A few months ago I sold my 1979 rustbucket Dodge for $500, just to get rid of it. Darn the luck! If I’d have just held on to it, I could have traded it in on the gummint’s “Cash-4-Clunkers” program. I could have gotten a $4500 voucher toward a Prius or a Focus!
When that girl on TV last fall effused about Obama buying her gas—”If I help him, he’s gonna help me…. I won’t have to worry about putting gas in my car”—we had no idea he was going to buy us the car too!
Since the C4C program ran out of cash months ahead of schedule, Obama did what any benevolent dictator would do: he demanded more cash! Last night Congress finalized a decision to dole out another $2 billion.
The effects of the virtual auto industry bailout hit the markets immediately. These appear in auto advertizing as well. Despite posting a 96% drop in 2Q profits this morning, CBS says that local affiliates are beginning to earn revenue from local auto dealers for car ads.
This from Associated Press:
Outgoing Chief Financial Officer Fred Reynolds called the first quarter the “rock bottom” for auto advertising, and said he expected automakers to continue to boost spending even after the end of government’s incentive plan ends.
“‘Cash for clunkers’ got people off the couch and into the market … but they are selling more than that,” he said. “We think it’s sustainable.”
“We think it’s sustainable.” Note: When an “outgoing” CFO who’s presided over a 96% loss in profits says “We think it’s sustainable,” you have a right to skeptical.
Truth is, the automakers will continue to “boost” spending as long as they’re being handed the money by government.
But where does the money come from? Does it grow on trees? Do they refine it in Galveston and pipeline it to Detroit? We all know by now that the billions are borrowed and must be paid back with interest to a central bank that created the money digitally by fiat to begin with. This is a net loss to the economy as a whole.
As long as it is “sustainable” to destroy the value of the dollar as a whole in order to bail out one industry—we call this “wealth redistribution,” or “stealing,” depending on your moral code—then Reynolds is right. But note that such a sustaining means sustaining the devaluation of the buck, too. How long do you wish to sustain that?
Meanwhile, Obama has some advice on how to save on gas, and save as much oil revenue as if we drilled it ourselves: “We could save all the oil that they’re talking about getting off drilling if everybody was just inflating their tires.”
Well, we know he’s true to his word on this one. Well, at least the “inflate” part.
And finally, I think we should recognize the nature of these “little bailouts” like C4C. Why stop at autos? Why not stimulate more and more parts of the immediate economy? Pump in that money, baby! Fill up my tank, inflate my tires! Housing, supermarkets, retail, shipping, luxuries, jewelry, book stores, liquor stores, financial centers (wait, we already did that one), and on and on…
Representative Jeb Hensarling (R-TX) made this point on the floor: “Recently one of the largest poultry producers in America, Pilgrim’s Pride… had to declare Chapter 11. Maybe we should have a ‘Cash-4-Cluckers’ program and pay people to eat chicken.”
He then proposed to pay people to buy TV’s as well. Why not? I suggest we call it “Cash-4-Clickers” as new remotes resound throughout our newly sustainable fiat economy.
Point made. We cannot bail our nation out of an economic hole by digging the hole deeper. More bailouts equals more debt equals worse times ahead. “Cash-4-Clunkers”? No. “Cash-4-Suckers.”
If I had my old truck back, I’d drive it—just to defy the bailouts, the greenies, and the suckers.
Joel McDurmon, M.Div., Reformed Episcopal Theological Seminary, is the Director of Research for American Vision. He has authored four books and also serves as a lecturer and regular contributor to the American Vision website. He joined American Vision's staff in the June of 2008. Joel and his wife and four sons live in Dallas, Georgia.
