Here's Why the Economy's Growing

Gross domestic product grew 3.5% in the third quarter. That's great news and all. Only a few months ago, GDP was falling at a 6%-plus clip, and we were certain the economy was about to meet a fiery death.

String together another quarter or two of growth, and the powers in charge will declare the recession over. That really means nothing, but it'll produce great headlines that make people feel good again. That's how these things work.

But what's important is why GDP is growing:

Component

Third-Quarter Growth

Personal spending

3.4%

Nonresidential fixed investment

(2.5%)

Real exports

14.7%

Government spending

7.9%

Source: Bureau of Economic Analysis.

Export growth was on fire, thanks in part to a weaker dollar. But exports are a relatively small portion of our economy, so even though growth is big, the final contribution isn't. In fact, net exports (exports minus imports) decreased the final GDP figures.

Our economy is truly reliant on consumer spending. That's why Wal-Mart (NYSE: WMT  ) and Target (NYSE: TGT  ) dominate the landscape while manufacturing withers. You can see that by breaking out the contributions that made up the 3.5% gain:

Component

Contribution to 3.5% Growth

Personal spending

2.36%

Gross private investment*

1.22%

Net exports

(0.53%)

Government spending

0.48%

Total

3.53%

Source: Bureau of Economic Analysis.
*Increase mainly attributable to change in inventories.

OK, so spending is just blowing up. The 2.36% contribution was the largest since early 2007, when we couldn't spend enough. If it seems suspicious to you, it should.

And sure enough, tucked into the Bureau of Economic Analysis' comments was this little nugget: "Motor vehicle output added 1.66 percentage points to the third-quarter change in real GDP."

Motor vehicles, huh? GM? Ford (NYSE: F  ) ? Chrysler? You guys back in the game?

No, they're not. You'll remember a neat little program called Cash for Clunkers, which paid people to buy cars earlier this summer. We can assume that it alone is almost entirely responsible for autos' gain.

In fact, durable goods, which include auto sales, surged 22.3% in the third quarter, compared with a 5.6% decline in the second. The Bureau doesn't even try to beat around this, admitting, "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)." Mmm-hmm.

And what's funny is that, despite the contribution to GDP, Cash for Clunkers was grossly inefficient. Edmunds.com crunched some numbers and estimates the average cost to taxpayers per extra car sold was $24,000. Of the 690,000 vehicles sold under Cash for Clunkers, 565,000 would have been purchased without an incentive. The same can be said for the $8,000 first-time homebuyer credit. The eminent finance blog Calculated Risk estimates the final cost to taxpayers could exceed $100,000 per extra home sold. Yay! Success!

So, yes, GDP grew handsomely in the third quarter. But an overwhelming amount of the gain was attributable to Cash for Clunkers, which is now extinct. Lies, damned lies, and statistics, people.

This article has been updated to clarify the results of the Cash for Clunkers program.

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Wal-Mart Stores is a Motley Fool Inside Value recommendation. The Fool has a disclosure policy.


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  • Report this Comment On October 29, 2009, at 5:14 PM, LessGovernment wrote:

    Good article. Let me just add this bit of news and analysis.

    The speaker of the house today gleefully announced as only she can do that a sweeping new bill has worked its way through the house chamber and once enacted, will provide affordable health INSURANCE for nearly every American.

    To do this, the new bill will create a public health INSURANCE company to compete with private insurance companies, require everyone to have insurance, subsidize low income workers by taking from others (again) and require large businesses to cover their employees. Large businesses will presumably (the bill did not seem to consider what large businesses will do to make up the added cost) either pass the cost on to the consumer (another hidden tax further eroding discretionary income) or if competing with foreign manufacturers will probably just go out of business, but heck, congress has been doing that to our workers for a long time so that is nothing new. We will just keep extending unemployment benefits and stick the bill to the next several generations.

    The stated price tag for this insurance coverage is estimated at only $894 billion. This $894 billion dollar boondoggle is the result of trying to cover 25 million un-insured with health INSURANCE. Do the math. That is $35,760 for each un-insured. Hey, it’s a government program so what did you expect? A bargain? Consider this. The ancestors of today’s demo goons thought social security would only require $30 per worker per year. Today, the payroll tax bite for that little gem and its offspring Medicare is up to $15,300 per worker per year which is I guess just a Washington style rounding error from the original $30 per year estimate.

    So don’t be surprised if the $894 billion swells to the stratosphere just as every other government program has done. The insanity in all this is Obama actually praised Medicare many times as being a good example of what can be done in having the government provide this sort of program. I guess he does not realize that Medicare is now under funded by nearly $40 Trillion. But hey, there is no accountability if they are wrong and the future will get the bill, not you and me, so why even care?

    We are still in a deep recession, yet here we go again, being led by Obama, down another path of treating the recession with higher taxes, higher costs, and more government spending. And in this case, the government has done absolutely nothing to reign in the originally stated problem of the cost of health CARE itself. This is because the original goal of making health CARE more affordable was very quickly shown to be a difficult goal, so Obama and his spin-minions changed course in March and began marching toward the revised goal of making health INSURANCE more affordable, thus creating a “crisis” in health INSURANCE. Government just loves a “crisis”.

    Question. How many long distance passenger rail lines of significance do we have in this country? Other than Amtrak? None that I know of. Keep that thought in mind, because the government has been subsidizing Amtrak and Amtrak in turn has charged less for a ticket than its costs would otherwise indicate. Hence, there are no other long distance passenger rail lines because the private sector is not allowed to just print money. It has to earn it. So private enterprise can not compete with government.

    Apply this Amtrak analogy to the fact that the government is going to sell health INSURANCE and compete against the private health INSURANCE companies. The only reason to buy the government’s insurance would be that it is cheaper, that is a given. So, if it too is subsidized just like Amtrak (remember the $894 billion estimate – that is the estimated cost of subsidy at this point), how then is there to be a different result? How are we to avoid wiping out most private sector health INSURANCE companies? This is a very real possibility, but we should not question Obama as that is un American.

    These same goons in government garb recently tried to provide housing for nearly everyone in America by creating two public GSE’s (Fannie and Freddie) that were to help lower the cost of a MORTGAGES instead of increasing discretionary incomes (cutting taxes) or making the cost of HOUSING itself more affordable. Do you remember what happened? The cost of HOUSING increased due to the bubble demand created by the government assisted mortgage programs. The result, HOUSING costs for everyone went up, and then the MORTGAGES failed and many more people than were originally helped saw their life savings wiped out as the stock market failed, as the value of their real estate declined, and as the round of foreclosures still working its way through our economy put people in the streets, literally, after losing their jobs and their houses. In the end, the government’s attempt to provide a government assist to home ownership actually deprived millions of their homes, and many more millions of their livelihood. Did socialism work? No. So heck, let’s try it again anyway.

    So we are now going to spend $35,000 per uninsured, raise the cost of doing business, become even less competitive with overseas suppliers, and hope the taxpayer is still too dumb to see the real cost of doing this. So I say yippee. We have now “fixed” the health INSURANCE “crisis”. In Washington speak, “A crisis is a terrible thing to waste”.

    What have we done to make health CARE more affordable? Nothing. We gave up on that “crisis” in March because changing that paradigm would have stepped on too many toes belonging to too many special interests that donate too many funds to Political Action Committees just as did the GSE’s and the banking Industry in the last debacle. So with health CARE costs continuing to climb, and health INSURANCE costs capped at will by the government (we will probably have another Czar, yippee again), the health INSURANCE industry is going to be in for a rough ride, just as a passenger rail line would be in if it tried to compete with Amtrak. We are not supposed to think of these things. Instead, just trust Pelosi. After all, she is from a state that is now broke. So let’s be more like California.

    The bottom line is simply this. In Washington, one “crisis” is as good as another, because a “crisis” is a blank check to expand the role of government. So, if you don’t have a crisis, you can just create one. Housing, global warming, health INSURANCE, etc., etc. See what I mean. With every crisis, you lose more of your freedoms and government gets even bigger, employing more and more people that do nothing of value at great cost, pushing the deficits higher in the process.

    America, I am convinced, will fail from the enemy within.

  • Report this Comment On October 29, 2009, at 5:17 PM, CD101C4 wrote:

    One of the best politically-incorrect columns from The Motley Fools in recent weeks... Would also love to read your editorial on how we are supposed to increase wealth by destroying assets-- that is, destroying perfectly good running cars -- under the cash for clunkers program!

  • Report this Comment On October 29, 2009, at 5:20 PM, sailrmac wrote:

    Good article, with meaningful facts, numbers and analysis.

  • Report this Comment On October 29, 2009, at 5:27 PM, actuaryphil wrote:

    don't get it: program was a failure 'cause most buyers would have bought anyway, but at the same time, gdp growth was an illusion because it was all due to cash for clunkers --

  • Report this Comment On October 29, 2009, at 5:27 PM, bills442 wrote:

    CD101C4 , an excellent point, to put it in a real world scenario as well; recently a friend of mine had a very modest amount of cash which he *really* need to buy a reliable used car for his wife. Without a long proof or details, suffice it to say, he basically determined that all the cars in his price range didn't exist because of cash for clunkers. So here's someone that really *needed* one of these, no doubt , perfect running cars that is getting destroyed ... and the best part is as he laughed at the situation, was that he couldn't afford a new car ... but her sure help all those other people both (a) buy a new car and (b) destroy the car that he could have afforded. Brilliant. Destroying things is NEVER a way out of a tough time.

  • Report this Comment On October 29, 2009, at 5:30 PM, TMFHousel wrote:

    "don't get it: program was a failure 'cause most buyers would have bought anyway, but at the same time, gdp growth was an illusion because it was all due to cash for clunkers --"

    Fair point, and I didn't make that clear enough. The increase in autos from Cash for clunkers was about 125k vehicles. That's enough to make a big dent in GDP, but when you put it in the context of the cost of the program, it was grossly inefficient.

