An interesting take on "Cash for Clunkers"

[Grunthos]

I must admit, I didn't think of this particular angle on the whole stupid fiasco (which is reportedly boosting sales on many of Government Motors' biggest competitors, 4 of the 5 top-C4C sellers being Japanese cars), but having read it, it makes perfect sense.

I was past 40 before I could afford to buy my first factory-new car.

Everything I'd driven up til then, would have been unavailable for me to buy had this program been in place for the first 25 years of my driving life.

If I recall correctly, my father, in his 83 years of life, has only ever owned three brand-new cars. The rest, he bought used.

August 2, 2009
The Madness of King Barack I
I turned a jaundiced eye toward the Cash For Clunkers program when I first heard of it. It seemed like just another bit of progressive feel-good theater designed to make the ecomaniacs feel splendid about themselves. That being, of course, the entire raison d'etre of a progressive in the first place. I assumed the barriers to entry for this enterprise, the red tape and myriad of if/thens, would make the program just another liberal circle jerk. Cheap vaudeville for the True Believers.

Therefore I was surprised when I read that no only was the program hugely successful in enticing folks to buy new fuel efficient cars, but it was so goddamn successful they'd run out of the first billion dollars of taxpayer money and needed an infusion of another 2 billion. All the while killing/unkilling the program as "too fucking successful," to quote the administration's Demolition Derby Czar.

Two things about this program drive me absolutely insane: first, anyone who can afford payments on a new vehicle doesn't need my fucking tax dollars to make that happen. $4500 rebate for your clunker? Better be prepared to pay sticker price less $4500 for that new vehicle, sucker. And anyone who can't beat a salesman down $4500 on a new car without a trade in is a fucking moron.

Second, and most egregious, is the fact that these "clunkers" are being willfully destroyed to prevent their use forevermore. Here is the infamous video you've all seen of a Volvo(!) being destroyed with a lethal dose of sodium silicate:

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You poor people who voted for Obama? He just fucked you again. Poor people can't afford $500 car payments even with a $4500 taxpayer bailout. All those "clunkers"? They were traditionally immediately auctioned into the bottom rungs of the used car market. High school and college kids looking for a first car? Poor folk who can only afford a $500 to $1500 car, where the dealer carries the paper and you pay him weekly because your credit resembles that of the Weimar Republic circa 1922? You're boned, Patsy.

It's just like the old trope of burning a village to save it. (I really despise the assholes who perpetrated My Lai. Not only for what they did, but for giving the Left 40 years worth of ammunition, during which they endlessly and breathlessly proclaimed that that was all we ever did in Vietnam. Besides bayoneting babies and raping women, of course).

A government that purposefully destroys perfectly serviceable consumer goods, inexpensive goods that most benefit the poorest and most desperate members of society, is a government gone so fucking mad it makes the ravings of tertiary syphilis look wholesome in comparison.

This singular act belies any affectation of good faith, compassion, or humanity this craven and diabolical regime presumes. Barack Obama would rather have poor people beggar a damn ride to work, or walk holes in their shoes, than drive an affordable vehicle that does not meet his arbitrary and capricious definition of environmental friendliness.

I work in a county full of poor country sods, black and white. Almost to a person they drive "clunkers". And there is a reason they drive pickup trucks from the sixties, seventies, eighties. And it's not for ironic reasons, or because they enjoy driving a "classic". It's because they bought that truck when they were 25 years old, and have babied it their entire lives and they never want to buy another vehicle, unless it's to buy mama a Buick when she's 65 to drive to the Publix and the hairdresser once a week. These poor bastards just had a goodly amount of the affordable vehicle market yanked out from under their feet by a megalomaniacal prick.

I suppose King Barack I wants them to ride public transportation. Well, they don't have fucking buses in the country, or the small towns. That's an urban construct designed to help enslave the city proles. Hamlet proles need a cheap car, you miserable wretches.

