economic updates

Statistics on the cash for clunkers

Buy Japanese

Looks perfectly fine to me too. I don't think this is actually worked as well as its supporters claim (it looks like it condensed months of car buying into a couple frenetic weeks), but it also shouldn't bother anyone that it results in people trading out of American cars and into Japanese/Korean ones. The interesting thing about it isn't the money running out, as many of these impromptu teabagger part deuce demonstrators would have us believe. It's that it's basically an attempt to jump start global trade. Since that's not what it was passed to do, this is one of those rare occasions of a good unintended consequences, but it's one that
1) won't be recognized that way
2) will be abandoned once people figure out how it's working. Other than Ford, the other big two are still getting hammered by this deal. They won't need to manufacture replacement parts for example for thousands of cars.

More interesting of late has been discussions over China's stimulus. I'm still watching to see what it did. But it looks like they stripped out a bunch of the dumb stuff from the New Deal thinking and just gave people spending cards for domestic injections of cash. That covers and bridges over the shortfall of foreign demand and prevents plant closures (though it has the opposite globalizing effect of trade). We on the other hand put in place a bunch of emergency spending for governments and some tax breaks (for this year). Tax breaks are horrible at stimulus. Thanks GOP, and the rest is a short-term solution that doesn't address the plunge in domestic demand at all. Neither did the bank bailouts since they started paying extra on excess reserves, effectively curbing available funds for loans, and didn't make specific requirements on loans out of the dollars contributed, effectively meaning they'd not be used and multiplied as was the intention to keep afloat the economy.

Sometimes having a totalitarian system run by technocrats looks appealing by contrast to a bureaucratic system run by morons.