  • Report this Comment On October 29, 2009, at 5:32 PM, holosys wrote:

    Before you get your knickers in a twist, just remember, it's only money.

  • Report this Comment On October 29, 2009, at 5:54 PM, NotJesseL wrote:

    Even if you back out government spending and 1.66% for the autos, you still get a positive number. So, it still looks like a positive GDP increase to me. Now did we pay too much for it? Well, look at it (the financial crisis and resulting government spending) as a huge overdraft fee on the world economy. Basically, we bought time for a lot of money. A whole lot of money...

  • Report this Comment On October 29, 2009, at 5:57 PM, tp1071 wrote:

    afleetfeet - please enlighten us with your version of the truth.

  • Report this Comment On October 29, 2009, at 5:59 PM, Rasbold wrote:

    Yeah, Mish Shedlock was all over that one too.

    Good article!!!

  • Report this Comment On October 29, 2009, at 6:00 PM, stan8331 wrote:

    Beware the person who bemoans statistics while making use of them to grind his own axe.

    There's a glaring contradiction in the logic here. On the one hand you're saying that the cost per car of the program was enormously high, because most of those cars would have been sold anyway. On the other hand, you're claiming that the strong growth seen in the 3rd quarter was almost entirely due to Cash For Clunkers.

    You can't have it both ways. Either the program had a major influence on car sales, or it didn't. If it's true that most of those cars would have been sold anyway, then Cash For Clunkers was demonstrably a failure but economic growth is strong. If CFC did cause a large increase in car sales, then it's inaccurate to call the program a failure, although it means growth was weaker than the numbers suggest.

    I'm not interested in any claims along the lines of "well, those cars would have EVENTUALLY been sold without CFC". All cars that have already been built get sold eventually - when you're trying to pull out of a major recession, timing is everything.

  • Report this Comment On October 29, 2009, at 6:01 PM, gjoyan wrote:

    one of the reasons it is so difficult to get the economy up and going is because even when there is good news everyone needs to tear it apart to prove they are right that the economy is in dire straits. the only way consumers will spend is if they feel good about what is happening...let them decide for themselves how the economy is doing. even if the cash for clunkers didn't work, on their own consumers would have bought 85-90% of what was purchased. hurray! let's praise what we are doing right and quite tearing everything down! let us feel successful...then we will feel better about spending. there is plenty of doom and gloom available...where does that get us?

  • Report this Comment On October 29, 2009, at 6:02 PM, TMFHousel wrote:

    stan8331,

    Reposting comment from above:

    Fair point, and I didn't make that clear enough. The increase in autos from Cash for clunkers was about 125k vehicles. That's enough to make a big dent in GDP, but when you put it in the context of the cost of the program, it was grossly inefficient.

  • Report this Comment On October 29, 2009, at 6:03 PM, NoFreeRide wrote:

    LessGovernment is what we need more of.

    The reformers used to talk about how they were going to save us money on health care (900 billion over 10 years) but what happened to the savings? Now its only going to cost us $894 billion to insure an additional 17 million leaving only 13 million left uninsured.

    How is it possible to have uninsured if everyone is required to be insured or pay fines and/or jail time?

    It is way past time to replace our floundering leadership.

    Notes: Obama originally stated there are 47 million uninsured but revised it to 30 million. Pelosi states "covers 96 percent of all Americans" which translates to 13 million not covered.

  • Report this Comment On October 29, 2009, at 6:04 PM, felyons wrote:

    WOW!

    You guys sure can do the job with statistics...how does the saying go, you can make the numbers say whatever you want. 'Actuaryphil' picked right up on you pointing out that so many cars would have been sold without "Cash for Clunkers", using your numbers, that GDP woulda still grown. Go figure. The real figuring is when does the system come under some severe pressure to change? Ever/Never?

    It's so interesting that subsidizing the sale 125K autos was such a grossly innefficient expense to taxpayers; where do you stand on the efficiency of doling out TARP funds with no strings? Or even bothering to save financial institutions which take greedy risks? Gotta attempt to maintain the status-quo, I guess...at any cost to the taxpayer. So what's the impact on GDP for squandering trillions on bad gambles?

  • Report this Comment On October 29, 2009, at 6:19 PM, BLACKY500 wrote:

    I AM A FOOL. I DID NOT THINK THIS WAS A REPUBLICAN PARTY! I MISTAKINGLY THOUGHT IT WAS FINANCIALLY BASED NOT POLITICAL.

  • Report this Comment On October 29, 2009, at 6:24 PM, Dannysea wrote:

    Morgan, loved your candor!

    Afleetfeet, no one is arguing the growth. It has to do at what cost, what would have happened anyway, and the idiocy spending.

    LessGovernment, your tops!

  • Report this Comment On October 29, 2009, at 6:32 PM, Dannysea wrote:

    Blacky500, not a Republican here. Just want wisdom in government.

    Love change and technology improvements and quality of life! And are very wary of progressive anything.

    Progress does not mean better.

  • Report this Comment On October 29, 2009, at 6:35 PM, McAdamsJM wrote:

    Lots of interesting comments except of one last thing: We will continue to re-elect these very individuals (we call our representatives) back into office. Over and over again!!!

  • Report this Comment On October 29, 2009, at 6:36 PM, fjallstugor wrote:

    A couple of weeks ago WJ had a comment that golf carts were in the bill Cash for Clunkers. The only requirement was that the golf cart had to have rear view mirror and seat belts. Golf cart sales has been brisk.

    I wonder it this was another bill that the Congress did not review before passing.

  • Report this Comment On October 29, 2009, at 6:36 PM, Buckeye46 wrote:

    First, I'd like to know how 'afleetfeet' got into this conversation. The cash for clunkers program cost taxpaying Americans $24,000 per car and now the first time homebuyer program will cost $45,000 per "new" homeowner. I can't wait to see the final cost of ensuring every uninsured JACKASS. Afleetfeet is probably one of them. God help our portfolios.

  • Report this Comment On October 29, 2009, at 6:39 PM, bretco wrote:

    One of the best posts I have read on Fool. It is obvious we are and have been on an unsustainable binge since the great LBJ's Great Society program which had us believe in the "Guns and Butter" economic theory. We are going to hell in a handbasket but it is with good intentions that we slid towards the abyss.

  • Report this Comment On October 29, 2009, at 6:41 PM, Flygal5 wrote:

    Amen brother!

  • Report this Comment On October 29, 2009, at 6:56 PM, LessGovernment wrote:

    Dear McAdamsJM

    You stated:

    "We will continue to re-elect these very individuals (we call our representatives) back into office. Over and over again!!!"

    You are certainly correct if we continue to play the two party, plutocracy rigged, election game.

    However, there is another way.

    It will require work on everyone's part. some people will think you a fool for trying, but here it is.

    Never vote for an incumbent, ever, and convince your friends and business associates to do the same.

    A third political party can be crushed, but a political movement is another matter. Neither the plutocracy, the Washington power brokers, party officials, PAC's, or incumbents have any power over such a movement.

    Fire Them All and you neuter the PAC's and special interests. Those elected will not have to worry about being re-elected because we will keep them from doing so.

    In 1971, Congress passed the Federal Election Campaign Act which permitted Political Action Committees to make larger contributions to Congressional candidates than what was allowed by law for individuals. In short, Congress passed their own version of campaign finance reform that created the ability to have unlimited funding since there is no limit on the number of PAC's that can be created and nothing to prevent multiple PAC's from contributing to the same candidate, and nothing to prevent PAC's to make contributions in state elections across state boundaries, thus creating the ability to finance last minute smear campaigns with impunity.

    It is time to recognize this bad legislation for what it was, and to destroy the benefit derived there from.

    Believe, and do it. I have dedicated myself to that end and will not give up. We have to try. It is, I believe, our only hope.

  • Report this Comment On October 29, 2009, at 7:17 PM, stan8331 wrote:

    I still don't see anything resembling a convincing case that 3rd Quarter growth was weak due to Cash For Clunkers.

    From the numbers quoted in the post:

    Total 3rd Q Growth: 3.53%

    Motor vehicle 3rd Q growth: 1.66%

    Non-motor vehicle 3rd Q growth = 3.53 - 1.66 = 1.87%

    So, even if we assume that 100% of the growth in the motor vehicle component was due to CFC, you still had almost 2% growth for the quarter. And as far as I know, NOBODY is claiming that CFC actually was responsible for 100% of the motor vehicle growth.

    Using the numbers quoted, 690,000 total cars sold less 565,000 not attributable to CFC leaves 125,000 CFC cars sold. 125,000 / 690,000 = 18.1%

    18.1% CFC component X 1.66% total auto component yields 0.3% of 3rd Q GDP attributable to CFC, leaving total non-CFC 3rd Q GDP growth at 3.23%.

    But even if you want to assume that 100% of the auto component for 3rd Q was due to CFC, 1.87% non-auto growth for a quarter is still pretty darn respectable considering from whence we've come over the past year.

  • Report this Comment On October 29, 2009, at 7:32 PM, blr49 wrote:

    Nevermind Healthcare, there's only ONE way out of the US debt now, and that's a whacking great round of inflation. All you folks mortgaging yourselves at bottom rates, brace up. You''ll all be thankful for Social Security soon enough.

  • Report this Comment On October 29, 2009, at 7:33 PM, bhart3644 wrote:

    The part that is missed in all of this, both by the Fools as well as the economists is that the reward for the goverment is an inverse N Factorial. The purchase initially results in a State Sales Tax reward of 5% or 9% for the states on the entire cost of the car, So on a 20K car the states are making between 1k and 1.9 K . Where did this show up in your analysis? Then there is the ripple down effect which we can assume is around 15%. Every time that 20K moves to a worker level it is taxed. You chose the math, but if we look at a 20% tax level combination between state and fed here is how it works.

