CashForClunkers is sooo bad... GM increases production, rehires workers.

Run time: 00:51 https://www.youtube.com/watch?v=peEnDxrFpng   Posted on YouTube: August 20, 2009 By YouTube Member: Views on YouTube: 0   Posted on DU: August 20, 2009 By DU Member: Joanne98 Views on DU: 913

 

:wow:

Then what?

The workers get laid-off again?

Hey, it's great that some employees are getting off unemployment.

But, in all honesty, "Cash for Clunkers" is artificially juicing the market.

In all likelihood once this program ends and this little bump in demand is satisfied, GM will continue tanking.

It's all so much whistling past the graveyard.

:hi:

You view everything as single transactions, instead of looking at the entire picture.

Yes, governments SHOULD run deficits in times of deep recessions. It's one of the few ways we have to moderate the effects of the recession. Failure to do that, or worse actually contracting government programs because of falling tax revenue, is exactly how to turn a recession into a depression.

I live in the real world with real people and I've actually made money in my 401K over the past three years.

Thank, god, I am not an economist.

In a normal business cycle recession contra-cyclical spending would be the conventional course. But, this is not a run-of-the-mill recession. This slump has been caused by the bursting of the consumer, banking and housing debt bubble. Piling on more government debt without also making necessary cuts to keep from re-inflating the debt bubble -- in my opinion -- is what should have been done. (Military spending could have been cut by a third to a half; lots of corporate welfare could have been cut; the Bush tax cuts could have been repealed, etc.)

One of these days not too far off, the federal government debt bubble will pop (foreigners will not finance the debt; revenues will not be enough to pay the interest; oil will return to $100 a barrel, for instance), Then, Katie-bar-the-door ... we're going to be in for a heckuva crash.

typical recession cycles are moderated by adjusting money supply and interest rates, not government spending or tax increases. Eventually tax revenues will have to increase, but not until business lending and growth return to the economy (for at least 2 quarters). Yes, I also worry about the total debt... the good news is that the personal debt load of Americans is dropping, for the first time in years. Yes, it was forced on them, but now that feat is outweighing greed, perhaps the personal debt will continue to decline. Government debt will have to be serviced, either through inflation or through revenue. It's worrisome. I, for one, wish that we had elected Gore and that he had continued the policies of Bill Clinton (avoid war in Iraq, no Bush tax cut). We still had the cancer introduced into the financial system (Credit Default Casino) and the housing bubble coming, but perhaps we could have weathered the storm better with a Democrat in the White House.

But right now, and for the next year, we need to run big deficits. I wish the stimulus bill had been twice as big as it was, with more emphasis on infrastructure spending. We very nearly repeated the 1930s, and, while I wasn't alive for it, my parents were... and it wasn't something I would wish on anyone.