Sunday, August 9, 2009


We tax all the others and pass the revenue on to you

Cash for clunkers has come a-cropper. Let me summarize:

1. The gummint takes over two of our three major car companies, paying wildly more than they are worth because "they're too big to fail" and, um, that's what the UAW wants.

2. Gummint can't move their cars any better than the old owners did but they have an ace up their sleeves.

3. Gummint can give away taxpayer money to people who will please please please buy a new car. The people who get the money, in the form of a cash-for-clunkers payment for their undesirable trade-ins, are mostly the same people who would have bought without an inducement. Sales are front-loaded into the current period, the equivalent of borrowing new car sales from the near-term future.

4. As a consequence, post c-f-c sales will be dismal and jobs will be lost. The economic crisis will further shift to consumers, other new purchases will have to be abandoned or postponed because of the new car debt. Expect holiday sales to be way down. Look for 10% unemployment by the end of the year.

C-f-c was supposed to last for a little more than three months. It lasted four days before the gummint had to beg another $2 bil. Not close, no cigar, the folks who set this up didn't have a clue about selling cars OR giving rebates. Pretty predictable, given that the car czar, like the chairman of GM, knows nothing about any aspect of the car business nor, apparently, about any other business.

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Nine banks that lost a total of $81 bil last year have paid out $32.6 bil in employee bonuses. More than 4,800 employees received bonuses in excess of a mil each. Citigroup and Merrill Lynch lost more than $54 bil, received more than $55 bil in TARP handouts and paid out $8.9 bil in bonuses. Bozo bonuses, we called them earlier, paid from your money to the people who in large part caused the economic crisis. How much was your bonus? (Thank you, Washington Post.)

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Meanwhile, governments increasingly desperate for revenue turn to the least able among us to fund its programs. WSJ tells us of the new 400,000 sq ft casino in Pittsburgh, 3,000 slots (3,000!) and several bars and restaurants. All this when there are four other major casinos within a 2-hour drive. Sin taxes ("lifestyle choice taxes") are where the revenue is thought to be. Could be, but it's not inexhaustible. So drink, gamble, smoke to your heart's content, just as long as gummint gets the share that used to belong to Uncle Vito. Call it cash-from-idiots. Here's something you can safely bet on: Pennsylvania will increasing rely on this revenue stream. Then, when it peters out, they'll ask you for a bailout. Hey, it was fun while it lasted.

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Here's another prediction: GM is failing. Maybe one, maybe two more rescues is about all we can handle. Then gummint will discover what you already know, that if you're not competitive you don't belong in the market. Hear your money being flushed down the toilet, do you? Not, of course, before your various czars and their staffs are handsomely compensated. Think Citibank and Merrill Lynch.

BTW... remember when Fiat was supposed to be the savior of the American car industry (something like three months ago), taking over GM (but not actually paying anything, f''hevvin's sake) and all that? What happened to that pipe dream? Where is their contribution?

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Health care needs to overhauled. Few disagree. Consider TARP, the auto industry, bozo bonuses. bank bailouts to tax debtor corporations and $3 tril in new deficit spending with 9,000 pork projects in the current budget. Do you really want gummint in control of health care? Really?

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When the czar has a cold, all Russia coughs -- Russian proverb

1 comment:

  1. Loved reading this at 0530 today. What a hilarious way to start my morning!