Clunk Goes The Cash, Up Goes The Votes

I think it is quite important that the US maintain a strong heavy industry and manufacturing base.  I have nothing against the auto industry as an industry and believe it is a good thing that we make many products for consumers here and around the world.  I am not supportive however of Government, Inc. owning and operating that industry or any other industry.  Since the Government is the majority owner of both GM and Chrysler and that ownership came about to foster the perpetuation of Democratic politicians, it is no surprise that they are handing out taxpayer money to keep that symbiotic relationship between the unions and the Democratic party strong.  I just don’t abide the hypocrisy of it all.  It would be a lot more honest if Government, Inc. had simply written a check to the UAW for 1 billion rather than go through the charade of the cash for clunkers program.   Those companies were saved strictly to benefit the UAW and not the shareholders or consumers or anyone else.  Those UAW members and their families represent hundreds of thousands of volunteers, voters and fund raisers for the Democratic party and they are getting their reward for delivering the votes.  Likewise the union is getting its payoff for delivering those votes and no doubt remind the Democractic leadership of those votes on a regular basis.  Now the program appears set to expand again for another couple of billion for the UAW.

I realize that the White House and Democratic leaders think it would be unseemly to write a check direct to the UAW and doing this program gives them the cover of saving US jobs and rebuilding communities and having the loans of the government repaid, blah, blah, blah.   I wonder why we aren’t doing the same thing for the furniture manufacturing base in North Carolina.   I think I know the answer to that one.  There are no unions in North Carolina that deliver votes.   Why don’t we all get a check to go out an buy a new bedroom suite or living room layout for our homes?  Why not a clothing allowance check for the ladies to purchase new outfits at the Gap or wherever they buy those things?   Again, no union votes to be had.  While we are handing out billions to favor only one segment of our economy why don’t we use it to defray medical costs.  Is anyone surprised that people went out to buy new cars that allowed them to trade in a car that was worth maybe only $1500 for a $4500 credit?   Of course that money like all money is not free.  The government doesn’t make anything of value.  It collects taxes that belongs to the people.  That money that is being doled out comes from other taxpayers to benefit a few and the UAW.   Someone will be paying for that free lunch, like someone always does.  

I wonder how much fraud will be committed with this program.  Sending in people with clunkers to buy a new car with financing from GMAC (government) and then they walk the note and the car disappears into the nether world to be resold again at a profit since nothing was ever really paid for it in the first place.   Think about the possibilities for fraud.

Of course at the same time the administration will take credit for the bump in the GDP during the third quarter with all these sales.  It merely recycled printed money through the system to make itself look better without really doing anything that created real products and services that people want and can afford to buy.   You are reminded that last week while the  government on the one hand was doling out this billion for clunkers it was borrowing over 200 billion with the bills and notes auction.  That is the amount for only that week.  Treasury is selling over a trillion dollars worth of debt instruments this year alone.  In addition to that the Fed is printing up money out of thin air and passing it into the system.   Those debts and that worthless money will have their consequences for us, they always do.

Only yesterday the administration talking heads began laying the groundwork for increasing taxes on everyone.  They would no longer totally rule out tax hikes.  Of course those tax hikes won’t come next year since it is an election year.  They will be brought up in 2011.  They can’t tax only the rich, however they decide to define that term, because that won’t come close to reducing the deficits.  But not to worry the union votes will have been locked in for another voting season.  They should do a similar program for family vacations.  Las Vegas and Orlando are hurting along with many other resort areas.  The SEIU is very strong in those places  and I am sure some of the Dems will wake up to that fact sooner or later and realize they could use those votes too.  Why not give out $2500.00 per family for the family vacation?  That would stimulate all those local economies and the SEIU members would be very grateful.  Hey, its free money, it came from the government.  We didn’t have to pay for anything.  Such a deal.

Be very, very leery of any prognostications of the eonomists or talking heads about the economy.  There is no historical comparison to what we are doing now with our debt and the printed money.  Nothing from the Depression or WWII has any relevance.  The scale of the debt increase is off the charts, literally.  Likewise the amount of new money printed up has no historical base for comparison.  We are in uncharted waters.  As any experienced mariner would tell you that is always dangerous waters.


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Filed under business, Economics, government, Politics

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