Free Markets, Free People

cash for clunkers


White House Stuck On Stupid

Well, über defensive and stupid, to be more accurate. At least with its war on Fox News there was some calculated ability to garner sympathy and support from the fevered progressive masses. Taking on one of the most reputable reviewers of the car industry, when it’s giving you good news, is just plain idiotic:

It is an odd, and we’d say regrettable, pattern of this White House that it lets itself get dragged down into fights with specific media outlets.

[...]

But in addition to Fox News, now The White House is going after highly-respected and influential car site Edmunds.com.

They’re actually using The White House blog to dispute the site’s analysis of Cash-For-Clunkers (via Detroit News).

The post is snarkily titled: “Busy Covering Car Sales on Mars, Edmunds.com Gets It Wrong (Again) on Cash for Clunkers”

For its part, Edmunds.com responded with a sober yet forceful smackdown. After pointing to the obvious flaws in the White House’s (defensive) thinking, they put the once-venerable office to shame:

With all respect to the White House, Edmunds.com thinks that instead of shooting the messenger, government officials should take heart from the core message of the analysis: the fundamentals of the auto marketplace are improving faster than the current sales numbers suggest.

Isn’t this a piece of good news we can all cheer?

I’m not sure which is more pathetic: the fact that the White House clearly lost a blog war, or that it is stupid enough to get involved in one in the first place.


GDP Growth – Real or Memorex?

My guess is you’re looking at GDP numbers that are about as accurate as the stimulus saved and created job numbers the administration put out recently.  Or perhaps a better way of saying it is they’re as deceptive as those job numbers.

The GDP is the combination of consumer, investor and government spending.  We know pure consumer spending is down.  We know that investor spending is down.  And we also know that government spending is way up.  That spending has spending has urges some consumers to spend – cash for clunkers and the $8, 000 incentive for first time home buyers.  But a spurt of government spending which encouraged a spurt of consumer spending does not a recovery make:

The nation’s gross domestic product expanded at an annual rate of 3.5 percent in the three months ending in September, matching the economy’s average annual growth rate from the last 80 years. But the end of government programs to encourage spending on things like cars and houses, alongside employers’ continued reluctance to hire more workers, means the recovery may not last, economists say.

The recovery will happen when investors invest, businesses hire and finally, consumers buy – not for a quarter, but in a constant and increasing manner. Until that happens, until we see the job numbers begin to lessen considerably, this is just a lot of hoopla over a quarterly blip driven by government spending.

~McQ


Law Of Unintended Consequences Meets “Cash For Clunkers”

Or in the words of almost any economist who knows his business – “I told you so.”

Essentially what has happened is precisely what most of them said would happen – the program, Cash For Clunkers, did nothing more than steal from future sales.

To paraphrase the Reverend Wright – the clunkers are coming home to roost:

Edmunds.com reports that “September’s light-vehicle sales rate will fall to 8.8 million units . . . the lowest rate in nearly 28 years, tying the worst demand on record. After the cash-for-clunkers program boosted August sales to their first year-over-year increase since October 2007, demand has plunged. In at least the last 33 years, the U.S. seasonally adjusted annual rate has only dropped as low as 8.8 million units once — in December 1981 — with records stretching back to January 1976.”

But fear not – Washington has learned its lesson:

Now NHTSA says that, despite burdening manufacturers with $60 billion in new costs, its new 35.5 mpg fuel mandate will stimulate the economy by boosting auto sales by 65,480 vehicles through 2016 because Washington “expects stronger consumer demand for fuel-efficient models.”

Yup, DC knows economics and it certainly knows the consumer’s mind doesn’t it? Centralized planning has always driven demand. Yessireee. That’s why the Soviet Union is such an economic powerhouse today.

~McQ


Podcast for 23 Aug 09

In this podcast, Bruce  and Dale discuss the top stories of the past week.

The direct link to the podcast can be found here.

Observations

The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2007, they can be accessed through the RSS Archive Feed.


“Cash For Clunkers” Is A Clunker To This Point

What got us into the financial mess we’re in today? Well all the experts and economists tell us it was overspending and debt.

So what’s the solution? Why encouraging more consumer overspending and debt incentivized with your tax dollars of course.

I’m speaking of the “Cash for Clunkers” program – a $1 billion dollar government program that gives a $3,500 to $4,500 cut in price, obviously subsidized by your taxes, to owners of old “gas guzzlers” that meet a certain criteria as an incentive to go into debt for a new more fuel efficient and environmentally friendly car.

You say a billion bucks in the big scheme of things isn’t much. Of course that’s not the point. The government has no business giving your tax dollars away to subsidize someone else’s car purchase. None.

And here’s another point to consider:

But dealers reported problems with the government’s online system to get the transactions approved by the National Highway Traffic Safety Administration (NHTSA), which is running the program.

Scott Lambert, vice president of the Minnesota Auto Dealers Association, said he was “astounded” to learn at a meeting Tuesday representing about 150 Minnesota dealers that not one has had a deal approved.

“We had dealers representing 1,500 to 2,000 transactions,” he said. “We asked how many had a deal approved yet, and not one hand went up.”

Lambert said the government has created a program that’s “so big and cumbersome that it can’t find a way to accept anything. We’re sending in good, reliable deals.”

It’s nerve-racking for the dealers, he said, because they have given the customer $4,500 and now the dealers need to be reimbursed.

This is a crummy little billion dollar program that began July 1st and the government (why is the NHTSA in the car business?) has yet to figure out how it is supposed to work and how to reimburse dealers who’ve apparently followed their guidelines and laid out hundreds of thousands of their own dollars in anticipation of being reimbursed by the government.

In the meantime, what government has managed to create is a giant and apparently unresponsive bureaucratic mess.

And this is the crew you want running your health care?

All I can say to the dealers is you should have known better.

~McQ