Monday, September 28, 2009

Quote Of The Day: German Car Industry

Every frat boy (U.S. government) loves a kegger (cash for clunkers), but the resulting hangover (fewer future sales) is another story. Cash for clunkers has come and gone. As expected, auto sales jumped. I personally finally benefited from the government's recent generosity (your tax dollars) and traded in my dear old '96 Ford F-150 for more of a family car. Would I have bought a new car without the incentive? Yes.

All of these government incentive programs are simply shifting sales/demand forward and arbitrarily rewarding some consumers at the expense of others, often for decisions they would have made anyways. They are clearly boondoggles and a waste of taxpayer money, and we're likely to see more of them since "free" money is a difficult drug to kick. We're not even close to a real recovery given that we haven't even completed Step 1 - admitting we have a problem.

The following comes from the latest piece by Evans-Pritchard:
The risk for Germany is that the economy tips into a double-dip recession as emergency stimulus subsides. Its cash-for-clunkers scheme expired earlier this month after a rush of sales over the summer. The Centre for Automotive Research says sales will fall by a million next year in "the largest downturn ever suffered by the German car industry".

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