The Biggest Threat to Recovery

Let me put this simply: I'm bullish on America.

I hardly think I'm walking out on much of a limb there -- after all, the U.S. has not only an incredibly hardworking labor force, but an extremely ingenious one. It's home to some of the most advanced technology in the world, and historically the people have had an undying "can-do" attitude that's helped the country through major wars and major economic disasters.

While that gives me confidence that the U.S. will push through this nasty economic episode, there is a big, glaring roadblock that I see between recovery and future growth. And it pains me to say that the roadblock is the United States government.

The ingredients are there ...
Simplifying just a bit, economic capacity stems from a country's labor force, capital stock (as in machines), natural resources, and technology. Having a lot of each can be a good thing, but more crucial is having each in the correct proportions to get the most out of the combined resources.

The U.S. lays claim to technology leaders like Intel (Nasdaq: INTC  ) and Microsoft (Nasdaq: MSFT  ) , leading industrial equipment manufacturers like Caterpillar (NYSE: CAT  ) , and notable natural resources such as the largest proven coal reserves in the world.

Sure, China and India may have much larger labor forces, but the U.S. makes up for that by having a highly skilled group. And the country may have a seemingly insatiable thirst for oil, but it's even made the most of that by being the home of globetrotting oil and gas supermajors like ExxonMobil (NYSE: XOM  ) and ConocoPhillips (NYSE: COP  ) .

In short, we have the ingredients to fuel a healthy economic recovery.

But it depends on how you use them
The thing about ingredients is that they're often only as good as your ability to use them properly. Throw together some flour, eggs, cocoa powder, and a few other things, and you can make a pretty tasty chocolate cake. But add some Italian dressing to the recipe or use 10 times the recommended amount of sugar and you'll turn something delicious into something downright gross.

The same holds true for economic ingredients -- used properly, they can lead to growth and prosperity; hampered and misdirected, they can lead to stagnation and underemployment. Historically, the U.S. has made the most of its economic spice rack by allowing the free markets to direct how these resources should be allocated.

In times of economic distress, the government has been known to use taxpayer money to attempt to jump-start economic activity. In theory, this can be a good play that greases the economic wheels and gets business and consumers to start spending again.

What not to do
However, Uncle Sam walks a fine line because there are a great many ways that this largesse can be misused and lead to nothing more than economic confusion. The current "cash for clunkers" program is a perfect example of how government "help" can go badly astray.

It may seem like a good thing that the program will give a near-term economic bump by helping automakers like Ford (NYSE: F  ) and dealers like AutoNation (NYSE: AN  ) . However, the new cars being bought will, in many cases, simply reduce demand for new cars in years to come. The program will also no doubt encourage many Americans to take on yet more of the consumer debt that helped get us into this mess in the first place.

Plus, not only are we not likely to see much of a lasting economic impact from these car sales, but pumping money into the auto industry will direct labor and equipment to that sector of the economy when it could almost certainly be more useful elsewhere.

Clunk it if you got it
I can't blame folks for taking advantage of the cash for clunkers program; after all, it's free money. It's my money (and yours), but it's free for the taking nonetheless.

Programs like this will perform like economic crack -- a high that wears off quickly and leaves the users desperate for more. So as bullish as I am on Americans and the resources in the U.S., I'm concerned about what kind of recovery we'll end up seeing if the government insists on wasting money this way.

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Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned in this article. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool. The Fool's disclosure policy would like to give some clunks to the government for every bit of cash it's given out on this program.


Read/Post Comments (63) | Recommend This Article (101)

Comments from our Foolish Readers

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  • Report this Comment On August 06, 2009, at 1:13 PM, plange01 wrote:

    the biggest threat to the recovery is the government refusing to face the facts that we are in a depression...

  • Report this Comment On August 06, 2009, at 1:17 PM, catoismymotor wrote:

    There has yet to be a problem the federal government can't make worse.

  • Report this Comment On August 06, 2009, at 2:22 PM, VegasMartin wrote:

    Do we have some Peter Schiff supporters here? Trying to cure the recession with inflation will just make things worse.

    www.ShootTheBears.com

  • Report this Comment On August 06, 2009, at 2:59 PM, brwn8484 wrote:

    We have met the enemy and ... He is us! Yes .. our biggest threat is the US Govt.