    20K car= bonus of 1K and 1.9K. so give me 1.5K.

  • Report this Comment On October 29, 2009, at 7:35 PM, blr49 wrote:

    ps. it wasn't the Democrats that brought this on, it was free-wheeling capitalism at its finest.

  • Report this Comment On October 29, 2009, at 7:40 PM, blr49 wrote:

    bhart3644, I was going to make a similar point, only less ably. Already ibythe '60s it took only about 7% of the population to actually satisfy all of our material needs: food, shelter, etc. The rest of us are just busy trying to make and sell crap to each other just for something to do. And more than half the population is now in the service industry, producing nothing. Even cycling money through an ever- growing bureaucracy circulates the wealth, creates buyers blah blah. It's socialism, to a point, but not all bad.

  • Report this Comment On October 29, 2009, at 7:52 PM, mythshakr wrote:

    The Amtrak comparison is really getting old. Lets say we get rid of Amtrak subsidies. That's OK with me so long as we get rid of the subsidies to the airlines and aircraft manufacturers. And while we're at it stop subsidizing agriculture. We all have to buy food anyway why should we subsidize any of it.

    Al Capone knew insurance was just a lucrative racket and it hasn't changed so lets get rid of insurance altogether. No subsidized flood insurance or earthquake insurance or health insurance. Heck how about no FEMA. Even better let allow hospitals to turn away anyone for inability to pay up front. That would reduce the costs spread around to everyone else. Without insurance AIG would never have happened (and probably not Berkshire Hathaway either).

    Let them all eat cake!

    No one has even brought up the real bottom line to cash for clunkers. It's just the first step in forcing retirement and destruction of automobiles over a certain age, probably about 10-15 years. They're just not fuel efficient enough, they're not safe enough and they pollute too much. It's already happening in California. Imagine the long term boon to the auto manufacturing biz.

  • Report this Comment On October 29, 2009, at 8:03 PM, afool4allseasons wrote:

    Here's Why The Econ Is Growing and LessGoverment's comments are timeless examples of Foolish intelligence and analysis and reasons why The Fool is a one-of-a-kind investment treasure trove. Morgan Housel and LessGovernment, I salute you!

  • Report this Comment On October 29, 2009, at 8:05 PM, LessGovernment wrote:

    Dear mythshakr,

    While I am not onboard with your entire post. I must say that your observation ..."No one has even brought up the real bottom line to cash for clunkers. It's just the first step in forcing retirement and destruction of automobiles over a certain age" ...

    is dead on. And your are right, it probably was missed by most of us. I'll keep it in mind going forward.

    How about this. The only reason the Treasury had to conduct stress tests on the banks was the books were not reliable so the Treasury had to basically do their own quickie audit to determine the real assets and liabilities adn financial condition of the banks. I'll wager most folks missed that too.

  • Report this Comment On October 29, 2009, at 8:42 PM, nin4086 wrote:

    stan8331 is correct...this does not add up. From the comments above I can see that this article fooled quite a few fools but not everyone. You should do your research Morgan!

    TMFMorgan said:

    Fair point, and I didn't make that clear enough. The increase in autos from Cash for clunkers was about 125k vehicles. That's enough to make a big dent in GDP, but when you put it in the context of the cost of the program, it was grossly inefficient.

  • Report this Comment On October 29, 2009, at 8:50 PM, xetn wrote:

    The article also omitted the "First Time Homebuyer" program that gave $8000. (in the form of a tax credit) to each one.

    I think it is fair to say that the only reason we had a positive result is due to government give-a-ways.

    All of this overlooks what is not seen:

    http://blog.mises.org/archives/010935.asp

  • Report this Comment On October 29, 2009, at 9:01 PM, Dannysea wrote:

    Speaking on the cash for clunkers demise, nationwide these CFC vehicles are turning up in the used car salvage yards for parts. Another way free enterprise is looking to overcome Washington stupidity, whether I agree with what is being done or not, is making excessive parts more economical to those in need.

  • Report this Comment On October 29, 2009, at 9:09 PM, thisislabor wrote:

    So what your saying is the books are so bad even the treasurey can't get accurate readings?

  • Report this Comment On October 29, 2009, at 9:15 PM, hdguyrk wrote:

    Lot's of interesting comments but all missed the most important factor. Unemployment is higher again! My business like most small businesses is hanging on but surely not thinking about rehiring or adding employee's anytime soon regardless of this GDP report.

    Since unemployment is so high the retail sector will struggle to make their numbers which will reflect poorly in the GDP for the 4th qtr (except for government spending).

    The 4th qtr is where retail usually adds employees for increased sales and also what most retail depends on to make their money for the year.

    I'll be interested to see the comments on the GDP, unemployment, health care and everything else come January!

  • Report this Comment On October 29, 2009, at 9:28 PM, booyahh wrote:

    Huh? The author says Cash for Clunkers was a failure, because most of those cars would have been bought anyway.

    But he contradicts himself by saying that GDP only grew because so many cars were sold artificially because of Cash for Clunkers.

    Make up your mind: if it was so unsuccessful, then how could it make GDP grow?

  • Report this Comment On October 29, 2009, at 9:32 PM, TMFHousel wrote:

    @xetn

    "The article also omitted the "First Time Homebuyer" program that gave $8000. (in the form of a tax credit) to each one."

    Curious, how did you interpret this sentence, "The same can be said for the $8,000 first-time homebuyer credit ..."

    @nin486,

    It does add up. Like I said, the 125k in extra sales from c4c was enough to make a big dent in gdp, but when put in context of the cost of paying 565k people $4k for doing something they would have anyway, it's quite inefficient. What part isn't adding up?

  • Report this Comment On October 29, 2009, at 10:06 PM, robertf36009 wrote:

    Wake up this proposal has nothing to do with care and will be unhealthy for your portfolio. SHOULD ANY KIND OF "PUBLIC OPTION" PASS; SELL YOUR HEALTH INSURANCE STOCK.

  • Report this Comment On October 29, 2009, at 10:13 PM, Pyrrhic wrote:

    I recall that cash for clunkers did more to boost sales of foreign cars than the big 3.

  • Report this Comment On October 29, 2009, at 11:52 PM, bearbitten wrote:

    blr49, it wasn't democrats or capitalism, it was flat out Greed.

  • Report this Comment On October 30, 2009, at 12:42 AM, TerryJim1 wrote:

    " 1.87% non-auto growth for a quarter is still pretty darn respectable considering from whence we've come over the past year." stan8331.

    It is an improvement, but the growth rate is reported elsewhere as an <i> annualized</i> percentage.

    Please pardon my ignorance, is that assumed here?

    It wasn't mentioned in the above article.

  • Report this Comment On October 30, 2009, at 1:05 AM, sttho wrote:

    For crying out loud, people, lighten up. It's a great, although, slanted article. Like any journalist throwing statistics around, do your own background, your own research. Just because Fool, Fox, CNN, or the friggin Disney channel says it, doesn't mean it's unbiased. See all sides and decide for yourself. That's the beauty of America... you can take what the media throws at you and weigh what you hear, what you know, and what you can research.

  • Report this Comment On October 30, 2009, at 1:17 AM, sttho wrote:

    However, for what it's worth, I absolutely respect and admire the Fool community for sharing their knowledge and skepticism. Let's just keep the politics out of it...

  • Report this Comment On October 30, 2009, at 1:57 AM, joewatts wrote:

    Thanks Mr. Morgan House for an intriquing article.

    He made the case, very well, that the economy grew because of Cash for Clunkers.

    I wonder why he didn't get the message.

  • Report this Comment On October 30, 2009, at 8:09 AM, dave4305 wrote:

    Unfortunately, when the government controls the economy politics is business, The value of your estate, the buying power of your salary, and now your heath are controlled by our government.

  • Report this Comment On October 30, 2009, at 8:36 AM, Formula51 wrote:

    I wanted to take a stab at the Cash for Clunkers contribution debate going on.

    Referencing the following:

    http://globaleconomicanalysis.blogspot.com/2009/10/market-ch...

    Motor vehicle sales were 1.66% of thrid quarter GDP. However, they were only 0.19% in the second quarter.

    So I asked myself, what has changed since the second quarter other than Cash for Clunkers?

    Unemployment has risen, wages have fallen, and foreclosures have increased. All things that do not lead to increased auto purchases.

    Then you can look at the numbers. Domestic Motor Vehicle sales annual unit rate (taken from Bloomberg):

    April - 6.8 Million

    May - 7.3 Million

    June - 7.1 Million

    July - 8.3 Million

    August - 10.1 Million

    September - 6.7 Million

    Remember that Cash for Clunkers was in effect in July and August.

    While seasonal auto purchases and great incentives may have attributed for some of the increased sales in July and August, it would be silly to say Cash for Clunkers did not have a significant effect. But here's the most important part. Now that the program has ended, the annual rate of auto sales has fallen BELOW where it was in the second quarter. In just one month, POOF, just like the snap of your fingers.

    So if we go back to those original numbers: Motor vehicle sales were 1.66% of third quarter GDP, only 0.19% of second quarter. One can make a very good argument that without Cash for Clunkers, the contribution to third quarter vehicle sales would have been equal to or WORSE than second quarter.

    Thus, 3rd quarter GDP minus auto sales due to Cash for Clunkers would be roughly 2%.

    Thoughts?

