Cash for Clunkers!

A couple of months ago I wrote an article asking is the "Government doing too much?"   There is no doubt about it, as historic action was needed in the past year, but when does it become too much? The "cash for clunkers" program has been a success, but never the less somebody is going to have to pay for it.    

Real GDP fell at annual rate of 1% for the second quarter, which is a real strong rebound from the last quarter with a 6.4% decline.   Do these new GDP numbers really call for handing out $4500.00 for new cars!?!   Keep in mind that this is money that comes off the back of the taxpayers, and not to mention, higher oil prices in the form of a weaker dollar. I have trouble going along here!

These policies are really no different than going out for a couple of beers and not feeling a thing after a couple of them. So you keep kicking them back until, before you know it, you have drank too much and you're an irrational fool, with nothing to look forward to but a hangover.

Over-stimulating the economy can be the same thing; you have to be a little patient. If you over-stimulate before you know it, the economy is out of control with hyper-inflation, bubbles and then there is another severe recession.    

The "cash for clunkers" program would not have been nearly as successful just a couple of months ago, so what is the rationale for doubling down on a program that really serves no purpose anymore? 

You can't say that the economy needs this kind of stimulus, because the economy is improving.   In regards to the environment, who isn't in favor of a cleaner, greener environment? A cleaner environment is not going to be achieved by bribing people with $4500.00 rebates.   It may however lead to a national bankruptcy! 

There is no doubt about the reaction in the stock market though. Ford (F) was up nearly 15% on the news that the "cash for clunkers" program should be extended.