My indifference to this contemptible bastard has grown to concern, to disgust, to loathing. He isn't fit to carry a house framer's tool belt. He is a fraud, a despicable fraud, who would build his empire upon the bones of the weakest, most vulnerable segment of society as he engineers us into the ditch.

I cannot wait to vote againt this son of a bitch again.


The man has a point...

http://www.velociworld.com/Velociblog/Oldvelocity/003447.html

[Tonus]

I hadn't thought of that either. What's more, by destroying them you decrease supply. Quick economics quiz-- what happens to the price of a commodity when you decrease the supply?

[dooge1992]

Well Ford is and the other American companies are releasing a bunch of new fuel efficient vehicles for a relatively cheap price in the coming year. (Specifically the Ford Fiesta which is coming from Europe.) I guess the idea is to make less supply of cars and therefore make people buy from, hopefully, American auto manufacturers. So far the system isn't showing promise.

[Grunthos]

Seeing as the program burns through a billion dollars a week, and is selling primarily Japanese-made cars, I don't think it's going to do that very well.

By the way, Nissan announced this week that they will beat Chevy to the punch with an all-electric vehicle. Due in showrooms for the 2010 model year.

Go Go Go-vernment Motors.

[Shady]

Seeing as the program burns through a billion dollars a week, and is selling primarily Japanese-made cars, I don't think it's going to do that very well.

How is it burning through a billion dollars a week when NONE of the dealerships have been paid by the government for any of their product that has left the lots?

And to add insult to injury, dealerships are now being made into tax collectors for the state. Some states are now taking their cut of back taxes (state income, et al) out of the government funds that are supposed to eventually be on the way to dealerships as reimbursement.

Awesome. Just awesome.

[Tonus]

How is it burning through a billion dollars a week when NONE of the dealerships have been paid by the government for any of their product that has left the lots?
Government burning its way through cash it doesn't have? That's a new one.

That reminds me of what California recently did, paying creditors with IOUs and then demanding taxes on the "payments" even though banks weren't accepting the IOUs. Yes, let's give government EVEN MORE OF OUR MONEY, since they've shown how well they manage it.

[Tonus]

Dealerships in New York are dropping the program. (http://www.nydailynews.com/money/2009/08/19/2009-08-19_hundreds_of_ny_auto_dealers_withdraw_from_clunk ers_program.html) Can anyone guess why?

Hundreds of New York auto dealers withdraw from 'Cash for Clunkers' program

Dozens of area car dealerships have put the brakes on the popular "Cash for Clunkers (http://www.nydailynews.com/topics/Car+Allowance+Rebate+System)" program, citing bureaucratic delays in getting reimbursed by the feds.


"Many of our dealers decided over the weekend not to offer the program anymore," said Mark Schienberg, president of the Greater New York Automobile Dealers Association (http://www.nydailynews.com/topics/Greater+New+York+Automobile+Dealers+Association), which represents 450 metro area dealerships, including 175 in the city.

"Dealers have shelled out hundreds of thousands of dollars in rebates to consumers since the program began six weeks ago," he said. But "only a very small percentage of that money has been paid back, leaving these small-business owners too cash-strapped to continue offering consumers the discounts."



The program offers up to $4,500 to people who trade in vehicles getting 18 mpg or less for a newer, fuel-efficient car or truck.


Dealers pay the $4,500 rebates out of pocket, then must wait to be reimbursed by the government. Administrative snags and heavy paperwork have created a backlog of unpaid claims. Several auto groups are suggesting the federal government change the program so that a customer's new car isn't delivered until the government reimburses the dealers.

(http://www.nydailynews.com/topics/Ray+LaHood)
Transportation Secretary Ray LaHood (http://www.nydailynews.com/topics/Ray+LaHood) said yesterday that dealers will be repaid for the clunker deals they have completed. "I know dealers are frustrated. They're going to get their money," he said, urging patience.

As of yesterday, auto dealers made clunker deals worth $1.81 billion, resulting in 435,102 new car sales, according to the DOT.