  • Report this Comment On October 30, 2009, at 9:55 AM, mattius10 wrote:

    stan8331,

    Thanks for doing the math. My first reaction to the article was to start to doing the same calculations in my head, because Mr. Housel clearly contradicts himself stating "You'll remember a neat little program called Cash for Clunkers, which paid people to buy cars earlier this summer. We can assume that it alone is almost entirely responsible for autos' gain." and then 2 paragraphs later giving numbers that show over 80% of vehicles purchased under CFC would have been purchased anyway.

    However, if you take the math one step further, the 0.3% GDP growth attributed to CFC is about 8.5% of the growth reported for Q3 (0.3 / 3.53). So my question becomes is 8.5% of quarterly growth a lot or a little?

    Since CFC was announced i was firmly on the side of the argument that called it an atrocity. Still today it is no question to me that it was a complete waste of tax payer (my) money. However, i do now wonder how CFC stacks up against other subsidy programs. Is there any other subsidy that can lay claim to something even close to the bump in growth CFC provided? If so, then at what cost?

    Is it possible that given CFC's output and taking into consideration the timing and market it was directed at, that CFC was actually an efficient subsidy program? At least as far as subsidies can be efficient...

  • Report this Comment On October 30, 2009, at 10:31 AM, TMFHousel wrote:

    stan8331, mattius10,

    "Mr. Housel clearly contradicts himself stating "You'll remember a neat little program called Cash for Clunkers, which paid people to buy cars earlier this summer. We can assume that it alone is almost entirely responsible for autos' gain." and then 2 paragraphs later giving numbers that show over 80% of vehicles purchased under CFC would have been purchased anyway."

    No, because that extra 20% is enough to kick in the growth. I'll say it again: The excess in c4c sales was enough to make a big slash in gdp, but was still quite inefficient. If you throw a few billion dollars at something, you'll make it grow. But that doesn't mean it was a productive use of capital. If i light my hair on fire, I'll warm myself up on a winter day. But that doesn't mean it was a sensible thing to do.

    Stan, you wrote: "Using the numbers quoted, 690,000 total cars sold less 565,000 not attributable to CFC leaves 125,000 CFC cars sold. 125,000 / 690,000 = 18.1%. 18.1% CFC component X 1.66% total auto component yields 0.3% of 3rd Q GDP attributable to CFC, leaving total non-CFC 3rd Q GDP growth at 3.23%."

    Well, no. 1.66% represents *growth,* not the contribution of total sales. Non c4c auto sales would have likely attributed something close to nothing, as the other components of consumer spending did. You can have 565k monthly auto sales and still not attribute anything to growth. The dollar amount of GDP, yes, but not growth.

  • Report this Comment On October 30, 2009, at 11:32 AM, Melchidael wrote:

    It appears to me that the 3.53% is the average of the percentages of the four sectors involved. This yields a meaningless number as it assumes each sector had equal totals.l.

  • Report this Comment On October 30, 2009, at 11:42 AM, econlibrarian wrote:

    Let's try this in dollars. The BEA news release says:

    "Current-dollar GDP -- the market value of the nation's output of goods and services -- increased

    4.3 percent, or $150.3 billion, in the third quarter to a level of $14,301.5 billion. In the second quarter,

    current-dollar GDP decreased 0.8 percent, or $26.8 billion."

    There is no way that 125,000 cars, or 690,000

    cars, for that matter, accounted for a significant

    percentage of $150.3 Billion. So not only was CFC

    an expensive boondoggle, but it made an insignificant difference in the quarterly GDP result.

  • Report this Comment On October 30, 2009, at 11:50 AM, calynweb wrote:

    $35,760 per new insured person for 10 years is a great bargain. If I and everyone else could get insurance for about $3600 per year the problem would be solved! Go try to buy insurance on the open market now and you will find it costs way more than that. If public insurance is good enough for our military, retired people, and politicians, why not for everyone?

    As for the clunkers program, you can't have it both ways. They say that the program is a failure because the 80+% of the cars would have been sold anyway but you want to discount the sales in the GDP numbers. If the cars would have sold anyway then 80% of the benefit to the GDP should be real. The flip side to that is that the clunkers program was a great success as it jump started buying again.

  • Report this Comment On October 30, 2009, at 1:33 PM, Formula51 wrote:

    econlibrarian, it is a FACT that 1.66% of the 3.5% GDP growth was from autos. A FACT.

  • Report this Comment On October 30, 2009, at 1:58 PM, lriverwest wrote:

    Agree with calynweb. Anyone want to take a shot at adding up the cost to taxpayers of the ONGOING financial services bailout? Let's get real here people, we now privatize gains and socialize losses under the current system. And by the way, my healthcare cost for a family of four is $9,000.00 a year. Half of that could be better spent on consuming products sold by local businesses. I am tired of anti government ideologues who would shoot themselves in the foot just to spite their face.

  • Report this Comment On October 30, 2009, at 2:32 PM, econlibrarian wrote:

    I agree that 1.66% of the $150.3 Billion in GDP

    growth was from the auto sector; I'm pretty sure

    this is what the release says. 1.66% of $150.3

    billion is about $2.4 billion, which would be $3,478

    in GDP GROWTH for each of the 690,000 cars

    sold in the quarter, which is reasonable. But $2.4

    billion is a drop in the bucket in a $14.3 trillion

    economy.

  • Report this Comment On October 30, 2009, at 6:30 PM, 0hman wrote:

    " booyahh wrote:

    Huh? The author says Cash for Clunkers was a failure, because most of those cars would have been bought anyway.

    But he contradicts himself by saying that GDP only grew because so many cars were sold artificially because of Cash for Clunkers.

    Make up your mind: if it was so unsuccessful, then how could it make GDP grow?"

    THIS STATEMENT DOES NOT SAVE YOUR POINT;

    "but when you put it in the context of the cost of the program, it was grossly inefficient."

    It was lame. The logic still fails.

  • Report this Comment On October 30, 2009, at 8:45 PM, LessGovernment wrote:

    Dear Calynweb and Iriverwest,

    $35,760 per individual per 10 years

    $3,576 per individual per year

    $14,304 per family of 4 per year.

    What was that again about this being reasonable in cost?

  • Report this Comment On October 30, 2009, at 8:54 PM, selfdestruct2 wrote:

    Increase in GDP is due to the government's out of control spending !

  • Report this Comment On October 30, 2009, at 8:57 PM, LessGovernment wrote:

    President Obama, Congress, and the rest of the country would do better to address the original problem as to why health care costs so much. Artificially capping the cost of health Insurance with a government program will only eliminate the private sector insurance companies, which by the way average about 6% in earnings per year, which scares me because I don't think a government entity can run that efficiently, meaning the waste in government will exceed the current profits siphoned off by the insurance companies, so there is no upside at all. However, allowing health care costs to continue to escalate, and allowing fraud to go unchecked, and claiming to have somehow fixed the problem with artificially low insurance premiums is just going to make the program run in the red which will only consume additional tax dollars meaning more taxes for someone somewhere in the system, which means less economic activity somewhere in the system which means less opportunity somewhere in the system.

    We can do better than this. Much better. What we have set in motion is the more rapid financial decline of our country in the name of helping those that need help. IO am all in favor of helping the less fortunate, but I want to do it by creating real opportunity, not robbing Peter to pay Paul. That is a short term limited approach that will fail in the end, hurting Paul much more than Peter. Just look at what trying to artificially lower the cost of mortgages did to Peter and Paul. And yet, here we go again.

  • Report this Comment On October 30, 2009, at 10:39 PM, econlibrarian wrote:

    After some further research, it appears the 1.66%

    IS the percentage of the $150.3 billion in GDP growth

    attributable to the automobile sector, and that this

    approximately $2.4 billion is roughly equal to the

    additional 125,000 units sold at about $19,200

    per car. The wording of the release makes no sense;

    if we figure they mean 1.66% out of 3.5%, that would

    mean that 47.4% of the $150.3 billion in growth, or

    $71.2 billion would have to come from the sale of

    695,000 cars.

  • Report this Comment On October 31, 2009, at 10:17 AM, Tomohawk52 wrote:

    Just wait until the government gets involved. Anyone in favour of a "Cash for Cougars" program?

  • Report this Comment On October 31, 2009, at 12:31 PM, BaseballKat wrote:

    Yea, cause Granny needs a date.

  • Report this Comment On October 31, 2009, at 12:40 PM, REIN wrote:

    Excellent discussion of several points of view. I would like to focus more on the timing issue. Some percentage of the sales would have occurred anyway. The incentive program causes some purchasers to delay their purchase until the incentive is available. And others to accelerate their purchase to meet the availability of the incentive. So the sales numbers would have been much more evenly distributed over the period (April - Oct?). What does that achieve? Personally, I think it was a destructive program, like war stimulates the economy.

    Also greatly enjoyed LessGovernment's relating the mortgage crisis to the potential INSURANCE crisis. The healthcare problem we have is a demand issue. Too little supply, too much demand. That is causing prices to be too high. And flooding the economy with "free" insurance is just going to make that all worse.

    That worries me,

    Rein

  • Report this Comment On October 31, 2009, at 1:18 PM, mchuckie wrote:

    Just as an aside, GDP is a measurement of what is produced, not sold. I suspect most cars in the cash for clunkers program came out of dealers inventory. Therefore, it's effect on GDP may have been overstated.

  • Report this Comment On October 31, 2009, at 1:40 PM, Deepfryer wrote:

    "the average cost to taxpayers per extra car sold was $24,000"

    I hope you realize how ridiculously misleading it is to make a statement like this. People are going to take this at face value, and think that $24,000 vanished into thin air for every car that was sold.

    Obviously that's not the case. If you take American taxpayer money and give it back out to taxpayers, then the net cost to the economy is exactly zero dollars and zero cents. Focusing your attention on the "$24,000 per car" figure is mind-numbingly stupid. If you think this proves that it was an "inefficient" program, then you must be incapable of any form of deductive reasoning.

