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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (501237)	8/4/2009 10:13:22 PM
From: Brumar89	Read Replies (1) \| Respond to of 1576397

Who cares, since they did, we should have the govt pay for health club memberships for all.

To: Road Walker who wrote (501237)	8/5/2009 4:18:10 PM
From: tejek	Read Replies (1) \| Respond to of 1576397

I hate that Murdoch bought the WSJ......he's ruining a good paper with the partisan ranting. You can always tell when there is a partisan message to an article.......they print out the whole article and not just a portion with a link to subscribe. Clunkers Not So Stimulating By LIAM DENNING Is $1 billion still a lot of money? Car buyers think so; politicians hope so. But the "cash for clunkers" program's boost to the economy looks less impressive. Washington's Car Allowance Rebate System, subsidizing trade-ins of older vehicles for new ones, boosted July's seasonally adjusted annual rate of light vehicle sales by 15.5% compared with June. With another $2 billion of funding looking likely, car sales should enjoy a tailwind through most of August too. The program raises significantly the chance of a positive third-quarter gross domestic product growth figure. Spending on vehicles and parts was 3.3% of real personal consumption in the second quarter. Assume June's pop in sales fades through September and growth averages 8% across the quarter. Excluding the impact of drivers buying imported vehicles, that would boost consumption by about 3%, and GDP by 2.2% annualized. Economists at BNP Paribas reckon higher vehicle production will contribute to a slower pace of inventories reduction across the economy, adding three percentage points to real GDP growth in the third quarter. The problem with such annualized growth trends, however, is the implicit assumption that they last. Yet stimulus efforts tend to have a short-term impact -- especially in the automotive sector. David Rosenberg, chief economist and strategist at Gluskin Sheff, recalls the 0% financing offered by Detroit in the aftermath of the Sept. 11th, 2001, attacks. Vehicle sales and production expanded strongly. Yet after two quarters, the initial boost to GDP growth faded amid continuing deflationary pressure following the bursting of the technology bubble. Moreover, pulling demand forward through incentives tends to open a gap further down the line. Ultimately, even if CARS helps boost near-term economic numbers, the automotive sector -- about 2% of overall output -- is simply too small to counter the wider effects of America's housing led bubble-burst. Subsidized cars might also cannibalize other retail sales at a time when real personal income continues to fall. Moreover, even a rebound in autos will do little to address one of the issues critical to recovery: jobs creation. Even in the last economic upswing, auto manufacturers and dealers cut 169,000 positions. Since the current recession began, they've shed 1.2 million jobs; four out of 10. In comparison, construction and financial services added 1.1 million jobs in the good times, and have since lost 1.6 million. Even if the automotive sector was not still suffering from overcapacity, it cannot be the engine to make up job losses. A sustainable recovery in vehicle sales will come eventually, but slowly, along with the broader economy. For Washington, a few billion dollars might seem a cheap way to create a populist buzz of confidence and provide some insurance on the huge sums invested in General Motors and Chrysler. But in the context of the current economic crisis, it's pocket change that might be better spent elsewhere. online.wsj.com