    Only in the US of A would we allow our leaders to run their congressional lunchroom (for over 20 years) in the red. That's right folks... The very people telling us how to solve the biggest financial crisis in the last 2 centuries ... cant even keep a simple cantina from running into bankruptcy. How in the Hxxx are they going to solve anything. This blog is so humorous..... I am beginning to think that the pay for play (Goldman sucks) scam has been replaced with the blog for payola scam .. i.e. you write a positive piece about our incompetent leaders and banks and then you get to partake in the illegal spoils. Sounds like a great idea for our pol's to help solve the financial crisis. We can call it F.A.R.T. (Somewhat) Free Asset Relief Program. Any blogger below 200% of poverty level can qualify for a govt loan at 8% interest as long as he tells a convincing fairy tale about how honest and true and capable our govt is at running a 3rd world socialism experiment (thats right... I said it.. the "S" word).

  • Report this Comment On August 06, 2009, at 4:52 PM, Snertie wrote:

    It's worse than that Matt. "Cash for Clunkers" actually destroy's American capital in the form of used cars and parts! Instead of being resold and put to use elsewhere in the economy, perfectly good running vehicles are deliberately destroyed in the name of eco-correctness. This reduces the supply of used cars to the secondary markets as well as parts. Used car buyers will be made to pay more, as well as people seeking parts to repair other still-functioning autos.

    So not only are we borrowing money from the Chinese to do this, we end up taxing those who either cannot afford new cars or don't wish to participate in this nonsense.

    Insanity.

  • Report this Comment On August 06, 2009, at 4:55 PM, Chgodvr wrote:

    Isn't owning a car company (GM) and then passing legislation to increase sales a conflict of interest??

  • Report this Comment On August 06, 2009, at 5:14 PM, stokescorrales wrote:

    This whole thread seems to only be about the economics of car buying. I thought an important purpose of the Cash for Clunkers program was to reduce demand for oil and consequently, to contribute to a decrease in global warming.

  • Report this Comment On August 06, 2009, at 5:14 PM, upupaepops wrote:

    "The new cars being bought will, in many cases, simply reduce demand for new cars in years to come."

    What a silly argument!

    So, instead of new cars selling today, reducing demand tomorrow, you would rather have new cars selling tomorrow, reducing demand the day after tomorrow!

    Did you even consider how well-functioning cars not only pollute less, keeping people healthier, but also avoid accidents, and get people to work more efficiently?

    Of all the ways the government is putting money into the economy, why do pick on a relatively small amount of money that helps the neediest, instead of huge amounts of money going to the weathiest?

  • Report this Comment On August 06, 2009, at 5:32 PM, nosodog wrote:

    The problem is that we've had thirty some odd years of conservative destruction to our country.

    Government is not the problem, it's the corrupt politicians controlled by corrupt big business; that's the problem.

    Listen to Dr. Ravi Batra when he speaks of the ballot box revolution that has already begun. When we consider where to place our investments in the coming years we must consider the significantly changed society that we will be living in.

  • Report this Comment On August 06, 2009, at 5:37 PM, shymel52 wrote:

    I agree that this article and some of the comments are silly! The $3 billion will buy fewer than 675,000 vehicles. Before the near-depression we were selling at least 13 million but before "Clunkers" we were expected to sell fewer than 10 million. So 675k cars added to the 10 million is a short-term boost and will barely affect any future purchases if at considering historic sales. AND there are milliions of vehicles both older and newer than the turned-in clunkers so the engines (not the whole vehicle) being destroyed has almost no affect on the availability of pre-owned vehicle. AND all but 1 pound of the engine is being recycled into other metal products w/ buyers lined-up to buy them according friends in the scrap metal industry.

    Yes, the Founding Fathers were right, the greatest threat to our democracy and any democracy is an uninformed and misinformed electorate. No shortage of both when folks discuss the "ravaging effects" of the Clunker Program!

  • Report this Comment On August 06, 2009, at 5:46 PM, nurredin wrote:

    Is Matt on the Forbes 400? Why take advice from someone who isn't? If some one is giving financial advice,and they're not wealthy,then it's just opinion. When Warren Buffett says it's a bad idea,maybe I'll listen. Show me your Billion,and I'll listen to what you have to say.It's just like the economics professor back in college who drove a Taurus. Why am I listening to this clown?

  • Report this Comment On August 06, 2009, at 5:55 PM, regulatethem wrote:

    Some good points here. I was against the huge loans to GM and Chrysler. I really do hope they pay it back. But this favoritism has soured the next purchase decision for many.

    Increasing sales is not why I like the C4C plan. I'm just glad to get several thousand polluters off the road. I get asthma from ozone pollution.

  • Report this Comment On August 06, 2009, at 5:59 PM, TMFKopp wrote:

    @Chgodvr

    "Isn't owning a car company (GM) and then passing legislation to increase sales a conflict of interest??"

    Haha, I actually hadn't thought of it that way -- well done!

    @upupaepops

    "So, instead of new cars selling today, reducing demand tomorrow, you would rather have new cars selling tomorrow, reducing demand the day after tomorrow!"

