It seems that 3 billion for Cash for clunkers is working. Unlike the 700 billion dollar TARP that had no effect except to bail out Paulson. I wonder how the economy would have been if the 700 billion was handed to Joe The Plumber instead. Velocity of money is critical, 700 billion sitting in vaults and swiss bank accounts is of no use.
I know of several small businessmen who are car repair men. They say they have lost about a dozen good customers who got new cars. They will be laying off some of their help. They will layoff high school dropouts who have learned a trade. High risk young males. From a pure energy point of view to make a new cars uses an enormous amount of energy. Better would have been to give vouchers to buy used cars , not new cars. This would have been the smart green move.
It seems to be working because the money is flowing from the bottom up creating a realistic flow of the economic system. However, this is done at the expense of more debt and newly created money. At the end, this practice is as bad as printing money to bail out banks (TOP-TOP FLOW).
the program is a direct subsidy for new car dealers and manufacturers. i have noticed new car prices for certain models rising in the past week, coinciding with the increased demand caused by CFC. as a consumer, you get a $3500 rebate for the trade-in that might be otherwise worth $2000, but the new car now costs $1200 more. guess who really comes ahead? at least with the bank bailouts, those were LOANS that have to be repaid, and the fed got 7% on the loan. this is a FREE MONEY for dealers. of all the bailouts this has to rank among the most ass-tearing for taxpayers.
Give it some time. Expect the usual vitriol from the knuckle dragging Elitetraitors aka birthers aka teabaggers.
The 700 billion the banks were given was used to speculate in commodities etc.. pay bonuses and get sent to tax shelters. It did not increase velocity of money and it just stagnated. Joe the plumber is what will get us out of the recession not bailing out Dick Fuld,Paulson,etc. Think of the Economy as a Pyramid, if the foundation is weak it will not hold up the rest of the country. Without a strong large Middle class population you cannot have a working economy. You need to bail out the foundation not the tip of the pyramid. Henry Ford was a smart Business man. He believed in paying his employees a fair wage so they can afford his product.
The economy is shrinking. It blipped up in April [tax refunds] and July [Car bailout]. There are more Cash for Clunkers weeks in the offing but after that, my guess is we will see that the economy is still contracting...