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Ok, this goes past the previous record of insanity set when the auto companies were nationalized. We’ve bought the companies and, in effect, artificially propped them up because they couldn’t function in a normal market by themselves.
Shouldn’t that be enough? Apparently not. The US government is now giving consumers cash to purchase new vehicles in an attempt to stimulate sales.
Sales were low and the companies ran out of money, so we gave them billions of dollars to keep going. Now they’re getting artificially generated and inflated sales to help keep them going.
First, an incentive isn’t a bad idea by itself, but when added to this existing bailout it seems assinine. I would have much rather seen a larger consumer incentive rather than giving billions in free bailout money (coupled with forced restructuring).
Second, after the bailout, which likely means the comapnies won’t actually shrink as far as they really should given market conditions, and now artificially inflating sales, we are left with a massive company in a bubble again. It doesn’t need to react to the market, it can continue it’s old ways, just scaled down a bit.