Tom Hayes: CNNMoney.com gets "Cash for Clunkers" wrong

You'd expect an author at CNNMoney.com to understand the relationship between cashflow and business success.  You'd expect an editor to send this article back to re-write either for more research or more objectivity.  Here was the basis of Peter Valdes-Dapena's misguided assessment:

"...majority of sales would have taken place anyway at some time in the last half of 2009, according to Edmunds.com"

So? This isn't news, and it misses the point of the Cash for Clunkers initiative.

Valdes-Dapena and/or his editors may think selling cars sooner rather than later is a valid reason to criticize the program, but as any businessman can tell you: success in business is about cash flow. Any retail operation needs to keep their stock turning over. At a time when the inventory was sitting idle on the lots this program provided a much needed infusion, enabling dealers to pay staff, utilities, creditors, and suppliers.

Did the Cash for Clunkers program solve the economic crisis? Of course not.  Nor was it intended to. The goal was simple: turn over inventory in one segment of the industry - to keep dealerships from failing in huge numbers before the manufacturers could recover. Save some jobs and hopefully avert a catastrophic spread of deterioration in the auto industry that would further delay economic recovery.

The article may fool a person with no entrepreneurial experience, but it reflects either a shallow grasp of money and business or a thinly-veiled attack on the government's attempt to avert a breakdown in the delivery mechanism of an industry it was actively seeking to save - without proposing any alternative that might have been even marginally effective.

The public may think "Cash for Clunkers" was as simple as just selling cars, the author obviously wants to, but the reality is much subtler. Edmunds didn't surprise anybody (except maybe CNNMoney.com staff) with the news that one of the primary effects was to accelerate the decisions and purchases:

In business, my friends, timing is everything.

 
Thomas Hayes is an entrepreneur, journalist, and political analyst who contributes regularly to a host of web sites on topics ranging from economics and politics to culture and community.

Kofi Annan on The Need For Understanding In The Global Economic Crisis

Former UN head Kofi Annan is sorely missed and this speech is one reason why. Here's Kofi Annan his the nail on the head when he says that people see trillions going to big companies and rich people and lose confidence in Government. He talks about the global economic crisis at the Davos Forum with clarity and with care.

World Bank Chief Economist: World Faces "Worst Recession Since The Great Depression"

World Bank Chief Economist: World Faces "Worst Recession Since The Great Depression": “Global oil demand will collapse next year and commodities will not return to the highs they reached this summer in the foreseeable future, two authoritative reports said on Tuesday as they forecast a long and painful worldwide recession.

The stark conclusions came as the World Bank's chief economist predicted that the world faced "the worst recession since the Great Depression".

The US energy department said global oil demand will fall this year and next, marking the first two consecutive years' decline in 30 years.

"The increasing likelihood of a prolonged global economic downturn continues to dominate market perceptions, putting downward pressure on oil prices," it said, forecasting that demand would drop 50,000 barrels a day this year and a hefty 450,000 b/d in 2009. US oil demand will drop next year to the lowest level in 11 years.”

If you had survived The Great Depression, which campaign would you volunteer for?

You tell me.

I'm with Charles.

more about "If you had survived The Great Depression...", posted with vodpod

Open Letter to Obama Supporters

Call McCain's choices foolish if you choose to; question his judgment or decry his decisions; cite the choices he's made in comparison to other paths he could have taken, but don't call John McCain a coward, or be goaded into the sort of personal attacks you find problematic coming from the other side.

With over 150,000 jobs lost last month and the stock market in a veritable free-fall it’s no surprise that the economy is seen by many voters as a priority for our next president. It doesn’t take advisors for McCain to know that’s undermining his chances. His campaign is struggling to find any other topic that will eat into the time that electronic and print media devote to the economy. They’re “looking forward to turning the page on the financial crisis.” McCain's mistake is in heeding the wrong advice during the campaign, as he evidently did on deregulation in previous years.

"I'm not trying to excuse such behaviors, particularly since he asserted early on that he'd avoid them. The choice was his. Spinning the record of one's opponent was to be expected - this is politics, and a lot is at stake. My point is: the attacks, be they Palin's words, electronic ads, or the phrases and style in the debate are evidence that McCain has picked the wrong team. His campaign advisors have put him farther behind in the polls than he ever imagined he'd be - and don't forget, any savvy GOP insider knew the odds were bleak following the Bush administration even before the economy belly flopped."

The campaign reflects either the wishes of its leader or his inability to get his orders carried out - and in either case the trend is increasingly to go negative, to attack another Senator, to practice the divisive politics of smear mongering and character assassination. But both Biden and Obama have counseled against descending into adopting those tactics, and they're right.

"You may not like what John McCain stands for. You may deplore the strategies and tactics that are being employed with his approval (explicitly or tacitly.) You may question the motivation and/or goals of McCain and his advisors. You may not trust him based on something you've read, or overheard, or because you think his choice of a running mate is evidence of poor judgment. You may think his voting record is disastrous, or that he's simply too closely aligned with an administration you feel hasn't served the country well. But if you don't approve of the various and sundry attacks aimed at Senator Barack Obama for political reasons you should not - must not - be goaded into adopting them yourself."

Frankly, I find the use of Rovian tactics - the same tactics that caused him to defer to George Bush in 2000 - disappointing, and I hope McCain uses the debate on October 15th to reset the rhetoric rather than let his last campaign taint his legacy. He can take back control, or he can let the advisors exert their poisonous influence in a campaign that's no longer reflective of the integrity and honor we once associated with John McCain.

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