This is the appearance of clear coat failure (caused by UV exposure and oxidation). It cannot be fixed by polishing. Discoloured and heavily oxidised paintwork can often be restored (to a certain extent). Restoration is only possible up to the point where the failure of the clear coat begins (white stained areas).
However, there are some clear coats, such as those used in the factory, that dry sufficiently to start polishing in as little as two hours. I put 3 base coats on the bonnet of my car and 3 clear coats, then sanded it with 1000 grit and polished it, but the result was horrible. The colour coat is just for colour; it is not stabilised for UV or exposure to air and pollution, and once it has been, it's only a matter of time before it fails too. The correct way to correct the problem is to sand off the clear coat, apply a coat of red and then re-clear.
Generally, you would sand the surface, apply a coat of colour, and then move on to the clear coats once the colour has flashed. Now Jaded, the SEMA pro-touring Mustang, has some minor flaws in the clear coat, mostly caused by the frantic pace at which Kevin had to finish the car for the show. It can be sanded for adhesion and a new clear coat can be sprayed over the base, but it will never set, and will always sit on top of the old clear on the edges. This method also gives you a pure clear coat to buff and rub off without having to worry about affecting the colour at all.
However, many cars from the 80's and 90's have a clear coat that is coming off in chunks, can I fix this by spraying more clear coat on the bonnet to make it look better even though I have already polished it? Once the clear coat burns off, you'll have to sand it all off and apply another coat of colour, then clear again. The wavy line represents where the new clear coat should extend too, so you have plenty of room to blend. Next, mix a 50 e colour and a 50 e compatible transparent (after activating each of them separately) and apply another layer. The new clear coat should extend beyond the new colour so that you have enough room to polish without the new colour's paint coming off.
On the wing, the two solid lines represent the base coats of paint I would apply, and the two dotted lines are a blend coat and a pressure coat of colour.