I'm not expecting many to read this blog because it deals with my take on the economy. It's a dry as dishwater blog...but here goes.
I don't like it, but I can understand the need to bail out big banks and so called vital industries. The government couldn't let the banking industry die, or certain big corps. If the banks went down taking big business with it....the entire country would go down. There's at least some hope the government will get our money back should these become profitable again.
The various "make work" stimulus packages are quite another matter. They are in place only for a limited period of time and therefore offer no long term resolution....nor do they do anything to stimulate sustained growth. The key word being SUSTAINED.
Cash for Clunkers is a prime example. It's cost the taxpayer billions of dollars and is being called "a huge success." I don't quite understand that.
As far as I can see it's only made Americans deeper in debt through the purchase of cars.... and spent billions more in taxpayer dollars to subsidize the program. The Cash for Clunkers program mainly boosted the profits of Japanese auto makers, since they received most of the sales. Domo arigato Uncle Sam.
Cash for Clunkers has also eliminated spending in other areas. If thousands of families have just gone deeply into debt for a new car, how ready are they to now purchase a new home?
The real test of our economy will come in a couple of years when these stimulus programs are off the table and the economy will be expected to fly on its own. Until then any good news stories about the economy improving will not be accurate as they're based on a false table.....namely taxpayer financed stimulus subsidies. At this point no one knows if the economy will be able to sustain its self without government intervention.
And when it's all over......who picks up the tab for all this extravagant short term spending? You guessed it!
Will taxes have to rise to pay the bills? You guessed it right again!
Will the pay-down be measured in years? Actually it will be measured in lifetimes.
Will inflation rise to meet expenses. More than likely.
How can we blame government for racking up debts on our behalf when we're so willing to do it ourselves. American personal credit card debt is close to $1-Trillion according to one report I've read. Nearly 1 in 4 households are paying more than 20% interest on their personal credit card debt. OUTRAGEOUS!!
The cycle of being strapped for cash and paying debts through more debts is alive and well.
Somewhere along the line someone's gotta pay for all of this.....and tragically it's our kids who will bear the burden of our collective failure. I'm passed being angry about this.....and am more saddened by how little we've respected our children and our country through our greed and extravagance.
We're supposed to be intelligent people. Perhaps it's time to Make a New Plan Stan in the way we live and think.
That's my view and I'm stickin' to it.
Thanks. Sincerely, David
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