    There is going to be a certain amount of demand for cars as those out on the road reach the end of their useful life. The ideal scenario is to have the market naturally drive the demand for new cars rather than the government using taxpayer dollars to artificially shift demand from one time period to another.

    And yes, I would rather have new cars selling tomorrow because that's when today's cars will be at the end of their useful life and will need to be replaced. Sans meddling, the demand for the day after tomorrow will be taken care of by the market.

    @shymel52

    "The $3 billion will buy fewer than 675,000 vehicles. Before the near-depression we were selling at least 13 million but before "Clunkers" we were expected to sell fewer than 10 million. So 675k cars added to the 10 million is a short-term boost and will barely affect any future purchases if at considering historic sales."

    So this is good enough justification to take taxpayer money and give it to people to buy new cars? It's an economic sugar high that not only will likely do more harm than good for the economy, but it sets a dangerous precedent for the ways government uses our money.

    Also, have you considered how the folks driving "clunkers" are going to be able to afford new cars? Is it possible that they'll be taking out large auto loans to cover the difference between the clunker money and what a new car costs? Seems to me the exact opposite of what we should be encouraging right now.

    @nurredin

    "Is Matt on the Forbes 400?"

    Yes, I am. Look harder.

    Matt

  • Report this Comment On August 06, 2009, at 6:06 PM, knifequest wrote:

    You know, When you think honestly about the state of so called government in the US you begin to realize that the American Revolution was started over far less garbage that what we put up with now. It's not about parties, look toward the light, politicians regardless of party affiliation above all things MUST PERPETUATE THEMSELVES, or they are no longer politicians but mere citizens. Now you know they can't let themselves shrink to that level so they reward those who reward them and it isn't the voters. Never have so few screwed so many for so little.

  • Report this Comment On August 06, 2009, at 6:36 PM, TMFKopp wrote:

    One other thing to consider in the whole clunkers situation...

    What of auto mechanics and manufacturers and sellers of aftermarket auto parts?

    http://online.wsj.com/article/SB124951665673109435.html

    Apparently the vested interests in Detroit are more important than the friendly neighborhood mechanic...

    Matt

  • Report this Comment On August 06, 2009, at 6:46 PM, QuailRun53 wrote:

    "Is Matt on the Forbes 400?"

    Yes, I am. Look harder.

    Matt

    No Koppenheffer on this year's list. Must be really small print.

  • Report this Comment On August 06, 2009, at 6:52 PM, TMFKopp wrote:

    @RDaniels

    Yes, very small print. :)

    Matt

  • Report this Comment On August 06, 2009, at 6:59 PM, chrone2 wrote:

    Is unregulated business the answer? I think not.

  • Report this Comment On August 06, 2009, at 7:09 PM, fks3 wrote:

    Matt,

    Well said. Not only is the "clunkers" program a waste, but it adds to the already huge deficit. (And there's only one "American" nameplate in the top 5 cars purchased under the program!) The billions spent on this "phase two" automaker bailout is being done by printing more money. More printed money = higher inflation. I had one of President Carter's 17% mortgages (I voted for him, but I was very young and naive), and really don't want to see that economic policy repeated.

    Why don't we just give people money to buy anything they want? How about $45 for toasters (cash for crumbs?), and $450 for TV's (cash for crap?). Giving people money you don't have, to entice them to buy things they probably wouldn't have bought, is crazy. It would be interesting to track just how many of these "clunker" car loans go into default over the next few years.

    "Free money" policies only work in the short term, as the mortgage debacle has shown. Paybacks (pun intended) are hell.

  • Report this Comment On August 06, 2009, at 7:30 PM, john795806 wrote:

    And the biggest threat to recovery is...Cash for Clunkers? What a leap of logic.

    The simple truth is, we had a false economy and a collapse was inevitable. The "economy" was built on people spending money that they simply didn't have, using easy credit for houses, cars, and every other imaginable purchase using high-interest credit cards. Then the bills came due, no one could pay them, and the credit market dried up. All of that money that was borrowed and spent would not (should not, nor could not) have been spent had credit only been available to the credit-worthy. Hence--a false economy--jobs and industries were supported by spending money no one had.

    And leading the way was--Uncle Sam! Under 3 Republican administrations (Bush Jr., Bush Sr., and Reagan), 90% of the national debt was created. All the while, tax cuts given to the richest in our society, just to assure that bills didn't get paid.

    Now you want to blame things on programs like "cash for clunkers"? It's a drop in the bucket, my friend, and while no solution, it's not the underlying problem. The solution is to build a real economy where people spend what they've saved (or for big ticket purchases like housing, what they can reasonably afford). Americans, finally, ARE saving. Credit card debt is going down as well. New legislation needs to be created to limit irresponsible credit--because in the end, even the responsible suffer when credit markets go awry.

