The Leveller: A modern day regulator

Intelligence canard

The so called cash for clunkers program is boasted about as a successful program. The 2 billion allocated for the program is as we hear exhausted but extensions to it promised by Congress will continue.

Remember in the 2005 time-frame when auto sales were at record levels the auto giants were still losing money? The economic merits of the cash clunker program is obvious but I still can’t help pointing out how this temporary subsidy doesn’t contribute to a healthy economy.

At best it is only temporary good news for the auto industry. Unless these prices naturally come down to these levels that the subsidy induced people to make a decision to forgo other economic activity like savings then there is no real economic growth. Only a government gravitated economic disturbance.

Basically, the economic engine is being coerced into another bubble. Similar to the cash clunker program we have the Government encouraging mortgage modification with a program that is promised an endless supply of money to continue. I think 70 billion is allocated but we know they wont stop there, when they are willing to do whatever it takes to use their words.

The same activity that caused the last bubble is being encouraged except the government is more directly involved because they are doing the spending this time rather than simply encouraging bad investments as they did previously.

Instead of economic activity doing what it needs to do to recover. the economic activity is being encouraged to cause greater indebtedness. This has been the policy since the dot com bust. When does the Fed plan on reducing the deficit again?

Temporary artificially induced mortgage and auto sales only provide a brief spark or green shoot as they call it. Since none were actually naturally occurring the government decided to create their own and then say see, look, green shoots of activity!

I can’t help make the analogies with the previous administration. In this case when Cheney would leak intelligence data to the New York Times then corroborate his own leak days later in an interview to convince people of the threat Iraq posed to America.

Instead this time its an economic canard.