Obama Has Fixed The Economy!

30 10 2009

20060824151627To hear Obama talk about the economy today one would think that the economy is officially fixed and we can all roll in piles of money. Piles of Yen maybe!

Question: If Obama and his far left followers are against “consumerism”, then why did they even have a cash-for-clunkers program? (my guess is… they are all stupid) BTW… I hope you like the photo of my neighborhood.

Gio-
 
The Beginning Of The End
By- Dan Scott

To hear President Obama crow in vindication of his Stimulus Bill, one would think the light at the end of the tunnel is visible on the economic front. Obama has taken credit for the third quarter GDP growth of 3.5% as well he should. However, we need to examine what that growth was based upon and whether it was a bona fide growth of the economy or the counting of stolen booty.

The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, federal government spending, and residential fixed investment…
Motor vehicle output added 1.66 percentage points to the third-quarter change in real GDP after adding 0.19 percentage point to the second-quarter change…

of 5.6 percent. The third-quarter increase largely reflected motor vehicle purchases under the Consumer Assistance to Recycle and Save Act of 2009 (popularly called, “Cash for Clunkers” Program).So nearly half of the third quarter’s increase was due to the temporary car stimulus. However, according to Edmunds, most of the car stimulus credit merely advanced car sales at the expense of the future months. By the way, the Whitehouse is claiming that’s a good thing. The result of this advance on car sales was to crater the car sales figures for September. October and November sales are yet to come and will similarly be as bad as September. In other words, they robbed Peter to pay Paul by advancing sales to one quarter in the deceitful attempt to proclaim the stimulus ended the recession. The net effective result is the taxpayers were forced to subsidize car sales at $24,000 per vehicle.  GM, Chrysler and their financing arm Ally (GMAC) will now have to endure even worse tanking sales coupled with high interest rates.  You know what that means? More government bailouts to forestall the inevitable in a vain attempt to save UAW jobs. You know, Obama’s campaign supporters.

Durable goods increased 22.3 percentSource

You meant the $4,000 car credit? Well, not exactly. Edmunds calculated the so-called $4000 car credit as actually being $24,000 per car.

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.

 Similarly, the Brookings Institution (liberal think tank) calculated the $8,000 first time homebuyers credit to cost $43,000 per house to the government. Congress in their infinite wisdom, if it can be called that, extended the first time homebuyers tax credit to April 2010. There is nothing like doubling down on stupid.

According to estimates by Ted Gayer at the Brookings Institution, each additional home sale generated by the $8,000 first-time homebuyers’ tax credit actually costs the government $43,000.
How’s that possible? Gayer figures that of the 1.9 million homebuyers that will get the $8,000 tax credit, 85% would have bought a house anyway. The price tag of $15 billion — about twice what Congress had intended — he reckons will result in approximately 350,000 additional home sales, at a price tag of $43,000 for each additional sale.

If there were ever a perfect example of inept government bungling, these would be perfect candidates. Putting the government stimulus in personal terms, this is like an unemployed person using a credit card to artificially keep the spending up with no job coming in the future to pay the bills that are coming due. Once the credit card limit is reached, that’s it and no new job means bill collectors. The net effect of the government spending $2 billion on the car stimulus and $15 billion on the home buyers tax credit will deprive the Treasury of $17 billion by April 15, 2010 on top of the cratering income tax and corporate tax collections.

The truly sad part of the liberals foolishly spending $17 billion dollars on consumption spending is it didn’t do anything permanent for the economy. The government acknowledged MOST of the increase in durable goods was car sales and that’s bad. While a car is technically a durable good, it is not an “investment” in future business activity where new income can be created. Business income means money for jobs, new income possibilities means new jobs. Consumption spending on the other hand uses only existing equipment. The only time an increase in durable goods means a favorable future economy coming out of a recession is when most of that occurs in the expansion and replacement of factory equipment that increases future income, not personal consumption.

Exports are up helping the GDP, but that is only due to the decreasing value of the dollar not because of real competition between businesses. Many liberals would have you believe that’s a good thing. Anything in the short run seems good until the long-term consequences occur. The long-term consequence of a declining dollar is inflation, as the cost of imports rise allowing domestic businesses to pass on price increases instead of innovating thus ending competition. Unfortunately, the long-term consequence of the weak dollar has already started; you have noticed the rise in gasoline prices recently?

There is no nice way of putting this without lying like a liberal, so like pulling a bandage off a hairy arm, let’s do this quickly so as not to prolong the pain. Given Obama’s insane response create a temporary increase in GDP due to a massive borrowing campaign directed at consumption spending, the economy is headed for the dreaded W shaped recession. The upshot of these stimulus programs as described by both liberal and conservative sources as front loading of sales at the expense of the future, the 4th QTR will in my opinion be down…significantly. This prediction is consistent with the predictions of a job-less recovery. Yes, we are now beginning to see the end; the light at the end of the tunnel is from an on rushing train. Welcome to the surreal slow motion play out of Jimmy Carter’s second term in office compliments of  Barack Obama as Jimmy Carter, the second.

 

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4 responses

30 10 2009
Dave

I’m not buying the 3.5% growth rate. I expect it to be revised well downward very soon.

-Dave

30 10 2009
dscott

we will have to wait to the end of November for the revision. I agree since the September #s on economic activity are coming out showing a severe drop off.

I think you do have a point there on revisions since the same game has been played with Unemployment claims, virtually every week, the previous week’s numbers have been revised up, meaning the original figures are low ball estimates thus contributing to the misreporting (I would submit deliberate spinning) of the job loss numbers. This is done under theory of “animal spirits”, the liberals are desperately hoping everyone will stop being cautious to spend money instead of properly paying off accumulated debt. Liberals being the economic illiterates they are don’t realize the point of cyclical economic levels is to wring out excesses from poor decision making setting the stage for the next expansion.

30 10 2009
Dave

Dan,

It’s all smoke and mirrors with this crowd.

LOL-They resemble people running about trying to keep the Hindenburg airborne after it has caught fire, trying to reassure anyone who will listen that all is well.

-Dave

13 11 2010
Kitchen Cupboards ·

i am into car sales business and it is a good way of earning money ,*.

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