    As for the "recovery", we will not, nor will we need to, "recover" to the days of an economy based on people spending what they didn't have. Slow is good. Savings are good. Paying off your bills-- good. Paying taxes for government services--good too, and there is no reason at all that we cannot eventually get back to a balanced budget. The Clinton administration ran a budget SURPLUS.

    And no, I'm not from Arkansas--I'm from Texas, for the most part, Bush country. Accident of birth.

  • Report this Comment On August 06, 2009, at 7:34 PM, xetn wrote:

    Consider this:

    http://www.lewrockwell.com/barnett/barnett11.1.html

    and this:

    http://mises.org/story/3568

    These things are whats wrong with this government redistribution program.

    Very "foolish"

  • Report this Comment On August 06, 2009, at 7:43 PM, EBerg13 wrote:

    I have to disagree with this article. I think most of the people that took advantage of this program did so because the price of a new car was suddenly about equal to the cost of a good used one. As someone who is driving an 11 year old Corolla (which will last another three or four years if I continue to lavish it with care) I would never pay more than 10K for a car...and the depreciation! But there are people now driving new Focus and Prius and Cobalts (the stupid ones are driving the Cobalts) who paid about the same as for a car three or four years old. The real sufferers are those poor schmucks in financial trouble due to the economy who are trying to sell a car two or three years old for the amount they still owe on it.Good luck!

  • Report this Comment On August 06, 2009, at 7:51 PM, TMFKopp wrote:

    @fks3

    Cash for crumbs -- I love it, I need a new toaster, mine's a piece of junk.

    @john795806

    Please let me know where in the article I said that cash for clunkers was the cause of our current economic problems -- if it does that's a mistake.

    Cash for clunkers is an example of the type of government spending program that is misguided in terms of its ability to really help the economy. The program itself is bad, but the specter of more programs like it is even more worrisome.

    The rest of your argument seems to state that today's economic problems stem from past failed governmental programs. Why is it such a stretch for me to say that bad governmental programs being put into place today will be a threat to tomorrow's economy?

    Anyone that has automatically assumed that I'm putting forth a blanket argument against the current administration and its actions, I urge you to put the tar and feathers aside for a moment and consider that bad programs are bad programs are bad programs.

    The current administration has definitely done some good things. This is not one of them.

    Matt

  • Report this Comment On August 06, 2009, at 7:53 PM, mtracy9 wrote:

    Amazing all the hand-wringing going on over the cash for clunkers program -- $1 billion so far; perhaps $2 billion more. Where was all this hand-wringing regarding two illegal wars in the Middle East that have gone on for 5 years now (and what these wars have done to produce the budget deficits racking our economy)? The war in Iraq alone has cost American taxpayers $10 billion a month, and has had disastrous human (and environmental) consequences.

  • Report this Comment On August 06, 2009, at 8:49 PM, Ziplow wrote:

    I agree that the cash for clunkers program is a bad idea, but the biggest threat to recovery is all of the federal and state tax increases that are about to take effect.

  • Report this Comment On August 06, 2009, at 9:14 PM, afleetfeet wrote:

    Cash for clunkers is not part of the administration's economic policy. It is a part of the administration's environmental policy.

    Ignorant articles like this is why I am not re-upping my subscription to MF.

  • Report this Comment On August 06, 2009, at 10:20 PM, upupaepops wrote:

    TMFKopp.

    Your worshipful reverance for the market is based on pure dogma, not to mention hypocrisy.

    Of course, you don't argue that we should let the market fund those illegal wars that are destroying lives and wealth on two continents. No, it's OK for the government to tax people to death to finance death and destruction.

    How much do you think people would willingly contribute to the Pentagon if it were totally under market control?

  • Report this Comment On August 06, 2009, at 10:31 PM, tuxeroo wrote:

    Ah, easy come, easy go. As the late Everett Dirksen once said in debate on the Senate floor, "A billion here and a billion there, and pretty soon you're talking about real money," But today, Ol' Ev would have to add some zeros, because now only trillions count -- sort of -- and soon it will be the next mathematical designation, whatever it is. No nation in the history of the world has ever extricated itself from burdensome debt by going farther into debt No matter what the brilliant bozos currently in charge in Washington may think, a nation can no more ignore the fundamental laws of economics than it can ignore the fundamental laws of physics..

  • Report this Comment On August 06, 2009, at 10:57 PM, drericrasmussen wrote:

    Yes, there is a danger that the "cash for clunkers" program might become, as you say, like crack cocaine. But it may be more like that medicine that I take when I have a cold and have to get through a work day. Now and then it can help.