    The same thing goes for your "$100,000 per extra home sold" figure. Couldn't you at least stop and THINK for 2 seconds before posting such inane, anti-government propaganda?

    Great posts by Formula51, by the way. The cash for clunkers has been a great success as far as stimulating the economy. I know it's easy to criticize everything the government ever does, as a default position, but if you stop and look at the reality of the situation, the Obama administration has done a great job so far of getting us through this economic collapse.

    Do you think it would be better to have hundreds of thousands of cars sitting on the lots and depreciating in value, while more and more auto dealers go out of business? Yeah, that's a GREAT alternative. Having a declining GDP would just be soooo much better than having a rising GDP. Idiot.

  • Report this Comment On October 31, 2009, at 2:00 PM, topsecret10 wrote:

    On October 29, 2009, at 5:14 PM, LessGovernment wrote America, I am convinced, will fail from the enemy within. You hit It right on the head with this small statement. That Is EXACTLY what IS GOING TO HAPPEN to the late,great United States. Our GOVERNMENT no longer represents the WILL OF THE PEOPLE. They represent SPECIAL INTERESTS,that are actually WRITING THE BILLS IN CONGRESS. That Is why they do not bother to read them..... TS

  • Report this Comment On October 31, 2009, at 3:31 PM, burrowsx wrote:

    I have had enough of those who believe that markets can handle any problem. We have not had an industrial policy in this country since 1970. Instead of investing in industrial production and basic research, we have diverted our economy to the pursuit of stupid ego-boosting wars. As a result, our industries have withered, our educational institutions increasingly perform engineering and industrial boosterism for production outside the United States, and our children have been induced to believe that service industries will continue to provide the standard of living to which we have become accustomed. This is delusional.

  • Report this Comment On October 31, 2009, at 3:52 PM, wolfman225 wrote:

    I have to wonder what the reaction is going to be when all those who "took advantage" of the generous government programs (C4C and the $8K home-buyer credit) do their taxes next April 15th and are introduced to the fact that this assistance from "Uncle Obama" is taxable!?

    What will it take for people to realize that there is no such thing as "Free" Government Assistance?

    "Government can't give anyone a dollar until it first takes two dollars from someone else".

  • Report this Comment On October 31, 2009, at 5:41 PM, TMFHousel wrote:

    Deepfryer,

    Thanks for your comments, as well as the name-calling.

    Rather than calling me an idiot only because you disagree, maybe you can show how spending $3 billion to stimulate 125k car sales was an efficient use of capital. Not that it raised GDP for one quarter. Not that it reduced inventory. Not that it helped auto dealers. But that it was an efficient use of capital, which is what my article disagrees with. Go.

  • Report this Comment On October 31, 2009, at 11:25 PM, csd128 wrote:

    Please note that I may have overlooked other, similar, comments, but nevertheless, here is a perspective which many seem to have missed, or do not understand.

    The CFC did, indeed, increase auto sales and provide a boost to the GDP, but the problem with all such governmental splurges is that it is an unsustainable effort confined to a finite amount of money and narrow window of time.

    One sale does not an economy make - an economy is the sum of ALL business transactions (read:GDP) done over a relatively long period of time; a single event for a specific and limited amount of funding spent during a short period of time does not make an "economy", viewed as the event it is, rather than the GDP, which it is not, it has only the net impact of one (in this case, admittedly rather large) sale, and then business as usual resumes at the lower level from which it temporarily sprang, propelled by the artificial increase in cash.

    Artificial and sustainability are key words in this instance - without ongoing consumer need or desire to buy, cars sales slow down in direct relationship to available consumer cash (the artificially impacted aspect)while consumers,lacking either a job or confidence in the economy to create jobs, put off purchases(the sustainability impacted aspect).

    These meddlesome events amounts mostly to a single frame of picture being removed from an entire movie, and then displayed as representing the whole.

    Think trailer/movie.

    The good news they bring inspires ony those who "hope" and "feel" that things are getting better, regardless of the facts, thus long term success hinges on emotion and blind consumerism rather than solid underpinnings.

    Thoughts?

  • Report this Comment On November 01, 2009, at 10:06 AM, Deepfryer wrote:

    I didn't call you an idiot only because I disagree with you. I called you an idiot for using the "$24,000 per car" figure. This is an artificial number, which represents absolutely nothing. Using this number means that you either don't understand what you're talking about, or you are intentionally trying to mislead your audience.

    The cash for clunkers program not only stimulated auto sales, but it also put billions of dollars back into the hands of the American public. These people are free to spend this $4000 on whatever they want, whether it is paying down their credit cards, paying off student loans, investing the money, etc. How can it be inefficient to take government money, and give it back directly to American citizens? Are you really arguing that the government could spend the money more efficiently than individual Americans? Please explain your position.

    The good thing about this program is that it took effect very quickly. Money was transferred from the government into the hands of individual Americans, in a short amount of time. In this sense it was similar to the Bush tax rebate, only this program was performed much more efficiently, and it had the added benefit of having a targetted effect on the economy - in this case, boosting auto sales.

    There are also the sustained effects of having lower-emission vehicles on the road, and becoming less reliant on foreign oil. And, on average the new vehicles are much safer than the old "clunkers" that were turned in. Again, these new vehicles were just sitting on the ground, collecting dust. That's obviously not an efficient use of our wealth (in this case, the wealth was in the form of a car which had already been built).

    You didn't bother to suggest any alternative ideas for the money, but if it had been spent on other programs (additional infrastructure spending, or whatever), it would have taken much longer to have an effect. The same goes for tax cuts.

    So yeah, overall I would say the cash for clunkers program was a great idea, and was a complete success. Can you show that the $3 billion would have had a greater effect on the economy if it were used in some other way? I would love to hear your ideas.

  • Report this Comment On November 01, 2009, at 10:49 AM, TMFHousel wrote:

    Deepfryer,

    Thanks for the response. You still haven't explained why the $24k number is useless, other than the fact that I'm clearly a big stupid idiot for using it. It's the marginal cost of the increase in auto sales, which is what the program was designed to achieve.

    If you throw money at something, you'll make it grow. No one doubts that. The question is whether you can do so in an efficient manner. That's what I disagree with, and that's what you -- or anyone else -- hasn't shown C4C did. I agree: It boosted sales. It reduced inventory. It helped dealers. It got fuel-efficient cars on the road. Yes. Yes. Yes. But show that the impact of this was beneficial in relation to the $3 billion cost. Thats what we're getting at here.

    Here's a good, factual, numerical, example of why this stuff doesn't work: http://online.wsj.com/article/SB1000142405297020473180457438...

    All it does is front-load sales at the expense of future sales. That's what happened in 2008 (see article) and it's what will (and is) happening with C4C.

    What would have I done with the money? This is deficit spending, Deepfryer, so let's not pretend the money is sitting around in a room waiting for something to do.

    If we absolutely had to spend more, I'd be all for infrastructure rebuilding. God knows the last thing Americans need are more cars and an incentive to finance those cars with more debt.

  • Report this Comment On November 01, 2009, at 2:28 PM, Deepfryer wrote:

    "It's the marginal cost of the increase in auto sales, which is what the program was designed to achieve."

    1. The program was intended to do more than increase auto sales. It was also intended to put money into the wallets of Americans, which is a good idea during a liquidity trap.

    2. $24,000 is absolutely NOT the marginal cost of the increase in auto sales. This would be the marginal cost of the increase in auto sales, if the $3 billion was gone forever, or if it was given to another country. But that's not the case.

    The marginal cost of the increase in auto sales is actually $2000 per car, according to a study by professors Burton A. Abrams and George R. Parsons of the University of Delaware.

    Source:

    http://www.bepress.com/ev/vol6/iss8/art4/?sending=10731

    Again, I have no interest in debating this or trying to change your viewpoint, because that's obviously never going to be successful. I just wish you would refrain from using such misleading numbers, especially since YOU were the one who complained about lies, damned lies, and statistics.

  • Report this Comment On November 01, 2009, at 3:31 PM, topsecret09 wrote:

    Heres why Its not..... Because people like me have been UNEMPLOYED for over 8 months with no end In site ...........

  • Report this Comment On November 01, 2009, at 7:06 PM, csd128 wrote:

    Deepfryer, you asked "How can it be inefficient to take government money, and give it back directly to American citizens?"

    The answer is in your question - the government money of which you speak is in reality the earnings or, in this case, I believe, the future earnings of those who produce the wealth.

    This money is (mis) appropriated using the most complex system of taxation ever devised, and in this instance, the cash is taken from thin air since the value of this "wealth" has yet to be created; since only the printing of additional currency has occurred.

    That means the dollars spent have zero actual value, unless one considers the inevitable increase in future taxes and the attendent inflation to be a positive thing.

    The results of this technique are very predictable, and the inefficiencies will somtime later make themselves known when the worker paying 2009 debts must do so by earning, paying taxes on and spending inflated dollars earned 5, 10, 15, or 20 years or more in the future.

    This amounts to the federal government using credit (by borrowing from/making liable the future taxpayers) to pay our way out of a financial hole.

    BTW, did anyone notice the price of the autos sold seemed to be full sticker during C4C?

    Did auto makers increase production and hours for workers?

    How much, or little of these funds, funneled thru Ginormous Motors, actually made it to the employees?

    Could this mean that the left finally embraces the "trickle-down" Reaganomics, since this money must be doing some worker, somewhere, some good:)

    But that is just my take.

  • Report this Comment On November 01, 2009, at 9:09 PM, papaegan wrote:

    Great article guys - thank you. Think most everyone here would appreciate a book called 'The Liberal Mind' by Lyle H. Rossiter, Jr., M.D.

    All I can say is I've fastened my seatbelt!....

