The evidence on Cash for Clunkers is that it just borrowed from future demand rather than creating new demand. After a quick spike of sales, future demand will be lower.
The first time homebuyer credit is seeing the same effect - 5/6 of the people claiming the credit were going to buy there house anyways, either today or in the near future. So the effective cost per incremental new house sale was $43,000. What a waste.
These programs made 2009 go slightly better than it would have otherwise, but will make 2010-2012 slightly worse. What a stupid way to run a business, or a country.
You know who else did this? Sunbeam.
Is Obama going to be the next Chainsaw Al?
Friday, September 25, 2009
Thee Sunbeam method of Government Stimulus
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