    But this article makes such broad brush statements and repeats the noxious bromdes about "government is the problem not the solution." We had enough of that under Bush and government did not attend to any problems. They gutted the SEC. They gutted tthe EPA. They wanted to make government small. Instead they made the economy smaller. C4C is not an ideal program. But it is having a modest impact in a timely way. If we followed your "best to do nothing" advice we would still be in a downward spiral. Oh, but you'd just love that buying opportunity.

  • Report this Comment On August 06, 2009, at 11:03 PM, jomueller1 wrote:

    Is the article meant to be sarcastic? English is not my first language so I may miss something here. Yes, the people in the US used to have a "can do" attitude though nowadays I more often hear all kinds of reasons as to why something can not be done the same moment an idea surfaces. What I have not seen yet is the hard working man. Our home is nailed together in shanty town style that only became visible when repairs forced me to take off drywall and carpet. No wonder many homes are demolished after 20 or 30 years. The US motto is "there's no business like show business".

    I believe the US workers are masters in improvisation and salesmanship but know quality mainly from text books. Why else did the car industry downhill? Why are jobs being outsourced off shore? Why is life expectancy lower than in other "civilised" nations?

    Is it just because self serving politicians are constantly meddling in all affairs spending OPM to distort normal economic development? Is it because lawyers are chasing ambulances instead of helpng to uphold the law or is it because of all the corruption of which I read daily?

    Another tea party is all that can save this country.

  • Report this Comment On August 06, 2009, at 11:14 PM, amt77 wrote:

    Just for kicks - I looked up my 6-cyl. 1994 Mazda B3000 Pick Up Truck on the govt. CARS site and it's NOT eligible! The MPG for eligibility has to be 18 (combined ) or less. Mine is 19.

    It's 15 years old!! What does this tell me? There are still going to be plenty of used cars left for the U.S.A.- they will just be more fuel efficient models. There are going to be fewer gas guzzlers on the road. I do think someone may have underestimated pent up demand from people who realized their poor vehicle choices, when gas went over $4 last year! Comments here on how this program encourages people to take out loans they can't afford, don't make sense to me. Aren't lenders supposed to control that? Isn't it in the lenders job description to not loan money to me that I can't pay back? The other thing that strikes me about my truck not being eligible is how it highlights WHAT crappy progress has been made in this country toward fuel efficiency, that my 15 yr. old pick-up doesn't meet the criteria. This program is just OVERdue as far I am concerned. Money is the only way to entice people to do the right thing. As previous poster mentioned - I also heard the recycled steel is benefitting other industries. Now if we can only get the gasoline taxes raised some more...

  • Report this Comment On August 06, 2009, at 11:14 PM, OldAtHeart wrote:

    nice article. spot on.

  • Report this Comment On August 06, 2009, at 11:17 PM, wldgrdnr wrote:

    Occasionally I actually read something on MF if the title intrigues me enough...and then when I do, I remember why I never read MF LOL.

    Try discussing something relavent, like why the FDIC is permitted to destroy businesses and peoples retirements, because they are too lazy and ill equipped to do a proper valuation on a bank, and run an honest auction.

    Let's focus on the real issues, and not this drivel.

    Big business is running the politicians, bought and paid for...and just WHY do wee allow lobbying to continue?

    "By and For the People"....a concept that was lost long ago in Washington. Now it is "By and For the company who can pay the most to the politicians campaign funds"

    Let's get back to the America that was so good...this one is not looking too shiny anymore

  • Report this Comment On August 06, 2009, at 11:35 PM, xetn wrote:

    More real economic reasoning regarding government intervention:

    http://www.lewrockwell.com/bonner/bonner402.html

  • Report this Comment On August 06, 2009, at 11:36 PM, punterman wrote:

    Just a few points that I have not seen mentioned. I worked inside the car plants in Michigan and Ohio from 1982 to 1995 as an engineer. Consider 2 facts:

    1) For at least 30 years our domestic auto company's directors and executives, without the consent of their staff members making up the bulk of their companies head count, and without the consent of the communities where their facility was located, chose to move production activity year by year to other countries to "improve cost structures" in order to have impressive short-term quarterly earnings and boost their own personal wealth. This is not being discussed in the news very much if at all. Our corporate leaders created their own incentives to move production off shore during the past several decades as they interacted with share-ownership as if it was a casino they could shape to give themselves better odds.

    2) Our domestic car companies are partially owned by people all over the world. When our congress of 450 or so people decides to tax just this nation to give money to those companies it could legitimately, to some significant degree, be interpreted as moving money from Americans into the pockets of foreigners.