  • Report this Comment On November 02, 2009, at 10:54 AM, leohaas wrote:

    So, you are arguing that one of the stimulus programs (Cash for clunkers) did its job: it stimulated the economy!

    Congrats to the administration...

  • Report this Comment On November 02, 2009, at 11:05 AM, mrmajik33 wrote:

    As a kid back in the 60s I remember hearing my Uncle Al yelling at the local newspaper over political issues of the time. His words of wisdom from over 40 years ago,

    "NEVER RE-ELECT ANYONE"

    Not sure how many more years this country can keep going with the, "Same problem, different day".

  • Report this Comment On November 02, 2009, at 11:54 AM, williamjacobs wrote:

    I'm a liberal.

    I was annoyed with Cash for Clunkers too.

    I think the first poster is wrong though.

    $35,000 per patient is the cost of the public plan because it's going to be covering the people that private care refuses to accept because they cost, on average, $35,000 to treat.

    The emphasis on cost containment was misplaced. I understand it was meant to persuade a majority of the population to join in on this sensible idea, but I'm always concerned when we do a wrong thing for the right reason. I can't help but worry that this will come back to bite us all.

    On the quip that destroying things is no way to spur an economy, wars are all about destruction and they're great for pulling countries not involved in said war out of their doldrums. Maybe if America can wrap our wars up, we can make destruction even less of our GDP?

    It all depends on who's doing the destroying whether such activity is good or bad for the economy, I guess?

    Missiles, whose sole purpose is to self-destruct (taking a target with it), or gas guzzling cars. Neither produces a long term asset.

    If we were more prudent in how many we fire and what minimum improvement in mileage is allowable, perhaps we can find greater gains in both.

  • Report this Comment On November 02, 2009, at 3:53 PM, Formula51 wrote:

    Great TMF deleted my post along with the solicitors post. Way to go!

  • Report this Comment On November 02, 2009, at 5:57 PM, NoFearNoWay wrote:

    For all you LIBERALS...There will never be enough money to satisfy your feeling of guilt. You cant spend it away, or give it to the government to redistribute the feeling away either. Oh and by the way, there is no such thing as a Liberal anymore, the Democratic party has gone completely SOCIALIST...Wake up!

    We all have the right to "pursue" happiness, not the right to "get" happiness. If it makes you SOCIALISTS happy to destroy your standard of living, and give up all your resources to those less fortunate, then do it, and keep the rest of us out of it. We are sick of watching you destroy the country with your failure to implement good intentions. Especially with money that is borrowed...We dont even have the money...freakin A!

  • Report this Comment On November 02, 2009, at 6:27 PM, selfdestruct2 wrote:

    bills444, I'm in total agreement. Obama gang is purposely destroying our economy. The cash-for-clunkers was the stupidest "incentive" program ever created by any administration. What an absolute waste of vehicles, and nothing was really accomplished. This federal government is way too big and ruining our great nation.

  • Report this Comment On November 02, 2009, at 9:00 PM, jerryguru69 wrote:

    Could not have said it better myself (in fact I was going to do a blog about this, but now I guess I don't have to).

    Remember

    GNP = C + I + G

    where:

    C = consumer spending

    I = business investment

    G = gov't spending

    The keynsians taught that there is a magic, full-employment level of GNP. Not there yet? Just increase G.

    P'shaw.

    We have mucho G but unemployment is still way short of "full-omploymnet".

  • Report this Comment On November 03, 2009, at 1:38 PM, crazy4swayze wrote:

    how many user names does glenn beck have on this website? it's got to be upwards of 70, right?

  • Report this Comment On November 04, 2009, at 4:25 PM, snowhippo wrote:

    Fool blog needs a "respond to comment" feature to keep the conversation trackable. Can't tell the order of discussion.

  • Report this Comment On November 04, 2009, at 4:29 PM, plange01 wrote:

    the only thing growing in the US is unemployment,forclosures,bankruptcys and wishful thinking! cthe US is over 11 months into a depression and moving toward a major collapse...

  • Report this Comment On November 05, 2009, at 3:39 PM, verakot wrote:

    What depression? Did you check the stock market lately?

  • Report this Comment On November 05, 2009, at 3:42 PM, cubanstockpicker wrote:

    GDP counts insurance money collected through casualties. It also includes money lost in payout due to homes being FORECLOSED.

    There is persistnet unemployment and nore more work in the construction industry. There were 17( count em) 17 housing starts in MIAMI-DADE county.

    Fort Myers is now officially a ghost town.

  • Report this Comment On November 06, 2009, at 11:16 AM, scn9677 wrote:

    GNP is the older way of accounting which doesn't account for workers outside of a country. That is why almost everyone uses GDP

    GDP = C + I + G +(X-M)

    X = exports

    M = imports

    The cash for clunkers and 1st time buyers caused the money to be spent earlier than later. Only time will tell if it was a good idea. History has showm that it has worked before such as the great depression when spending was greater than GDP during the war years.

    Facts do not change. Only the way people look at them is different.

  • Report this Comment On November 06, 2009, at 11:51 AM, foolishbroker68 wrote:

    You make some valid points but as was pointed out the cash for clunkers program only increased the sales of autos meaning it was not solely responsible for the increase. I have never understood why Americans so often fail to see beyond the end of their nose.

    The economy has to stabilize before we can grow meaningfully. We are seeing stabilization which is a good thing but you seem to want everyone to think the sky is still falling. This is part of the cycle of the worst thing we could do is constantly overreact one way or the other.

    The stock market is now at levels previously realized in the late 90's and yet many think it is over priced. So companies even adjusted for inflation are not worth any more now than ten years ago? There is a concept in business called marginal improvement. Many companies have continued to grow but at a cost to margins or quality over the years. You can cut out that marginal business and still produce earnings by reducing costs to levels supporting your highest margin business. That's where we are now.

    In the 80's with Microsoft and Intel showing up on the scene and the advent of the wireless industry everyone became obsessed with growth. So much so that many believed that if a company paid a dividend there must be something wrong with the company. What a crock! Many companies have embarked on growth ventures, making acquisitions etc. that seldom ever pay off unless your a banker. Now all companies should be able to grow at a reasonable pace but that is not necessarily 15 - 20% per year.

    Now we have the E-trades and Ameritrades of the world trying to convince everyone that they can be a trader. Who cares about the companies tell me about the stock. What? I believe one company even advertises stock charts as research.

    I remember when Blockbuster first opened. Analysts went and sat outside the stores and counted the number of people during different periods of time. I recently read a report from an analysts covering CBS describing how he drove along the major freeways of a large US city and he counted the number of billboards from different providers. He also counted the number of CBS billboards that were populated versus their competitors. That my friends is research.

    Americans are getting more lazy all the time and when we have these crisis as someone pointed out the government comes to step in because there is a void. The mistake is that we allow them to do this because it's easier to sit on our butts and do nothing. Why do research I can trade for $9.99 per trade on E-trade all day long and I'll get rich because the commercial told me so.

    If we are doomed we have no one to blame but ourselves.

  • Report this Comment On November 06, 2009, at 12:00 PM, refugee07 wrote:

    A lot of interesting points. My two cents: even a car that doesn't have a $4k incentive costs taxpayers a lot of money in roads, air quality issues, accident clean-up and emergency care, etc. That's why other countries nearly double the cost of a vehicle in duties. My argument: our vehicle costs are artificially subsidized by the government. Insurance companies and banks making student loans are also subsidized by the government.

    What is confusing me today is that typically hyper-rational fools are apparently happy when the subsidies go to companies but unhappy when some limited amount goes to a consumer. Personally, I'm for ALL subsidies to be taken away and a limited government that applies rational rules fairly. But until they get stripped from corporations, I'm going to take a wait-and-see approach to Obama's radical idea of giving a bit of help to individuals.

    Efficient? No. But neither is paying banks to proces student loans, paying ag companies not to grow crops, or exempting health insurance companies from fair competition provisions that Pepsi and Coke have to deal with. Policy is not a simple efficiency exercise or it could be computerised and run by industrial engineers. Obama inherited crud, and it will never shine like a diamond. If this causes the End of Days, then I'll be happy if I can at least have access to some anaesthetic.

  • Report this Comment On November 06, 2009, at 12:01 PM, jwkovlanks wrote:

    These Republicans that hate Obama should remember that minus Cash for Clunkers and the Stimulus which was started by Bush, the country

    would still be in free fall thanks to eight years of

    Republican mismanagement. They forget that Bush

    NEVER included the billions of in two wars in his

    budgets to Congress. Stop the whining rich folks and

    support the President of the United States.

  • Report this Comment On November 06, 2009, at 12:02 PM, rdscubby wrote:

    I can see the numbers just like everybody else! Why is it that everyone can pick something apart but in doing so has no alternative to replace it. This society is very negative, maybe due to press, people writing articles, email and the internet. Let's just say we need more constructive writing in general no matter what it may be about. We've given the insurance industry, medical companies, drug companies and scores of related area's years to come up with an answer and I've yet to see anything out of them to help are problem, and please don't tell me that it is better now than it was before, the problem I mean not society.

  • Report this Comment On November 06, 2009, at 12:41 PM, jrcarey wrote:

    I really hate these financial blogs turning into political rants by both sides. We are all GROWN individuals who are most likely totally set in our ways. Do you really think that shouting at each other online is going to change anyone opinion. I have extremely strong views on these issues, but they are not going to change based on what someone dashes off in three lines. Get real! Lets continue to discuss money not politics.

    However, I do have a financial point to make about this issue. The gentleman who started these comments LessGovernment posted this.

    "$35,760 per individual per 10 years

    $3,576 per individual per year

    $14,304 per family of 4 per year.

    What was that again about this being reasonable in cost?"

