important markets to American car makers when they needed them the most, and contributed to the downward spiral.
The lack of a stimulus package wasn’t the main problem (President Hoover was actually a firm believer in the value of public works, and pushed them throughout his administration). It was his monetary policy and the decision to sign the Hawley Smoot Tariff (which was supposed to “protect” American industries, and wound up devastating many of them) that turned what should have been a short and sharp recession into the Great Depression.
jkross22: Obama and the Dems are doing the same thing Bush said after 9/11. “Go to the mall… go on vacation… spend money.” It was stupid then and it’s stupid now.
The amusing thing is that there are still people on both sides of the aisle who believe that some sort of momentous change occurred on January 20, 2009. From what I can see, “hope and change” really means “more of the same,” only pushed by a president who is more articulate and has better abs.
Buick61: And WE all own GM, so buying from Toyota, Ford, et al. just means we’re robbing ourselves all in the name of misguided righteousness.
Not really. If I own a part of Ford (i.e., own shares of its stock) I have the choice as to whether to keep it or sell it. I have no such choice regarding the “ownership” of GM and Chrysler.
Incidentally, telling people that because they now “own” a part of GM or Chrysler somehow means that they should be buying one of their products is hardly a surefire way to increase support for the bailouts.
We now have an obligation to buy a Cadillac instead of an Infiniti, BWM, Mercedes or Lexus?
Talk about bending over and taking one for the team…
Buick61- If it costs you more to produce something in house than to out source you are stupid to “buy from yourself”.
GM has an excellent track record for destroying wealth and there is no indication that this has or will change.
Buying from companies that produce some profit in the US is a better deal for America than pouring more into companies that simply destroy it.
IMO that $60B is already gone. You hav eto know when to walk away from a mistake.
I will put my money into companies that are creating wealth not burning it.
Just a thought.
Bunter
How many good work trucks have been destroyed in the Cash for Clunkers program?
Answer: so few it hardly matters. There will always be beater trucks available any time you like.
I wonder how may jobs will be lost if small businesses have trouble getting off the ground due to a shortage of beater pickup trucks.
I predict two. No wait, 1.5. See my comment above.
I am seeing first-hand what is being turned in on the clunker program. Yes, some vehicles are actually in good condition and it is almost a shame that they are heading to the crusher. But for the most part, it is definately a good thing that some of these dangerous POS are off the road. Believe me. And as a side note, it is pure pleasure “parking” these heaps. Demolition derby anyone?
Lot of fretting over a measly 6 day sales event.
And I thought ALL that stuff stored at your auction yard was industrial machinery?
So, no_slushbox, if you invest money in a company that collapses thirty years (say later), you didn’t earn that money in the first place?
You might want to think the logic through there.