Continuing my thoughts from yesterday, on Wednesday the US reported a third straight month of Factory Order increase, a sign that things are picking up in the manufacturing sector.
The report was met with mixed results as the Dollar fell and stocks ended slightly off, an unusual occurrence as normally when stocks are down the Dollar is up as Forex Traders usually seek a safe haven respite.
I was watching Fox Business Network and they had an economist on who was analyzing the data and came up with similar conclusions to what I had said yesterday, simply, the reports that are coming out are not reflective of “the whole picture”. So this is the story behind the factory orders data:
About three weeks ago, the US announced a program called “cash for clunkers” which gives people $4,500 for their junk cars towards the purchase of a new car with more than a minimum of 17 Miles Per Gallon.
This program is supposed to encourage “green” purchases to help lower overall carbon monoxide gases, as well as a boost to the ailing auto industry enabling them to see out their old 2008 models to allow for increased production of 2009 models.
The program was launched in “test” areas about two months ago, and was met with wild success and went national two weeks ago. It has been so popular in the two weeks since, that Congress is approving another 2 Billion Dollars towards extending it.
So the result of this is you have people who cannot afford a new car, people who never would have thought of buying a new car, now buying new cars to the rate of about 450,000 new cars in the past two weeks.
And they are doing it for the most part, with their own present and future tax dollars. To me this is not stimulus but rather stupid.
The US government will be in a 13 Trillion Dollar hole next year – 1 Trillion less than the 2007 GDP of the country. They owe China 3 Trillion, Russia 1 Trillion and are poised to pass legislation on healthcare that will send them even further in the red.
