Comment by nimbius | Hacker News Reader

Comment by nimbius | Hacker News Reader

hindsight is 20/20, but does anyone recall some of the ludicrous things we actually did to prop up some of our structurally too-big-to-fail institutions?

as an automotive mechanic the one institution during this crisis that stuck out in my mind was "cash for clunkers." Essentially the government subsidized ordinary americans to trade in whatever car they had so long as it got relatively poor gas mileage and wasnt more than 25 years old. This was a 3 billion dollar program designed largely to get anericans to start spending money on cars --any car-- by bribing them to destroy their own car.

Two studies basically declared the program a failure. https://en.wikipedia.org/wiki/Car_Allowance_Rebate_System

But I have still a deep sense of chagrin when I remember mixing sandy batches of "engine disablement compound" and pouring them directly into a perfectly good truck or minivan. Sure, it might not win an award for climate change but these cheap cars and trucks could have gotten a single mother to and from the grocery store or school once or twice a week as needed. We intentionally destroyed them all. For those thinking the process was sane and simple, it wasnt. Doing this is loud, dirty, and throws a cloud of smoke you can see for a mile or more.

https://www.youtube.com/watch?v=M2Sz5vtfanw

We were even so desperate to fix the economy that the government basically started cutting people checks. The idea being they would spend the money on a shopping trip to the mall or something... https://en.wikipedia.org/wiki/Economic_Stimulus_Act_of_2008

I spent my check on groceries when I got it, and put the rest into savings.

"I spent my check on groceries when I got it, and put the rest into savings."

That is entirely appropriate. When the economy is depressed, we want people to both spend more and pay off any debts they might have, so your mix of spending and savings is just what the economy needed. The boost to consumption helps the economy get going again. And to the extent that people are paying off debts, their debts are moved on to the ledger of the government. Since the government pays a lower interest rate than private citizens, this reduces the overall burdens on the economy, and, again, helps the economy get going again. Both aspects of this help.

Ideally people spend all the stimulus money they get rather than saving it.

I think the point he is making is that he didn't "spend more".

He bought groceries, which he would have done any other week. If your economic stimulus bill is intended to help people buy groceries, then you ought to appropriately name it a economic relief bill.

Wasn't it Steve Keen (Australian economist) who wanted the cheque to go to debt forgiveness before cash and for that to get the funds that ultimately went into QE?

I'm hazy on the details now but I think the idea was it would both help the citizens and also help with deleveraging the banks.

He seemed to be cropping up in the media every other day in 09.

This isn't a boost to consumption, it's hoarding cash. Buying just the bare essentials.

There may have been some missteps there, but for the most part I think Obama's problem was he was too timid to seriously hold anyone's feet to the fire and too anxious to restore the status quo ante.

Plus congress decided to start the obstruction program so it was hard to get anything passed.

Yes, but in the two years he had total control he kept soft-pedaling all his proposals and waiting around for the phantom centrist Republicans.

agreed, he was sadly naive in waiting for reasonable treatment.

I think it's an open question how much was naivety and how much was a genuinely conservative bent.

For anyone interested in this line of thinking, I highly recommend reading Ron Suskind's "Confidence Men: Wall Street, Washington, and the Education of a President". [1]

As a Washingtonian, I can safely say that there are many actors who prefer the status quo, however flawed it might be, to an unknown other.

[1] http://ronsuskind.com/books/confidence-men/

I remember Mark Ames saying that one was of interest.

You alluded to it in your post, but an interesting side effect of Cash For Clunkers was that there is an entire set of model years basically missing from the used car market.

The people most likely to take advantage of the program were those who liked having new or nearly new cars, so the cars that got destroyed were actually on the newer end of the used car spectrum.

So then when people such as myself, who have no problem driving an older vehicle, went to upgrade, the cars weren't there.

I'm still driving a 1995 Pontiac Grand Prix largely because when I would have been interested in a cheap upgrade there weren't any moderately used cars to be found. At this point, I just plan to keep driving it until it finally gives out on me. It's lasted me this long, so why not?

Re: We were even so desperate to fix the economy that the government basically started cutting people checks.

That's pretty much how Keynesian economics is supposed to work: the gov't saves up during good times and distributes cash during bad times to get people to consume again. Otherwise, economies can get stuck in a circular rut where nobody is spending because they have no jobs, and there are no jobs because nobody is spending. (The problem is politicians don't bother to pay down debt during good times.)

Cash for clunkers is still going on in many European countries.

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