24
Aug
Quick question, how many people think the cash for clunkers program fixed the auto industry’s problems?
Well, for those that think it did, be happy. For those that think it didn’t, read this:
A $300 million cash-for-clunkers-type federal program to boost sales of energy-efficient home appliances provides a glimmer of hope for beleaguered makers of washing machines and dishwashers, but it’s probably not enough to lift companies such as Whirlpool (WHR) and Electrolux out of the worst down cycle in the sector’s history.
To date, I haven’t seen what they’re going to do with all the clunkers. Better make room for a lot more garbage with the appliances. And, for what it’s worth, I don’t think discounting the value of things to sell makes the economy look any better. If anyone has any idea how that benefits the nation, please fill me in. In my own opinion, the federal government borrowing money to discount the value of items that otherwise are not selling is not fixing any problems. To fix the problems we need to be creating jobs. Those jobs will buy the cars and appliances the government is now subsidizing. That in turn puts 100% of the investment back in the US GDP. The cash for clunkers program did as much to stimulate the Japanese GDP as it did ours. 100% debt for 53% return is horrid. Now, they want to do the same for the appliance industry. Now, Whirlpool’s pretty happy. But, so is Electrolux. Sweden stands to benefit almost as much from this program as Whirlpool. Again, a 100% debt is financing hopefully a 50% return. In both cases, these are intended to lower our demand for imported fuel ( very, very, good ), and hopefully prop up these companies until the market stabilizes ( very, very, dangerous ). In both of these cases, we’re not getting our money’s worth dollar for dollar. Once things settle down, we’ll be that much deeper in debt and basically no better off than if we had just hunkered down and waited for the world markets to stabilize.
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