    I am 54 with high blood pressure and self employeed. My insurance is about 5000+ (just for me) per year and going up - so 3576 looks pretty good to me. And you further miss the point that the 17 million extra people that this bill will reach is going to come out of your pocket anyway. Because they will got to the emergency room, or the public health clinic. Who do you think pays for that now and at what will be a higher and ever increasing rate. That is terrible business to me. But what do I know I have only kept a small business alive for 24 years - thru liberals and conservatives.

  • Report this Comment On November 06, 2009, at 12:43 PM, c0ffeen0te wrote:

    The point is to save jobs because a job lost is not easily replaced. How about telling us the cost to replace a lost job? By the time those people would have bought cars anyway, who knows how many more US plants would have been shut down? We have to get this thing going today not tomorrow.

  • Report this Comment On November 06, 2009, at 1:48 PM, NoFearNoWay wrote:

    Jrcary, If you think the government is going to lower the cost to us folks my friend you are sadly mistaken. I work for the Fed. I have also worked in the private sector. There is nothing the Fed does that is cheaper, better, or more efficient than can be done by the private sector. I can tell you first hand, no private business would be sustainable if run by Federal Government Standards.

    There is a REAL limit to the amount of Debt we can sustain as a country...Just like there is a limit for your business. Are we there yet? Do you want to see what happens when we get there?

    Guess what, when we get there, dont turn to the FED, because the FED no longer exists, at least not in its current form, and by the way, neither do we.

    Quit stealing from future generations to fund your current needs/wants. Its not right, its unethical, and shamful, your old enough to know better.

  • Report this Comment On November 06, 2009, at 2:05 PM, booyahh wrote:

    "Quit stealing from future generations to fund your current needs/wants. "

    That's exactly what the "greatest" generation did. The New Deal put us into debt. And America turned out just fine later on. Throughout the 30s, 40s and 50s our debt load was much higher as a percentage of GDP.

  • Report this Comment On November 06, 2009, at 2:22 PM, OldPM wrote:

    I was fine with your reporting until I got to the last line. How do you people get off with “Lies, damn lies, and statistics”. What would you have the government do; not report the number, report the number and try to hide the details, or report the number and explain the details? It sounds like they did the latter. Or are you just surprised that this administration is pretty open and forthcoming, which hasn’t happened in a decade or so?

    I see you are also worried about “The taxpayer”. Well, I am one so just tell me what my share of cash for clunkers is, $100, $500, $1000? I am happy to contribute to try to get the economy off the skids. In fact, maybe I would contribute for somebody else who is too cheap to try to get America off its knees. The clunkers program got a few cars that were maybe not so safe off the roads, saved a little gasoline due to the mileage differences, and got some banks to lend money. Is it a big deal? No. But it may be a place to start.

    When the private sector doesn’t hire and the banks don’t lend, the government is the spender of last resort. Are we going to pay a penalty down stream for this? Probably. But the problem is getting the economy growing now. The problem with living in the present is that you know what happens because that’s what’s happening. You don’t know what may have happened because it didn’t. But I believe that if the government didn’t step in as it did, we would likely have 100s more banks failing, at least two major car companies out of business, 15% unemployment and you people in the financial services business (the ones that still had jobs) would be screaming for the government to do something, anything, to help out. Be careful what you wish for, you might get it.

    In the meantime, keep reporting, but leave your personal comments out.

  • Report this Comment On November 06, 2009, at 2:59 PM, bmialone wrote:

    More Yada Yada Yada from the shortsighted, me first crowd that ignores actual history in favor of choosing to pass down misinformation based on past manipulative rhetoric that best suits them.

    This sort of thinking is why the US, in our short history, continues to have a boom and bust economy. In fact, we are currently more like the country was before FDR, even back to the beginning of the 20 century, than we've been since reforms were put in place. Why? Because over the last 25 years regulations have been abandoned or ignored and propaganda has convinced those more recently born that contributing to the collective good is a bad thing for them, even as they lose their quality of life and even their jobs! We are now almost back to the few rich/many poor scenario we were in Before reforms!

    The reason for reforms, regulations, and public investments was the proven utter lack of responsibility our early barron robbers and business tycoons exhibited toward the economic slaves toiling away making them rich! The rich have received far more subsidies in one form or another from the federal government than the middle class or the poor, and they have since the beginning.

    Free land to rail road tycoons, then sold on the cheap to logging, milling, and mining tycoons who felt justified hiring families to work for next to nothing under dangerous conditions.

    Auto, steel, and aluminum factories that did the same.

    Corrupt private utilities gouging the public and delivering power only to those who could afford their prices.

    The families that owned these early American industries were few and exceedingly wealthy, yet refused to budge when it came to fairness to their workers. They refused to share Anything! When American workers asked for better they were rebuffed. When American workers started agitating, they got their heads busted. Read your American history, for Christ's sake!

    The only reason the federal government forced industry to accept trade unions was to stop our nation from turning to socialism or communism and to stop workers from sabotaging manufacturing and harvesting required for us to fight in WWI.

    Now we are on the fast track back to where we started and the private sector has once again proven it cannot police itself nor will it be balanced. Once again it has proven that "greed is good" is the only motivation that matters.

    As long as the trust fund babies are still living high on the hog in their $800 jeans, $30,000 dresses, filling the bars of Scottsdale, LA, and New York, we are being duped by articles like this. When the Donald Trumps of the world declare bankruptcy without still being able to spend more in a day than other Americans that work just as hard make in half their lifetimes, I'll give this argument some credence. As long as professional athletes and their wives are living in multi-million dollar mansions and buying $50,000 worth of clothes at a time in rip-off boutiques, then our nation can afford to invest in our people and our infrastructure.

    The bottom line is that other nations routinely kick our butts with their economies AND their quality of life while paying MUCH higher taxes and putting limits on the savage capitalism that tells the public those that are benefiting from the selfish savagery deserve what they are getting because of the choices they've made or the work they do.

    The current economic weakness of many is that too many of their citizens started to believe our way was the best. Yet, even as they bought into our load of crap, they still invested in their people and are smart enough to know that if they continue to do so, when the dust settles their nations will end up in the top tier. No business can survive without investment it in, and neither can a country.

    Finally, we are already spending the money and we will continue to spend the money, so the real question is what we spend it on. Do we continue bailing out rapacious industries that make only more profit for international investors their goal? Or do we invest in the health and educations of our people, in the technologies and sciences of the future, and in energy conservation and renewable energies, all of which will make us more competitive on the national stage and will bring jobs back to our country?

    How about people like this author focusing on how our public policies are made, how our legislation for the last 25 years has been written by the industries that will make huge profits from the outcomes? How about taking a long hard look at the criminal justice and prison industries? What do you they are costing our nation in shattered lives and real money every year? But no, instead you want to nitpick over some drop in the bucket program intended to help average citizens and improve our environment! Invariably, programs for the good of those with less are the targets instead of those that are fleecing us. Why is that?

    The Obamas of the world can see the big picture. Those who can't stay mired in nitpicking over whether they are actually making any extra money off of the money they already have, and begrudging all of us committing resources to the betterment of the entire nation. It is short-sighted, narrow minded, selfish, and foolish because most of us will never belong to the fabulously wealthy club, which means in the end, we are going to be bitten in the butt by the very people and ideas we promoted at the expense of those that were better for all of us.

    That top 3 percent, they are laughing all the way to the bank and not even thanking us for being such suckers.

  • Report this Comment On November 06, 2009, at 3:51 PM, scn9677 wrote:

    I always love to see the totally insane comment that the private sector is always more efficient than the government. If that is true then why have medicare costs increased 77% while private insurance costs have increased 200%?

    How did the TVA come about?

    Are you saying that Blackwater was way better than our military?

    Remember the government at it's best represents the best interest of the people. The private sector is at it's best when it stives to be a monopoly.

  • Report this Comment On November 06, 2009, at 5:43 PM, EyeT4Me wrote:

    scn9677,

    Well, medicare denies 2/3 of requested medical procedures, while private sector insurance denies only about 1/3. Also, if you think medicare costs only increased 77%, could you explain how you came to that figure? I think you may be missing the point that it doesn't have to make a profit - it doesn't even have to break even, because the program just dips further into the tax payers' money to pay for things.

    The government hasn't been 'at its best' in about 200 years now. It is NOT the place of the US government to have all of this control. Read the constitution. The private sector is at its best when liberties and freedom from extremely high taxes allow for innovation and competition. This "Health care reform" is a way for the government to begin to control another 18% of our GNP, and take away a huge chunk of our rights and liberties as gauranteed in the constitution.

  • Report this Comment On November 06, 2009, at 6:46 PM, scharfl wrote:

    GDP growth of 3.5 % is not a pittance. It is significant. The Stock Market and Buffet know it. Also some of the comments above assume that the think tank of the government including Summers and Bernanke are sitting there twisting their thumbs. We may be good fools, but they are cleverer and they are doing everything you can imagine to convert the dormant economy into a power house even in terms of creating jobs by the millions and bringing down the U level from the current 10.2 to 5% in just about two years. That is when interest rates would have gone up by about 3-4 percent across the board to curb inflation.

    So I wonder where the commentators get all their pessimism from? Looking at a static March 2009 picture of the economy?

    scharfl

  • Report this Comment On November 06, 2009, at 7:47 PM, scn9677 wrote:

    EyeT4Me ,

    I take a lot of time to find the data on the internet. Google is my friend. Try http://www.nchc.org/facts/coverage.shtml to start.

    It would be interesting to know where you find your information Denied requests are on the order of 6%. Where do you get 2/3 vs. 1/3? My parents have never had to pay a penny out of pocket for any of their medicare.

    Where are your facts about the government hasn't been at it's best for over 200 years. That is a very juvenile statement.