The brisk trades are expected to exhaust the program's $3 billion in funds by early September.
This is a good example of how government fools people by shifting the cost burden. The program is "popular" and leading to massive auto sales as consumers take advantage of the huge rebates. They don't feel the cash crunch when the government screws up the program-- auto dealers do. I can see where the public loves this program, since it allows them a big trade-in rebate on a new car, and if the rebate falls through, someone else pays for it!



These are the same people who want to take over the health insurance market and keep telling you that it will drive down costs and provide better care.

[Diniden]

Well Ford is and the other American companies are releasing a bunch of new fuel efficient vehicles for a relatively cheap price in the coming year. (Specifically the Ford Fiesta which is coming from Europe.) I guess the idea is to make less supply of cars and therefore make people buy from, hopefully, American auto manufacturers. So far the system isn't showing promise.

What can be considered a relatively cheap price ($9k-$14k) for middle class america is an outrageous price for those not in the middle class or for those who are already trying to just afford a home. I know some people who have to live on about $14k a year for two people (living in the same place). $450 a month for a living space = $5400. So, that leaves $8600 for medical, emergencies, food, gas, and other little necessities that always arise in life for two individuals.

Give that a thought and try to budget just living for a whole year for two people on that amount. Then try considering getting a "cheap" car.

The conclusion can only be: "impossible unless I'd rather not eat or I'd live in my new car".

For those of us with security in someone or something being able to provide our "middle class status" or higher, it's hard to think of living on tiny incomes. Most of us worry about not getting to do "fun things" with our amount of income, but because of that we miss the fact that some of us worry about "not getting to eat three meals of day" because of their income. Little changes in a structure of how someone is barely living can be the straw that breaks the camels back.

[DDjerk]

This program was clearly not thought through as well as it should have been. Whats the point of getting new cars out there if people still don't have jobs? "Yey I save 20 bucks a week on gas but I still can't go anywhere because I was layed off." Top priority needs to shift towards jobs and not better fuel economy.

This is having an adverse affect on jobs also. I read an article that salvage yard have taken a huge hit because of the program. They can't even get these cars to sell for scraps. Why destroy something if someone can still benefit from it?

[Grunthos]

The junk yard I frequent for parts for my hobby car has a ton of these cars - - the engine blocks are painted blue, and they won't sell any parts so marked (because they were intentionally wrecked) but the rest of the cars are absolutely still strippable.

[DDjerk]

The junk yard I frequent for parts for my hobby car has a ton of these cars - - the engine blocks are painted blue, and they won't sell any parts so marked (because they were intentionally wrecked) but the rest of the cars are absolutely still strippable.

The article I read said the engine from a car makes up 60% of junkyard value. That's a lot of a cut to take.

[Grunthos]

That's very true. Even if they get the cars for nothing, it is an incredible waste of money on every front... including for those people who would have bought used parts for repairs, but are now forced to buy new at inflated dealership prices.

Dealers make very little money on new car sales (margins are only a few percent) but make the bluk of their income on parts (85% margin is typical) and on service (where you pay roughly 2x-3x what the mechanics' compensation costs.)

[Tonus]

Cash for Clunkers, final verdict? Disaster. (http://hotair.com/archives/2009/08/24/cash-for-clunkers-rip-a-waste-of-money-and-assets/)

The long-term effects would be felt in any event. But the hopes for a short term economic boost that would generate good PR have vanished, with most of the $3 billion still tied up in a bureaucratic black hole that will generate additional costs as more government workers (such as FAA flight controllers?!?!?) are diverted to help manage this administrative nightmare. Meanwhile, auto dealerships continue to wait for their money to be sent to them, knowing that they lose potential value each and every day that their money is held up by the government.

It bears repeating: this is the same government that wants to run health care.

EDIT: Peter Schiff takes the Cash for Clunkers program to its (il)logical conclusion (http://seekingalpha.com/article/157686-forget-cash-for-clunkers-try-dough-for-dumps) and explains why the whole program was, for lack of a better word, stupid.