Guest View
User: Pass: | become a member


Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

David Rosenberg: ‘Clunkers’ Exposes Government Stupidity

David Rosenberg: ‘Clunkers’ Exposes Government Stupidity

david rosenberg fast money

Courtesy of Joe Weisenthal at ClusterStock

Gluskin-Sheff economist David Rosenberg has some harsh words about the Cash For Clunkers program in his daily letter:

We couldn’t believe this when we saw this quote from the U.S. Transportation Secretary (Ray Lahood) in yesterday’s NYT (page B3) on the “Cash for Clunkers” program: “There obviously is a real pent-up demand in America … people love to buy cars, and we’ve given them the incentive to do that.  I think the last thing that any politician wants to do is cut off the opportunity for somebody who’s going to be able to get a rebate from the government to buy a new vehicle.” 

Are you kidding me? If there is pent-up demand for autos why do we need a rebate?  If there are 20% more vehicles than there are licensed drivers, why the need to perpetuate this cycle of overspending?  Why is it a politician’s job to create incentives to spend?  Shouldn’t they be focusing their attention on health, education, defense, infrastructure, public safety, job skills and productivity growth (and perhaps the youth unemployment rate of around 20%)?  We’re not exactly espousing an Ayn Rand libertarian view but at a time when the deficit is running at 13% of GDP, at what point is enough?  These rebates are not manna from heaven — it’s a future tax liability to hasten a decision that the auto buyer would have made in any event.  This is fiscal
policy short-termism at its best (we say this as we read the article on page B5 of the NYT — $2 Billion in Grants to Bolster U.S. Manufacturing of Parts for Electric Cars).  

As a sign of how distortions are created when the visible arm of government intervenes and chooses to subsidize a form of spending, see Clunkers Plan Deflates Mechanics on page A4 of the WSJ.   

See Also:

 


Tags: , , ,

Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a free SWW trial or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Dashboard

 Sector Performances (Today)

 Thermal Imaging