  • Report this Comment On November 06, 2009, at 10:44 PM, GoNuke wrote:

    For all auto makers to make money in the US annual new car sales have to reach roughly 15 million units. The vast majority of these cars are purchased with consumer credit. Consumer credit virtually disappeared for a while. During that time demand for cars shrank but did not disappear. What disappeared was the credit to buy them with. When credit started to flow again auto sales were driven by "pent-up" demand. Six months of car sales were compressed into three. The sum of car sales during six slow months is still pretty good compared to the sum of car sales during three brisk months. Cash for clunkers or no, availability of credit is what "drove" the increase in automobile purchases. Expect many slow months in the near future.

    I am a loyal fan of the USA. That is why I get to be critical. To understand what happened to US auto sales one simply had to look at what happened in Canada where there was no credit crunch.

    With respect to all the folks here that continue to rage against public health insurance I beg you to open your minds. They seem to be cemented shut by some ideological straight jacket that thrives even in the face of a complete absence of supportive evidence. Indeed all the evidence, the world over, contradicts your assumptions regarding public health insurance.

    Rail as you may against universal national health insurance you cannot find a single instance in the world where private health insurance is competitive with public health insurance. The US spends twice the portion of its GDP on health care that we do in Canada. Thus US conservatives are forced to invent horror stories about Canadian health care. Groundless as these horror stories are I will resort to the Swiss model.

    Switzerland understands insurance. Yes, its health care is paid for by private insurance. Look a little closer and you will see that everyone in Switzerland is forced to buy health insurance and Insurance companies are forced to sell health insurance to everyone. It is mandated. Nobody can be refused coverage and people with pre-existing conditions pay the same premiums as other people in their demographic group (not their "condition" group).

    Low income Swiss have their premiums covered by the government.

    No applicants are denied, no claims are denied, nobody is allowed to opt out and health insurance is operated on a not-for-profit basis.

    The Swiss have universal health care coverage. Switzerland's system costs 40% less than the US system AND the Swiss receive excellent health care. They are very happy with the quality of care they receive.

    Treatment is never delayed, people never go bankrupt covering health costs, nobody is left holding unfunded liabilities.

    The Swiss have managed to wring out substantial costs by eliminating the financial risks associated with the US health care system.

    Get over yourselves. If the US does not embrace universal not-for-profit health care insurance it can kiss its international competitiveness good-bye.

  • Report this Comment On November 07, 2009, at 2:04 AM, alwaysintrouble wrote:

    Health care costs are amazingly high in the U.S. because of the gullibility of citizens when presented with drug company advertising. The major drug companies are like the tobacco companies once were. They sell drugs to people who do not need them and ruin their health so that they can sell more drugs to cure the ails that they created in the first place. Government-sponsored organizations team up with the drug companies to create the greatest scam of all time-high cholesterol levels. When cash flow suffers the drug companies in concert with various medical organizations and government departments lower the acceptable cholesterol levels so that they can sell more cholesterol-reducing drugs. Has anyone noticed an amazing reduction in death due to heart attacks and strokes? And then there is Viagra and other ED drugs. Can they stoop any lower than to make men feel that they are not complete without an erection on command? And what about unnecessary surgeries, like caesarian sections on the calculated due date rather than allowing nature to take its course. The health care system makes many people rich while patients go bankrupt.

    As was noted above, the government most of the time accomplishes the opposite of what is intended, such as the programs where everyone has to have their own home resulted in foreclosures on homeowners. No one can anticipate the consequences of government interference in the market. However, the market is not free, except for those at a low income level. Those at a low income level are free to pay handsomely for all that they need to live on and lose their house if they get sick or get stuck in a bad mortgage. Meanwhile, the Vanity Fair lifestyle accrues to the privileged and connected and corrupt. The omnipresent government is so embedded that its intrusion into life becomes invisible.

    Obama is failing because he underestimated the force of greed and corruption in America, which is not readily visible to anyone really. Greed and corruption is less noticeable in Canada because there is less money to steal. Obama also, perhaps, assumed that he could appeal to honest Americans and they would outnumber the corrupt, but, in terms of power, that was not true.

    There are signs of another bubble in the economy. I hope the shock will be less severe than the last, and that we can all cash in on the bubble and bail before the burst.

    As to health care, I fear that greed in that system will wreck the economy. I hope I am wrong.

  • Report this Comment On November 07, 2009, at 7:43 AM, avgctz wrote:

    I have following questions.

    1. Do all the politicians have health insurance?

    2. What is their coverage likes?

    3. Who covers them?

    4. Who & what is the payment per month?

    5. Can we get the same coverage for the same price?

    This is what we need to ask all of our elected representative, before any other debacles.

    Now should we talk about their Pension Plan...May be in another life time... This is the elitist group we had created.. They don't care about us either of them Dems or Reps. When it comes to their benefits they are all in same boats or should I say in luxury liners.

  • Report this Comment On November 07, 2009, at 10:47 AM, tj99 wrote:

    So much of this commentary attacks the Democratic congress for their actions (Cash for clunkers, home buyer credit, health insurance, etc). All these have had both positive and negative impacts.

    Recall that the first huge government bailout in Fall 2008 was under the Republicans, and paid those off who screwed the financial system (in the first Cash for Clunkers program). Where are all the investigations and prosecutions for those crooks who put us into those first disasters?

    Stop attacking one party or the other - they are both run by politicians who think they are doing what WE want them to do, and that's how they get re-elected. The recent boost may be a reflection of government spending and that must end. But I suggest we focus on how to prevent a repeat performance of the financial system collapse and demand BOTH political parties stay on that task.

  • Report this Comment On November 09, 2009, at 1:48 PM, hembreeder wrote:

    Dear Less Government: Thank you for your apt analysis. You are exactly correct on all points. However, scare tactics work better than facts to keep Americans in line. Your less government ideas will never work, because we will convince the elderly that they will be die in the streets if they have to give up Medicare or Social Security.

    And another point you were completely wrong on is saying you are politicallly incorrect if you question our wonderful president. You are not just politically incorrect if you question Obama. You, sir, are a racist.

    Our beloved expresidents Carter and Clinton have said so. And even Al Gore has said so.

    So you are now demonized, you racist devil. So we don't have to listen to you anymore.

    --Roger Mercer

  • Report this Comment On November 09, 2009, at 11:43 PM, johnw2k wrote:

    I can't help but think some people here are missing a basic point: What would the economic outlook be like right now without the 'stimulus'? I also see that this whole episode has shown (once again) why they call those politically founded rule making bodies 'governments'. Granted they aren't always that great at what they do but when they 'cut everything' and just let the market run free it ALWAYS runs amok- the market needs governance which it will never provide on it own (because greed trumps true long term self-interest) and which has been sorely lacking through the paradigm and present fashion of believing human nature has somehow changed to some greater rationality.

    The 1929 crash set back wage earners for 10-15 years and caused a groundswell of supposed 'draconian' regulations which special interests in the financial industry (and all those 'smart money' folks) whined about and chipped away at until these were all but eliminated. I'm sure some will claim that the result of this had nothing to do with our present day 'modern' problems but it's too much of a coincidence to me. Back then there actually WERE a lot of people starving, no jobs for common people and not too many Seniors on the street because they just died off (and conveniently got out of the way). Without WW2 and the physical destruction of most of the rest of the civilized world, with the associated opportunities for the U.S. to hugely profit from rebuilding everything we might likely have seen that downturn run much longer. These days we don't really build much of anything, we manage it's fabrication off-shore and play games with money while simultaneously designing metrics which show we are producing 'value'.

    The 'free market' is an illusion or a gambling casino with no rules where the house always takes all the money. Without governance and regulations 'free markets' are historically owned and dominated by thieves. Sorry folks.

  • Report this Comment On November 10, 2009, at 5:22 PM, mahoo1 wrote:

    Please stick to financial advise. I can find my political advise elsewhere.

  • Report this Comment On November 14, 2009, at 3:09 AM, Glennn739 wrote:

    Currently there is a government program called in the Long Term Care Insurance side of Health care called"Partnership". This was piloted in 4 states from 1989-1993 then legislation got rid of it. It came back in 2005 and has now been accepted in quite a few more states.

    Essentially it says that a person that owns their own Long Term Care Policy and runs out of coverage can use the dollars paid by the insurance company to offset their pay down requirements in Medicaid so that they can qualify for Medicaid sooner without liquidating all their assets. In the initial pilot, more people took the responsibility of covering their own care, very few ran out of insurance dollars and it seems like a win-win approach to care.

    Major Medical Health care legislation needs to take an approach like this.

    In regards to the $894 billion dollar Pelosi proposal. Basic Major Medical coverage is available for most individuals or families for between $500-1,500 per month. Why not use existing programs have the government pay the premiums for those that cannot afford them and save about $20K per person? It would be too efficient, or logical for government to do this, and probably would not line enough lobbyists pockets.

  • Report this Comment On November 17, 2009, at 9:26 PM, arikira wrote:

    can't wait until a public option passes, and all the fools oversell their healthcare stocks so I can pick them up at a pittance.

    Such a hilarious comment board. The brainwashed FoxNews and CNBC watchers are so transparent. The Democrats are no different than the Republicans, if so, only slightly. Its all just a shell game to get viewers to "choose a side" and hang on every word of the news... They get higher ratings, and we become more misinfomed and more partisan with each broadcast.

    I'm still trying to figure out if Morgan Housel is a just a rube who has fallen into this trap, or is a smooth operator hoping to capitalize on stoking the flames of the ongoing heated (but false) argument over legally-regulated business vs. completely unregulated business.

  • Report this Comment On November 25, 2009, at 10:19 AM, kstrick62 wrote:

    stan8331-

    so, by your logic, if the program's goal was to statistically increase GDP through auto sales, the program was a success. . . the cost of the program is irrelevant . . . you should run for office, you're a shew in

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