Thursday, August 6, 2009

Coming Soon - "Cash for Sneakers"?

Perhaps some have seen a recent Wall Street Journal editorial that commented on the economics and logic of the "Cash for Clunkers" program; it is subtitled "Let's have a $4,500 subsidy for everything" and can be found here:

In one of the articles I have written, titled "Intervention's Potential Blindspots" which is listed halfway down the Directory Of Articles.

I wrote the following concerning stimulus and intervention programs (point #8):

Setting of precedents – Originally the bailouts were directed toward major banks and brokers under the pretense of having to protect the integrity of the overall financial system. However, as time has gone on, the recipients of aid has expanded into other areas. As the list of recipients widens, so does the rationale for providing more aid…as does the list of those expecting aid. Thus a vicious circle arises. If taken to extremes, basically any business or economic entity could claim duress because of poor economic conditions, and thus need – as well as claim entitlement for – aid. Some of the current arguments for providing intervention are exceedingly convoluted and weak. Despite these shortcomings, they are being given credence (and in many cases funding), thereby establishing a weak argumentative standard that can be copied and exploited by other parties. The mere fact that certain of the arguments are so fatuous relatively early in the “entitlement” cycle bodes very poorly, signaling that by the aforementioned vicious cycle effect the entitlements “spectrum” may prove to be very wide.


Unfortunately, the entitlements spectrum is "widening" as time goes on, as mentioned in my article. Which leads one to wonder how, or if, the stimulus entitlements spectrum will be limited.

Recently I saw the phrase "Cash for Sneakers" mentioned ~

SPX at 999.69 as this post is written

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