Is cash for clunker a flunker or is GM failing yet again?

Just recently Free exchange posted what it had thought at a minimum was proof that cash for clunkers was a program that had “very little to provide anything like a sustainable boost to demand,” since  forecasts expect auto sales to nose dive 60% for the month of September.

If that is the case, then why has GM decided to increase production at three plants, restoring 2400 jobs that had been lost?

Cash for clunkers may have been able to clear GM’s inventory cycle,  but replenishing it so quickly may seem optimistic.  For a such a fragile company, GM shouldn’t have such sunny expectations for the auto market.  If the economy quickly recovers but then slows down, we may see GM heading back to capital hill.

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