Roger.Sharp

Cash for Clunkers: A Man-Made Disaster

The "cash for clunkers" program had two policy goals: move merchandise off dealers' lots and reduce overall fuel consumption. (Another benefit that is too hard to quantify is that newer vehicles are safer.)

Florida's economy has suffered from the lask of hurricanes since 2004. A hurricane destroys capital goods to be sure, but their replacement brings in money from outside the State in the form of insurance payments. The replaced goods are taxed by the State, thereby building surpluses. A hurricane is helpful to the State because it brings in subsidies for outside and the lost capital goods are quickly replaced using local labor.

Could England Be Headed for a Sudden Stop?

The UK like the USA believes that it can survive and prosper by borrowing huge amounts of money from whoever will lend it to buy cheap imorts from the Far East to have and to hold for a short time before putting them in the landfill. It makes as much sense as the two fellows marooned on a desert island becoming rich be cutting each other's hair!

Have Policymakers Started Setting the Stage for Further Action?

The whole concept of shovel-ready projects is a sham. They simply do not exist in any numbers. When implementing infrastructure projects, it is unwise to complete the design before the funding is clearly identified because things change. Standards change. Other things get built in the way and have to be avoided. This is well known and understood. To get around this problem the feds allowed design-build projects to qualify. As the name implies, the design has to be done first and can take many months to complete before we see any shovels.

Plunge in Consumer Credit 2.0

Surely, bankruptcies will increase significantly, especially if the government enacts legistation to make foreclosure more difficult. If the risk of losing the roof over one's head is reduced, why go on making increasingly large interest payments on HELOCs and credit cards with little hope of making a dent on the principal?

The only two reasons will be a moral one: keeping a promise to pay and a practical one: maintaining credit scores. These are still powerful motivators. However, if defaults and bankruptcies increase significantly, credit scores will mean less and the only reason not to default will be the moral one. In the face of increasing hardship, how long will this hold?

Obama's Sweeping Changes for America's Cars

One sure, easy way to reduce fuel consumption is to have smaller engines. Horsepower has increased constantly over the years and so have power/weight ratios. If cars were operating at 90% of their maximum power at 80 mph we would see a considerable reduction immediatly. However, available acceleration would be much less and the auto magazine journalists would be very rude about them.