This cash for clunkers seems to be working.

[MohdSalleh]

Yet again Obama with the gimme gimme culture of democraps will bring this country to ruins.

Obama is the antichrist, the destroyer of capitalism. he must be stopped.

 

[xenix]

Here is the definition of GDP

What Does Gross Domestic Product - GDP Mean?
The monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

GDP = C + G + I + NX

where:

"C" is equal to all private consumption, or consumer spending, in a nation's economy
"G" is the sum of government spending
"I" is the sum of all the country's businesses spending on capital
"NX" is the nation's total net exports, calculated as total exports minus total imports. (NX = Exports - Imports)

You don't see an entry for debt anywhere in there. It is only indirectly related to GDP through the other components. Will decreased leverage mean less consumption? Barring any sudden change in a relevant factor such as productivity, yes, definitely. But the point is, BY HOW MUCH? Anyone who is going to claim they know the answer to that question with any certainty is lying or misguided.

There are too many variables involved before you can pin such things down beyond a wild guess.

For example, if we have deflation, people can spend the same amount or less and the 'C' component MAY NOT be affected by a significant amount in real dollars.

Increases in 'G' will offset decreases in 'C'.

An increase in the velocity of money will result in more more money and a higher GDP.

The list goes on.

My objection is to the fact that a few relevant facts are taken completely out of context. What is more, somehow the leap is then made to a virtually apocalyptic vision of the future. That particular scenario is within the realm of possibility, but to speak as if it where a virtual certainty disserves the interests of people who look to you for guidance.

 

[bit]

Quote from maxpi:

The economy is shrinking. It blipped up in April [tax refunds] and July [Car bailout]. There are more Cash for Clunkers weeks in the offing but after that, my guess is we will see that the economy is still contracting...

Don't worry about it. I'm certain Cash for Kwanza/Cash for Christmas is already being brainstormed...

 

[Landis82]

Quote from Mercor:

I know of several small businessmen who are car repair men. They say they have lost about a dozen good customers who got new cars. They will be laying off some of their help. They will layoff high school dropouts who have learned a trade. High risk young males.

From a pure energy point of view to make a new cars uses an enormous amount of energy.

Better would have been to give vouchers to buy used cars , not new cars. This would have been the smart green move.

You must not TRADE the markets at all.

If you did, you would realize that auto parts company stocks have gone to the Moon!

Why???

Because during a recession, people do not have the money to run out and buy a new car, or they are not willing to make such a large capital committment given the economic climate and risk of losing their job.

As a result, they are willing to spend money on a mechanic to help keep their USED CAR running in good condition.

Feel free to check out the charts of O'Reilly (ORLY), Advance Auto Parts (AAP), or Autozone (AZO).

http://finance.yahoo.com/echarts?s=...=on;ohlcvalues=0;logscale=on;source=undefined

 

[JB3]

An incentive for American consumers to take on more debt into a depreciating asset is just what this economy needed.

LOL. Kick the can down the road.

I'm waiting for the next program where the government will give me $100K to move into a bigger home with insulated windows.

 

[piezoe]

Imagine you acquired a bankrupt business for $10 on the dollar (you were never good at arithmetic.) You then decide to gin up the business. You borrow from your mother in law (China) enough to give everyone you know, even people you don't know, as a gift, 1/4 of the retail product price. But you don't stop there. To be fair, you also give 1/4 of the price to anyone who wants to buy your competitors product. You are a very nice guy! Your Mother in Law is in big trouble, because you are a nutso.!

 

[Compulsive]

Quote from Landis82:

You must not TRADE the markets at all.

If you did, you would realize that auto parts company stocks have gone to the Moon!

Why???

Because during a recession, people do not have the money to run out and buy a new car, or they are not willing to make such a large capital committment given the economic climate and risk of losing their job.

As a result, they are willing to spend money on a mechanic to help keep their USED CAR running in good condition.

Feel free to check out the charts of O'Reilly (ORLY), Advance Auto Parts (AAP), or Autozone (AZO).

http://finance.yahoo.com/echarts?s=...=on;ohlcvalues=0;logscale=on;source=undefined

I don't see it