Sunday, August 02, 2009

Consumer confidence

Just a thought, (I've recently upgraded to new, high-temperature tin-foil)


One of the biggest indicators of how our economy is doing is consumer confidence. Consumer confidence is measured by how willing people are to assume new debt.

So the gummint offers $4500 to trade in your old, gas guzzling, but likely paid-for car for a new, eco-friendly, but not-paid for car.

And people are taking this money and buying these cars. And also going into greater debt. Generally, when the consumer sees the economy as bad, they don't add debt to themselves. They save, prepare for the worst (being fired/laid off) and otherwise batten down the economic and financial hatches.

So here's how I see this playing out--
1. Gummint offers big money for people to get rid of their older cars.
2. Economic reports on consumer confidence say people are back to spending again, ergo, the economy is recovering, or will very soon.
3. The gummint claims that the economy is recovering because of the pork-laden stimulus bill.
4. Because of the bubble created by the klunker program, some begin to believe the economy is recovering.
5. Taxes go up, because we have to pay the pork.
6. Employers lay off workforces to pay the increased taxes without affecting their bottom line.
7. People can't pay for their new cars, and the # of good, used cars is reduced because the gummint-purchased clunkers have to be destroyed.
8. People don't have reliable transportation to look for, or go to, a job.
9. The economic indicator of consumer confidence goes down as the bubble bursts, but it doesn't happen until after the mid-term elections.

*as an aside, did anyone notice that the gummint mandates the cars GM produces, and how many of them fall under the clunker program? Although other companies have cars in this program, the gummint is offering a rebate to a company owned by the government. Sending a second subsidy to an already-subsidized company. Robbing Peter to pay Peter, as it were.

And the thing that pisses me off the most? When someone uses this program, the government isn't giving the government's money to them, they are giving the money we give them as tax revenues. Money paid in taxes by people likely driving cars that are too new to fall under the klunker program, will go to people who either didn't pay, or paid less in taxes, to get new cars.

Can't seem to find the specific power given to the government in the constitution to provide for people to have shiny new cars...


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