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Politics : Just the Facts, Ma'am: A Compendium of Liberal Fiction
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To: Sully- who wrote (73536)8/26/2009 5:56:29 AM
From: Sully-1 Recommendation   of 90947
 
The Hangover

By John Stossel on Economics

" 'Cash for Clunkers' created a nice little blip," he said. "We'll look back and say, 'Nice party, but the hangover is awful.' "

That's Jeremy Anwyl, chief executive of Edmunds.com, an automotive research group, in today's Washington Post predicting what will happen next for the auto industry, now that the federal government's "free money" party is over for used cars.

<<< Many auto industry analysts and dealers expect sales volumes to fall now that the program is over. They worry that many people who took advantage of the program were merely accelerating purchases they would have made later in the year. If that's true, the premature sales could hurt automakers, which increased production in the third quarter to replenish clunker-depleted inventories. >>>


That's the folly in any stimulus: There may be an economic boost from a burst in government spending, but it disappears as soon as the extra spending stops. And stop it must, because even the most ardent supporters of stimulus know that such spending is unsustainable. To paraphrase GMU economist Russ Roberts, stimulus is like trying to raise the level of water in a pool by taking water from the deep end and pouring it into the shallow end.

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