    I am not saying that I know what's best, but I have brought these points up frequently in dialogues and I have yet to receive any argument of any kind regarding my statements, so I thought I would insert them here to see if any of you can tell me I'm off course about this.

    Cheers.

  • Report this Comment On August 06, 2009, at 11:37 PM, nelpasa wrote:

    You forgot to include Financing in the ingredients, without it you can not pay for labor, capital stock (as in machines), natural resources, and technology.

    Do to lack of financing is why we have all that money pouring from the GOVERMENT ( the manager of the whole structure)

  • Report this Comment On August 06, 2009, at 11:40 PM, nelpasa wrote:

    Rush Limbaugh style, have truths.....

  • Report this Comment On August 07, 2009, at 12:37 AM, robertf36009 wrote:

    Cash for clunkers is the least of the problems. Al Gores cap and trade tax is the real threat. This bill will drive energy prices way up. I bought Southern Union(SUG) @ $16 it seems like it has a way to run going into the fall my current stop is $17 and will probably track up. There are also ETFs for trading in carbon offsets. Al Gore is my new hero he has made selling snake oil an art and gotten it forced by Uncle Sugar (almost). It could fail in the Senate but I will trade it either way. I'm also shorting the dollar (UND). Buy snake oil and sell wolf tickets.

  • Report this Comment On August 07, 2009, at 3:14 AM, cima2000 wrote:

    "..So, instead of new cars selling today, reducing demand tomorrow, you would rather have new cars selling tomorrow, reducing demand the day after tomorrow!.."

    Good point..BUT.. 1) cars won't be junked..but just dealed over to Mex. by used cars dealers.2)the one's buying now because of the US offer don't know that in few years their cars will be obsolete by new green engines...sooo.. they got to buy again..and get more US$..

  • Report this Comment On August 07, 2009, at 8:28 AM, icemen39 wrote:

    I believe like all Republicans, "just say No"

  • Report this Comment On August 07, 2009, at 9:17 AM, howboutme wrote:

    Dear stokescorrales- just to inform you, there is no such thing as global warming or climate change. Temperatures have fluctuated from the beginning of time, hurricanes have always occurred and storms are a natural result of changing air masses. Without this stuff we would just see the sun or clouds all the time. The earths average temperature much fluctuate to environmentally survive just as your own body temperature does to keep your body functioning.

    I WISH you global nutheads would use half your brain to realize that everything in life must fluctuate to maintain a balance. Sleep on the other side of the bed once and maybe you will wake up.

  • Report this Comment On August 07, 2009, at 1:57 PM, shoalfree wrote:

    Ohmygosh!! Tilting with windmills will solve nothing, folks. The government programs are in place and will be acted upon, good or bad. And, by the by, folks, "consumer debt" was not the cause of the current finance morass. It was Greed, the achillis tendon of capitalism, which has bit us in the ___ big time. No one asked of the obscene financial leveraging characteristic of the past 8 years if it was the right thing to do -- but rather only was it cleverly possible to do so.

    I suggest that we each tend to our own houses to ensure that they are in proper order; that we use this opportunity to teach our children well the lessons of greed without regard to the welfare of Nation.

  • Report this Comment On August 07, 2009, at 2:01 PM, readnthink wrote:

    Please do enough research to find out that "global warming" science is only the national science organizations looking for annual funds (paychecks).

    Please do enough reading to see that cancer research is in the same state. No serious research is going on because government grants are not designed to encourage it.

    Please acknowledge that the federal government began participating in the financial debacle when they tinkered with mortgages for those who couldn't actually afford them. (FannieMae/FreddieMac)

    Someone, please tell me one thing the federal government has done well.

  • Report this Comment On August 07, 2009, at 2:01 PM, 86Targa wrote:

    A lot of valid points, but has Congress ever thought of the ramifications their meddling will cause? C4C has people buying what many of them can't afford. The aftermarket will become more expensive when nearly 700K vehicles don't get recycled into parts. The influx of so much scrap metal has to have an effect on that market as well. Four of the 5 most popular cars are not even made in union shops. Only Ford, of the American Big-3 is even represented. Oh, did I forget to mention that, what ever might be left after recycling, ends up in landfills. Throw $3-B into C4C and run the risk of disrupting any number of industries for years to come. Time for other bail-outs and government support?

  • Report this Comment On August 07, 2009, at 2:09 PM, TMFKopp wrote:

    Thanks to all for the comments.

    I'll just reiterate once more that this isn't an attack against a political party or even the economic ideology being followed. In fact, I'm more of a Keynesian mind myself and think stimulus spending does have its place.

