Don't be fooled again!

Please everyone; don’t be fooled by the phony GDP numbers created by the so-called government stimulus that the President and his minions have been crowing about. What they have helped create is a mini-bubble in the automobile and housing industry. Cash for clunkers (the idea appropriated from Germany unfortunately) distorted the automobile market, creating a temporary bubble for automobile purchases by moving purchases forward and encouraging unnecessary purchases. Meanwhile, the used car market, already hurting by the lower new car sales and resulting used car trade-ins, has been further hurt by the destruction of a large number of used cars in the government’s high-minded “cash for clunkers” program. The result has been fewer used cars, with higher prices, available for working class Americans (supposedly the main constituency of the Obama crowd).

Secondly, the housing tax credit, as with almost everything else the government has done related to the housing market, has been an attempt to prop up housing prices that need to fall to their natural level (historical price to income and price to rent ratios). All of the perverse incentives proposed and enacted by our economic maestros in the federal government are just continuing our unsustainable borrow and spend economy instead of permitting our economy to return to a sustainable economy based on savings, investment and production. With all of the talk (and it is mostly just talk) of transforming the economy to a “green” sustainable economy, the real path to sustainability continues to be ignored, while the unsustainable false economy consisting of massive public and private spending and debt is exalted. Don’t be deceived by the current administration; they are singing from the same song (different verse) as the previous administrations. The federal administrations and their co-conspirators in Congress and within Corporations are treating us like the frog in the cold-water pot that is boiled to a slow death. We don’t seem to realize that we are sitting in a boiling cauldron of economic disaster that will eventually explode, with hyper-inflation, massive unemployment and in our increasingly balkanized society, widespread civil unrest. Much like a volcanic eruption, we won’t be able to outrun the killer lava flow, and only a few will be spared.