According to the AP:

A Commerce Department report on Thursday showed total retail sales edged down 0.1 percent…Excluding motor vehicles and parts, sales fell 0.6 percent in July…

Analysts had expected a boost to retail sales from the government's "cash for clunkers" program and predicted a 0.7 percent advance in overall July sales.

They said the program…had pulled spending away from other sectors.

Just shocking that people took advantage of the government's give-away of cash and spent some of their own money to buy the cars and thus did not spend that money elsewhere.

In other words:

• Cash for clunkers took money (borrowed from the future) and gave it to others (wealth distribution).
• People took money the they would have spent on other items anyway and spent it on cars (so little change in total money they spent).

Imagine a time of economic downturn; people out of work, businesses closing, people losing their homes. In response to these extraordinary circumstances, the Federal government takes unprecedented steps to get the economy working again.

Ultimately, the corporations created serve two masters: The politicians with their political agendas, and the business people with their profit motive.

As long as the economy is booming, there is no problem, but when another slow-down hits it is clear the two “bottom lines” are incompatible.

An unrealistic scenario? Can you say “Fannie Mae” or “Freddie Mac”?

Well, you better be able to say Gennie Mae – the Federal government now owns 60% of GM.

When the political agenda and business agenda of GM come into conflict, what do you think will happen?

So let’s give GM to the real owners, not the politicians in Washington, give it to the people who paid for the 60% ownership - the American taxpayer.

If by using taxpayer money the Obama administration has the government owning 60% of GM, I want my stock.

Take everyone who paid Federal income tax for 2008 and divide up the GM stock proportionally.

Send me my GM stock.

Even given my strange perspective, there are some mornings I wake up in America and I feel that like Alice I am seeing the world through the looking glass. Today was one of those days.

According to the liberal New York Times: “Top federal regulators say they were taken aback when they learned that a California congresswoman who helped set up a meeting with bankers last year had family financial ties to a bank whose chief executive asked them for up to $50 million in special bailout funds. Representative Maxine Waters, Democrat of California, requested the September meeting on behalf of executives at OneUnited, one of the nation’s largest black-owned banks. Ms. Waters’s husband, Sidney Williams, had served on the bank’s board until early last year and has owned at least $250,000 of its stock.”

I am shocked!

According to the almost as liberal NY Daily News: “President Obama said Thursday the nation's economic woes are not as dire as they seem and said his economic policies will get the country back on track. "I don't think things are ever as good as they say, or ever as bad as they say…Things two years ago were not as good as we thought because there were a lot of underlying weaknesses in the economy…They're not as bad as we think they are now…I don't like the idea of spending more government money, nor am I interested in expanding government's role”.

Oh, really?

Just 6 days ago according to the AP: “President Barack Obama challenged the nation Saturday to not just hang in there but rather to see the hard times as a chance to ‘discover great opportunity in the midst of great crisis.’”

$787-billion stimulus plan, $410 billion spending bill for the current fiscal year, proposed 2010 budget increases the deficit to about $1.8 trillion.

And then there is this from the Financial Times: “Jack Welch, who is regarded as the father of the “shareholder value” movement that has dominated the corporate world for more than 20 years, has said it was “a dumb idea” for executives to focus so heavily on quarterly profits and share price gains.  The former General Electric chief told the Financial Times the emphasis that executives and investors had put on shareholder value, which began gaining popularity after a speech he made in 1981, was misplaced.”

Mind boggling.

From The New York Times: “Mr. Obama acknowledged the anger felt by many Americans over the bailouts of banks, the automobile companies and homeowners who are in over their heads. But he made a case that all those steps were necessary, not to help the institutions or people receiving taxpayer money, but to avert deeper economic problems that would afflict everyone for years to come.”

So, I ask again: What is the upside for all those people, those 91%+ of Americans who lived within their means, who did not live “over their heads”?

If bailing out the 9% of "homeowners who are in over their heads" is necessary “to avert deeper economic problems that would afflict everyone for years to come”, why not take the money going to the 9% and instead give it to the 91% for them to spend? Spending is stimulus, right?

Again from The New York Times: “He was vague about how he intends to make health care more affordable and accessible…” and “The president waited until the last moments of his speech to address America’s relations with the world, and when he did, he struck broad themes while eschewing specific policy directives.”

Speeches only require the speaker to be vague and present broad themes. Leadership requires specific action.

Speeches, especially for a good presenter like the President are easy. Leadership, well, that is another matter.

Thanks to George Will for reminding me of the FDR lend-lease quote and President Obama’s recycling of it:

“Suppose my neighbor's home catches fire, and I have a length of garden hose. ... I don't say to him ... ‘Neighbor, my garden hose cost me $15 ... ‘”
-- Franklin Roosevelt, Dec. 17, 1940

“When the town is burning, you don’t check party labels. Everybody needs to grab a hose.”
-- Barack Obama, Feb. 10, 2009

Yes, Mr. President, when the town is burning everyone needs to grab a hose. But, what happens after the fire is out and it turns out your neighbors had been playing with matches and gasoline? Do you punish them or reward them?

If you reward them, won’t they just do the same thing again?

If you do not punish them, why should they change?

While I do not want to speak for my wife, I will only comment for me when we would probably be more correct.

I (we) have been very blessed in many, many ways.