    However, it scares me to see the government spend taxpayer money in the way that they have with the clunkers program. It's true, as many have pointed out here, that clunkers is not a huge program compared to other spending going on, but if we encourage and support this kind of spending I'd be concerned about what we'd see down the road.

    Matt

  • Report this Comment On August 07, 2009, at 3:33 PM, waldokeywest wrote:

    I feel sorry for the legitimate small biz independent car dealers who have been x-ed out of the clunkers deal in favor of the big guys who dug their own hole. As far as everything else concerned, an "A" student might win at College Bowl but a "C" student knows, when it comes to the big picture, it's best to keep it simple stupid.

  • Report this Comment On August 07, 2009, at 5:48 PM, saron1 wrote:

    First of all, even if Cash-for-clunkers were a bad idea, it is a trivial amount of money in the US economy. This recession/depression has dropped our GDP by $2 trillion dollars - 1000 times the value of CfC. The 10% unemploment is directly due to the GDP drop.

    Second it is a good idea, IF you are committed to keeping high value manufacturing in the US.

    The Japanese government protected and funded Japanese auto-industry for the first twenty five years to give Toyota and Honda a chance to build world-competitive cars. Even the early semiconductor industry started by Fairchild and IBM benefitted greatly from tax and environmental breaks and a public-college-educated population.

    Only governments can take the long-view needed to build a world-class private industry.

    In the short-term:

    Yes it "reduces demand for new cars in years to come." But we need that demand NOW, not later.

    Yes, "the program will encourage many Americans to take on yet more of the consumer debt" - which is our right, not the governments' - or are you advocating REAL Socialism?

    Yes, "we not likely to see much of a lasting economic impact from these car sales." BUT we don't need lasting impact...we need impact now.

  • Report this Comment On August 07, 2009, at 7:41 PM, TMFKopp wrote:

    @saron1

    "Only governments can take the long-view needed to build a world-class private industry."

    Wow, that is a very bold statement and I couldn't disagree more.

    If this were true I wonder why the Russians had so much trouble under communism -- after all, the long-view government controlled everything. It'd also be curious that the Chinese are moving more and more towards a market-driven economy. Why privatize anything if the government is the best at building businesses?

    Of course there are examples closer to home in the U.S. as well... http://www.google.com/hostednews/ap/article/ALeqM5irzC2kcTNh...

    Matt

  • Report this Comment On August 07, 2009, at 10:22 PM, modeltim wrote:

    What a clown, must be a big fan Reagan voodoo economics, "I'm from the government and I'm here to help" - nine most dangerous words in the English language crappola.

    The government ain't the problem, big oligarchical business is and it is strangling what is left of our economy.

  • Report this Comment On August 08, 2009, at 1:43 AM, VegasMartin wrote:

    Chgodvr, "Isn't owning a car company (GM) and then passing legislation to increase sales a conflict of interest??"

    I know this was an attempt at humor, and although I'm anti-government-waste.... no, it's like General Mills giving you a $1.00 off coupon to purchase Lucky Charms.

    www.ShootTheBears.com

  • Report this Comment On August 08, 2009, at 2:44 AM, burrowsx wrote:

    Getting rid of the inventory bubble is what cash for clunkers is mainly about -- with secondary issues of reducing United States oil consumption, and air pollution. Tertiary issues include encouraging the market for scrap steel and remanufactured replacement parts. It is not about restarting the manufacturing sector. That was what the direct investment in car companies by the government was supposed to do. As for consumer debt, this is really not much of an issue with many dealers putting up 0% interest loans.

  • Report this Comment On August 08, 2009, at 10:15 AM, kellan45 wrote:

    will someone tell me what the radicial democrats have done or are doing to help our country out of this economic mess????

    looks to me as though they are trying to make it worse and liking it.. not better?

  • Report this Comment On August 08, 2009, at 4:48 PM, TMFKopp wrote:

    @VegasMartin

    "Chgodvr, "Isn't owning a car company (GM) and then passing legislation to increase sales a conflict of interest??"

    "I know this was an attempt at humor, and although I'm anti-government-waste.... no, it's like General Mills giving you a $1.00 off coupon to purchase Lucky Charms."

    Well... kind of, but only if General Mills were able to take money from the general population (whether or not they have any interest in Lucky Charms) to fund that $1.00-off coupon.

    Matt

  • Report this Comment On August 08, 2009, at 5:16 PM, wuff3t wrote:

    "Occasionally I actually read something on MF if the title intrigues me enough...and then when I do, I remember why I never read MF LOL."

    The most confused comment I have ever read. Good grief Charlie Brown, did you even think this comment through before you posted.....?!

