Borrowing from Uncle (Sam)

PhD economist John Hussman puts the recent good news on the economy via into context:

Call me skeptical. But if you look carefully at the economic data that shows improvement, and correct for the impact of government outlays, it is difficult to find anything but continued deterioration in private demand and investment. What we do see is a government that has run what is now a trillion dollar deficit year-to-date, representing some 7% of GDP. That sort of tab will undoubtedly buy some amount of Cool-Aid, but it has been something of a disappointment to watch how eagerly investors have guzzled it down. It is not at all clear that short-term, deficit-financed improvement necessarily implies sustained growth in the context of a deleveraging cycle. This is like somebody borrowing money from their Uncle and then celebrating that their income has gone up. (Emphasis mine.)

The most “successful” economic stimulus program to date, Cash For Clunkers, amounts to coercing the American taxpayer to fork over several billion dollars more of corporate welfare for carmakers. I fail to see how this benefits the nation beyond those few thousand who happily took our money for a down payment on a new ride.

Side note: a friend tells of how a guy he knows bragged about how he just picked up a car on the cheap through the progam — and then launched into a diatribe against Obamacare. No cognitive dissonance there, sadly.

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