These Colours Will Not Last

Obama's 'Cash for Clunkers' economic recovery plan for the automotive industry in the USA fell flat on its face. He managed to push years of new auto sales into one month, and as a result, auto sales have been down ever since. I am afraid that something similar is going to happen on this side of the border. And this is the problem with government stimulus. It interferes in natural market forces and creates false numbers that are not based in reality, all while the economy is trying to repair itself.

I am talking about the 'Home Owner Renovation Tax Credit'. I have been a direct benefactor of this initiative as my business has thrived ever since it was introduced. I just experienced my second best quarter in the last ten years and this while I am working at less than top speed with a defunct hip. This is all fine and good for as long as it lasts, but come early next year, when it expires, we will see if anyone is still interested in renovating or re-decorating their homes when there is no tax advantage to doing so.

I too have taken advantage of this incentive as I will have spent close to $20,000.00 on my own home. Why are others any different than me when I am thinking that there is no other better time to do this. I will not do anything of the sort next year, and perhaps neither will anyone else. If my numbers will go down next year, so will everyone else's and that means that there will be a downturn in the economy. That is why I do not like these programs. They give false hope, like the markets of today give false hope.

Today, stocks are selling at 27 times earnings when according to where we are at in the so called recovery, they should be around 15 times. I am anticipating a crash very soon. They usually come in October anyways so why not bring it on now. It is inevitable because investors are led to believe we are in a recovery when there are not real numbers to back up that fact.
The gov. stimulus programs dupe us into thinking that all is well, when it is far from it. These colours will not last.