We have been offered numerous opportunities by financial institutions to take some of the equity out of our house, but:

• We did not trade-up to a mansion.
• We did not buy icon cars.
• We did not take extra vacations.
• We did not buy all kinds of electronic gadgets.
• We did not run up extraordinary balances on our credit cards.
• We did not put ourselves into debt.

In short, we did not play with matches and gasoline.

While I cannot prove it, I suspect that some millions of those Americans (not all, but many) who “need” to be bailed out:

• Did take significant equity out of their homes.
• Did buy mansions with pools.
• Did purchase other houses as investments (thank you, Flip This House).
• Did take more expensive vacations.
• Did buy more expensive status symbol cars and electronic gadgets.
• And so on.

So now they are in over their heads, or “underwater”.

Yes, we should save them.

But, once we do, what is the punishment for setting the whole town on fire?

The “Inter-Generational Wealth Transfer Act” aka “the Stimulus bill” needs a complete rethinking. 

The Framers of the Constitution intentionally designed a central government that was slow. They saw a power that could respond quickly as a threat to liberty. 

They were right and wrong. Even under the most dire of circumstances, for example the Japanese attack on Pearl Harbor in 1941, the government could not mount a serious response for almost two years.

Because of this and the timing of November’s election, the Federal government has been slow to response to the economic crisis. Now, as they are planning another response, “the Stimulus”, they are already too late.

While much pain is being and will be endured, the crisis has to some extend passed and to another extent evolved. Look at Goldman Sachs already planning on repaying the government, or the drop in home prices which has caused a predictable increase in home sales.

Government deficit spending is not needed; it risks inflation and is just a transfer of wealth from the future (GenX and GenY and their kids) to the present (mostly baby-boomers).

What Congress should pass and the President sign is a bill providing the Federal government with the tools it may need in the future to quickly address an economic crisis. This could include provisions for government spending, but not specific spending now. It should be written so that the President would have certain authorities, subject to an up or down vote by Congress on enacting each as the President requests.

One day I left a saw out in my yard. A kid walking by, took the saw and used it to cut down my neighbor’s tree. I felt really bad that some dumb kid sawed down my neighbor’s nice tree, and even though I had left the saw out, there was nothing I, my neighbor, or even the kid could do to put the tree pieces back to make a living tree.

The economy will get better. It may be painful in the short-term, but much better for all long-term.

The housing bubble was just that and it burst. People were buying houses with money they did not have, knowing (hoping) that they would be able to sell the houses at a profit. Banks and financial institutions went along and leant the people money. When the merry-go-round stopped, everyone was thrown off.

But, DUH, housing prices are dropping and when prices drop, people buy more.

With all the “toxic” assets out there, banks stopped lending money. Short-term government loans/backing was needed to get the economy going again and there are signs it is beginning to stir.

Any part of any stimulus package that does not impact the economy within the next 12 months is not a stimulus - it is just government spending on a grand scale.

Doing nothing may not have been an option, but doing everything is just plan crazy.

Even forgetting about the inflationary impact of huge government borrowing, GenX, GenY and their children and grandchildren will pay the price, both financially and in their standard of living.

The panic of late last summer and early this year should not be allowed to cause the government to totally ruin the economic future of the nation (burn down the forest).

The United States Treasury will purchase a $5 billion stake in GMAC and lend $1 billion to GM so GM can help with GMAC’s reorganization as a bank holding company.

According to The Liberal New York Times, “GMAC lowered its credit score for financing to 621, which is one point above what is generally considered a subprime loan.” The median credit score for Americans is in the 720-740 range.

GMAC has no plans to offer loans to those with credit ratings at 620 or below. Too risky, I guess – but 621 is okay. Well, you have to draw a line somewhere.

Strange though, two months ago before our tax dollars went to GMAC, GMAC set its loan level at 700. 

GMAC lowered its requirements for loans so GM could sell more cards to people who may not be able to afford them.

So, buy a house you cannot afford and get a government bailout; then buy a car you cannot afford from a partially government owned company and no doubt when you cannot make the payments get a government bailout.

Okay, I will admit it, I am not a good American and while I do not want to speak for my wife, she isn’t either, so I will only comment for me when we would probably be more correct.

I (we) have been very blessed in many, many ways. I am sure many other Americans would say this so that does not make me a bad American.

First, what makes me not a good American is the mortgage on our house is much less than whatever the value may be in the current market. We have lived there for over ten years and have been offered numerous opportunities by financial institutions to take some of the equity out of our house. A few years ago we want to do a total gut remodeling of our kitchen. We thought we had enough money to pay for it, but wanted a cushion just in case. We discussed it and decided to take out a small equity loan, say $25,000. The bank offered us $250,000!

Now we did not take that money and buy icon cars (more on that it a bit), we did not take extra vacations, we did not buy all kinds of electronic gadgets.

Nope, we were bad Americans, we did not put ourselves into debt.

Then there are our cars, again we are bad Americans. Since I like to garden and tinker around the house, I got a big car, a Toyota Matrix, so I can shove all kinds of thing in the back. My wife has a Honda Fit. No gas guzzlers.

Then there are our credit cards. Even in these tight credit times, we keep getting unsolicited offers of credit cards. Yes, we do have balances on our credit cards, but nothing extraordinary. Again, bad, bad Americans.

Speaking only for myself, I did not do my part as an American to put myself so in debt that the government would have to bailout those corporations whom I cannot pay back.

Come to think of it, I am not only a bad American, I am a stupid America. I should have bought a big private plane. Then when I could not make the payment, may be the government would take over my debt.