Thursday, August 13, 2009

France and Germany out of Recession: Sites Own Cash for Clunkers

It seems that the stimulus in France and Germany is starting to work while ours seems to still be floundering.

Europe's two biggest economies each saw growth of 0.3 percent from the previous three-month period, surprising analysts' expectations for equivalent declines and technically ending their worst recession in decades.

They site their own cash for clunkers program as part of the cause

Countries across Europe have established so-called "cash for clunkers" programs in the hope that wary consumers will trade in their old cars for newer and more efficient models — in the process kick-starting the economy.

Unicredit economist Andreas Rees reckons that the export-dependent auto sector contributed 0.25 percentage point to overall German GDP growth.

Yup, when their economies slowed France and Germany propped up their big growth auto business. Our stimulus should have created a payroll tax holiday or included a giant cash for clunkers clause but for home appliances and other fairly expensive middle class goods to target the demand side of the equation.

It is so sad that the supposedly socialist Germans and French created a business friendly stimulus while our stimulus was just a big time giveaway to special interests. Maybe we should import Angela Merkel and Nicolas Sarkozy to write any further stimulus bills.

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