  • Report this Comment On August 08, 2009, at 8:57 PM, starbucks4ever wrote:

    Given the fact that the fair price of a new car is $2500, the cash-for-clunkers program is anything but "free money". I would call it a rip-off where you get $5K from Sammie for in exchange for agreeing to overpay $20K, and that before you even count the cost of the old clunker which has its own, and quite substantial, market value.

  • Report this Comment On August 09, 2009, at 2:07 AM, rlcardo55 wrote:

    You can't boost an economy by giving people money that is taken from the producers. Government is the only sector that seems to be growing, probably by 15% this year.

    If every one works for the government, the taxes would need to be 100% to keep paying them. I know this is absurd, but this is the direction we're heading until we literaly crash.

    The current administration continues to blame the last, even if it quadruples the deficit the last had. And then keeps adding other entitlements to pay for. That is as irresposible as the people who made nothing down loans, lied on their mortgage applications, took on bigger monthly payments than they could afford and then blamed everyone but themselves.

    I love America and am bullish on the stock market (being very selective on the stocks I hold). But taxing more form the companies that employ Americans is only going to create more lay-offs...and possibly have larger companies move their headquarters, company charters, etc. to countries that are more favorable to them.

  • Report this Comment On August 09, 2009, at 3:55 PM, brwn8484 wrote:

    ricardo55:

    Thanks for adding some true clarity. Finally someone truly understands the complete stupidity of paying out massive amounts of cash that can never be replenished. Seems like I read about a guy recently that pulled the same stunt. Think it was Made-Off or something like that.

    Anyhow... we appear to be a society that believes we can just print money on trees or borrow from some imaginary govt storehouse. Well were about to find out why neither will work. Giving free money to the masses is like giving A's out to all the students in Calculus. It may make us feel good for a while but eventually we all have to perform some real work or we will end up looking like dunces.

  • Report this Comment On August 11, 2009, at 1:25 PM, plange01 wrote:

    the biggest threat to a recovery? thats easy 1 not admitting to the fact the US is in a depression and its getting worse.2 obama more interested in making headlines and being a celebrity than doing his real job...

  • Report this Comment On August 12, 2009, at 2:44 PM, brwn8484 wrote:

    plange01

    Looks like the govt has done a fine job of driving us deeper into an economic recession while claiming all the while that they have solved the problem.

    What we need are some more headlines and more cash (to reward the criminal and irresponsible behavior) and a few more people to buy into the load of manure being spread liberally by the politicians and their lap dogs, the media. Not sure who is more eager to sling this load, though?

  • Report this Comment On August 14, 2009, at 5:30 PM, raystom wrote:

    The main reasons for the C4C fiasco are paybacks to the Auto Workers Union and Mich. Democrats. The primary beneficiaries are the folks in MI who are fervent Obama fans, as well as the Tree Huggers and Greens who are ditto. The rest of us are the involuntary donors.

  • Report this Comment On August 15, 2009, at 9:33 AM, Dannysea wrote:

    Hey John796806,

    Credit to where credit is due; Congress during the balanced budget years was Republican, yes during the Clinton years. After all, Congress decides on the final budget.

    And I am an independent; no, not by accident.

  • Report this Comment On August 15, 2009, at 9:44 AM, Dannysea wrote:

    Here is a dif perspective on the C4C: If you have a 4-year-old vehicle you are getting ready to trade in that was new at $24,000, and now is worth 12,000; the policy for vehicles is now in effect for $4500 credit; someone buys a $18,000 vehicle for $13,500. Why would anyone pay $12,000 for a nice 4-year old car? So now my vehicle can only be sold for around $8000.

    Hey, that's nice spillover economics!

    And what is to say there won't be more such crushing blows to the individual and used car corporate America?

    This is already round 2 of a one-time deal.

  • Report this Comment On August 15, 2009, at 2:35 PM, JPMillerHOU wrote:

    The main reason for the US successfully pulling out of tight situations in the past has been that the minds of all the individuals acting on behalf of their own pursuit of happiness have been free to choose what business venture, what trade, what investment they will make. Quite a few of those choices have been successful. The activities that were not were quickly absorbed into other more productive activities. What is happening now is an increasing attack on the minds of those individuals. A government bureaucrat will decide what environmentally correct venture will be funded. If it fails it will get more funding because it is the politically correct thing to do. The judgments of every executive and board member will be second guessed by a government bureaucrat and no one will be able to learn from mistakes because the companies are too big to fail or too politically correct to allow failure. Oh and government bureaucrats are not going to allow consumers to decide for themselves whether to invest or spend, whether to spend on an education or on a health plan or on whether to drive a clunker or Prius. This is an all out attack by the force of government on the free use of human minds. That is what is most frightening about this crisis and the attempts to thwart it. Read Ayn Rand's Atlas Shrugged to learn how important the free human mind is.

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