Our Government Declares (Economic) War On Japan?

General Motors announced this week that anybody that owns a Toyota vehicle will receive a $1,000 “incentive” to trade said vehicle in for a GM product.

Editor’s Note:  Ford has since matched the $1000 offer.

“We decided to make this offer after receiving many e-mails and calls from our dealers, who have been approached by Toyota customers asking for help,” GM said in a statement. The offers will run through the end of February.

The supposed e-mails and calls mentioned are in relation to the recent widespread recall on many Toyota products due to a faulty gas pedal that has led to at least one death. Toyota is working feverishly to find a fix but has yet to do so which has stopped production and sales of their most popular models including the Camry and Corolla.(as of this writing, a fix has been announced)

If this were General Motors declaring “war” on Toyota at their most vulnerable I would say go for it. I’m all about free markets and the best product usually succeeds. Hence Toyota outsells most if not all GM car models. But that is not what is happening here.

General Motors is now majority-owned by the Federal Government and Barack Obama is essentially the C.E.O. To believe that GM “CEO” Edward Whitacre Jr. didn’t get a thumbs up from President Obama on this is far beyond naive, it borders on gullible.

You don’t have to be a political wonk to know about Obama’s ties to Unions (SEIU Chairman Andy Stern visits the White House more than most cabinet members). This move is not in the best interest of the USA; this is a bone being thrown to the UAW (possibly for the threat of taxing “Cadillac” ((Irony)) health care plans). This $1,000 “bribe” is nothing more than a “tariff” on Toyota cars that are already made here in the USA.

Another aspect of this government program is that it is a direct slap in the face of Japan, a friendly trade partner. In the least this is nothing other than a ploy to attract the “Buy American” crowd with an election coming up in 10 months.At it’s worst it could cause friction with Japan who could possibly lower prices on goods thus muddying the outlook for the few American goods that are still manufactured here.

What the government is doing here is protectionism pure and simple and directly assaults any freedoms that our markets still have. Consumers buy goods because they see it as a means to their happiness and achieving an end that ultimately benefits them. The constant onslaught of gimmicks and schemes dreamed up by a Government that is in the spending business as opposed to the earning business, only confuses it’s citizens.

What are the repercussions? Here we will see a miniature version of the “Cash for Clunkers” scheme. American consumers who are in a vehicle that may be paid off, or close to it, are now enticed to start a new loan in an economy that is far from healthy (check this fact filled article on the state of our economy that you will not hear from the broadcast media). I stand by a prediction I made that with the unemployment rate on the rise these government schemes enticing us to finance cars will cause a rash of repossessions starting as early as this summer. This is another bad idea that will lead to economic trouble just like Cash for Clunkers and the Federal Housing Tax Credits. And as people get excited about free money somebody has to ask the question:

Who is paying for this program?

 


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