The Patriot's Flag

Today I’m flying the Fort Moultrie flag. I fly this flag when discussion that risks liberty is in the news. Today, we got the final results on the Cash for Clunkers program, a “proven success” and also news of a GDP signaling the end of the recession. Sound good?  Listen more closely.

Cash for Clunkers Program: The program under Obama’s economic stimulus package pays people up to $4,500 for trading an older-model vehicle with low fuel efficiency for new vehicles that get better miles per gallon.

Obama @ CNN: “Cash for Clunkers’ has been a proven success. The initial transactions are generating a more than 50 percent increase in fuel economy; they are generating $700 to $1,000 in annual savings for consumers in reduced gas costs alone; and they are getting the oldest, dirtiest and most air polluting trucks and SUVs off the road for good.

Edmunds.com: Cash for Clunkers cost taxpayers $24,000 per car, not $4,000! The Cash for Clunkers program gave car buyers rebates of up to $4,500 if they traded in less fuel-efficient vehicles for new vehicles that met certain fuel economy requirements. A total of $3 billion was allotted for those rebates. The average rebate was $4,000. But the overwhelming majority of sales would have taken place anyway at some time in the last half of 2009, according to Edmunds.com. That means the government ended up spending about $24,000 each for those 125,000 additional vehicle sales.

Game Over!

Edmunds.com: There is little doubt that Cash for Clunkers gave auto sales a big boost in late July and most of August, but there has been considerable debate as to how much help taxpayers’ $3 billion provided. Customers who purchased a new car or truck were rewarded in many ways, especially when you consider the U.S. government paid out a median price of about $4,000 per clunker. Those customers are also saving at the pump, as each car turned in was 4-10 mpg better than the vehicle it replaced. Dealers sold more cars. States received more tax dollars. So the program was a success, right?

If you believe the statistical analysis of Edmunds, perhaps the program wasn’t so terrific after all. The industry research juggernaut claims that of the 690,000 vehicles sold under the program, only 125,000 of those sales went to people who weren’t going to purchase a new car in 2009. The result, says Edmunds, is that the $3 billion spent for C4C ended up spurring only 125,000 sales at a cost of $24,000 per vehicle. Further, Edmunds claims that October’s sales would have ramped up even more than what current projections indicate.

Negative Stimulus for Bailed out Carmakers?

• Chrysler is giving a gloomy picture of auto sales with the government’s Cash for Clunkers program now just a fond memory. The Detroit automaker newly run by Fiat said U.S. sales industrywide are off 19% so far this month. “We are going to see harsh reality in September,” Sergio Marchionne, CEO of Fiat and Chrysler, said on Wednesday. He called the U.S. sales results a “disaster.” (From NYDailyNews)

• General Motors: The carmaker reported Thursday that U.S. sales dropped 44.9 percent in September from a year earlier. The company sold 156,673 vehicles last month, down from 284,300 in September 2008. “It was a more difficult month than we anticipated,” said Mark LaNeve, GM’s vice president of U.S. sales. “As expected, the market returned to pre-Cash for Clunkers levels in September,” said GM’s LaNeve. “Fortunately, the fourth quarter looks brighter.” (Lansing State Journal)

Cheering Over Ugly [GDP] Report (Global Economic Analysis Blog)

Today the market is cheering over what is actually an ugly [GDP] report. A misguided Cash-for-Clunkers added a one-time contribution of 1.66 percentage points to GDP.

• Auto sales have since collapsed so all the program did is move some demand forward.
• Government spending increased at 7.9 percent in the third quarter which is certainly nothing to cheer about.
• Personal income decreased $15.5 billion (0.5 percent), while real disposable personal income decreased 3.4 percent, in contrast to an increase of 3.8 percent last quarter.

Those are horrible numbers. The savings rate is down, which no doubt has misguided economists cheering, but people spending more than they make is one of the things that got us into trouble.

Stimulus Jobs (not!)

WASHINGTON (AP) — An early progress report on President Barack Obama’s economic recovery plan overstates by thousands the number of jobs created or saved through the stimulus program, a mistake that White House officials promise will be corrected in future reports.

They are still pushing  “HOPE”  (in a FALSE Economy)

• Money was printed, clunkers were purchased for $24,000 each (not $4,000) … all to save energy and give us a greener planet!  Car sales went up, the GDP went up … but car sales now are a disaster.
  

  Townhall.com Cartoon by Eric Allie

• This is a perfect example of a non-sustainable rising GDP based on government infusion of printed (not earned) dollars.  So you could say the stimulus worked based on the GDP, but an eventual disaster based on jobs (earned GDP!).
• Jobs reported by the White House at 30,000 is actually far less, (AP). But worse, we were promised 3,000,000 by now … this from the stimulus (that didn’t work!). Where are the jobs?
• The goal of the stimulus should not be to increase the GDP, it should be to increase JOBS, which will then increase the GDP in a sustained (earned, not printed) manner. And the job losses were again at an “unexpected” 535,000 this month … 9.8% for the nation.
• Today the Dow was up 199 points with the [false] GDP numbers and discussion of the recession being over. I fear for another stock bubble. People reacting to a good number that is actually a disaster when you strip away what made it happen. (Frightening!)
• The GDP today was not “good news” … it was “confirmation” that printing money works short term, and will be a disaster long-term.

The “HOPE” is from printing dollars, the “CHANGE” will be an economic disaster!

Doug Ft Moultrie Flag - Liberty Risky Discussion