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Wednesday, August 26, 2009

What's so special about clunkers?

‘Cash for Clunkers’ is a hare-brained scheme…but that doesn’t make it unpopular. The idea is to stimulate demand by, well, giving people money. But instead of just giving them money and letting them choose what to do with it, the feds decide they need a new car. In order to the get the money, people have to buy one.

According to the press reports, the program has been a great success wherever it has been put in place – in France and Germany, as well as in the United States.

If so, why not apply the concept elsewhere? How about cash for houses? Cash for liquor? Cash for newspapers? Cash for trips to Europe?

What’s so special about autos, in other words? And why is it a good thing for people to buy cars?

Oh c’mon, dear reader…don’t pretend you don’t know. The auto industry is huge…with many lobbyists and many organized groups interested in its wellbeing. It is an old and well-established industry with plenty of political clout.

Tomorrow’s industries, by contrast, have no lobbyists…no organized labor…no pet congressmen…no political action committees. So who gets the money?
-- from "Don’t Put Your Money on a US Recovery" by Bill Bonner

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