Mike Conlon
Senior Instructor
instructor@mywealth.com
First Clunkers. Now refrigerators. And I love Peter Schiff’s “modest proposal” of Dough for Dumps. But where will it end? In the latest round of government intelligence, it has been determined that the appliance makers are the next group that deserve to make more money by the powers that be. Should tax-paying citizens be concerned?
One of the major problems with all of this government “stimulus” is that it is taking the decision-making process out of the hands of individuals and putting it in the hands of elected officials. Why? To keep up unrealistic spending patterns to support businesses. Now don’t get me wrong, I’m all for supporting business, but the government is going about this the wrong way. This is boarder-line socialism! And it will have very negative consequences for the U.S. economy and for companies who "benefit" from these programs. Here’s why:
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(Take a shot!!….Chance to Win a FREE Currency Course Bundle (VALUE: $1300.00!!) by Emailing Us your answer no later than Friday 9AM EST and 3 Names will be randomly picked and named as Winners!! (Must be a blog subscriber) Just as the S&P 500 and the Dow Jones tracks the US Stock market, the US Dollar Index tracks the value of the US Dollar. There are many currencies that make up the US Dollar Index and the Euro is the largest at 57%, which is the second largest? a) CAD Canadian Dollar b) JPY Japanese c) GBP British Pound d) CHF Swiss Franc
First, by providing all of these rebates, potential customers have now become accustomed to receiving government hand-outs and soon it will get to the point where people will not buy large ticket items unless they think they are getting some sort of government deal.
So what’s going to happen when the music stops and the “free money” ends? It’s going to go right back to business as usual again, consumers won’t be spending money they don’t have and the temporary gains received by these companies will all but disappear.
So I could sit here and try to tell you that you should buy companies like General Electric (GE), Whirlpool (WHR), Sears (SHLD), Best Buy (BBY), etc., as they will benefit from these government hand-outs, but that would be contrary to fundamental sanity. The cash for refrigerators program is for “only” 300 million dollars, so the impact will not be that great. So use caution if you are going to buy these stocks based on this program.
But what’s even worse about these programs is that they are being promoted as “good for the environment” because they promote energy efficiency. Well, if I want to become more “green”, I’ll hold onto my dollars until I can afford to buy what I want!
So why can’t the government give me an individual tax break for “going green” and reward me for making the right decisions? Why do all other citizens have to bear the tax burden of my decision to upgrade myself? I can assure you I won’t be sharing my electricity savings with you.
The short answer is because that would take the control away from the bureaucrats and allow citizens to become less dependent on them. Why not just make “permanent” tax credits for taking steps to become more efficient so that people could upgrade to these products when they felt financially secure?
At the end of the day, we are ALL paying now through the expenditure of our tax dollars to go green even though the majority of us are still using the same old stuff. I thought one of the goals of being environmentally responsible was to recycle products?
My grandfather who lived through the great depression, used to say, “Why should I buy a new television? This one works just fine.” It’s a shame how quickly we forget the past.
So if you’re in the market for a new refrigerator you’re in luck, by all means take advantage of the free money. But bear in mind that the money isn’t actually free, and that you’ve already unwittingly paid for someone else’s new house or car.
To learn more about how government programs can affect stocks and your investments, be sure to check out our stock trading and investing 101 courses.
