Friday, August 21, 2009

Cash for clunkers disaster

This program has been simply disgusting. All it proves is that if the government offers to give away money then people will respond. This will go down in history as one of the most egregious examples of government waste. Ray LaHood should be ashamed to his core.

The Transportation Department said Thursday the government will wind down the program on Monday at 8 p.m. EDT. Car buyers can receive rebates of $3,500 or $4,500 for trading in older vehicles for new, more fuel-efficient models.

"It's been a thrill to be part of the best economic news story in America," Secretary Ray LaHood said in a statement. "Now we are working toward an orderly wind down of this very popular program."

7 comments:

ronrasch said...

A perfectly good used car gets demolished to be replaced by a more expensive new car that does get much better mileage. There are a number of bureaucratic missteps to complete the process. Multiply this transaction by a big city full of cars being reprocessed wastefully. Government management of health care multiplies the inefficiency of cash for clunkers by monumental factor

Bob said...

Listening to the spin on CNBC you would think this was THE proof that government programs work wonderfully.

What about the secondary used car market, and the auction market. That's 400k + autos off of those markets. What about having saddled debt on folks who did not have that debt before they bought a depreciating asset. Have they not, to some degree, stolen future purchases into the present? And where did the money come from to help these poor folks buy up? Oh yea, me and you. Don't you feel good now?

Bob

Public Library said...

The $8K home purchase credit is the same lipstick on a pig.

Our Government believes people are better off in debt, with a so-called "stake" in the future. This mantra worked coming out of the depression but it is a disaster now.

People should reject any offers the government throws at them and aim to lead a life debt free. That means no mortgage debt either.

Invest in yourself and your community, not things designed to separate and segregate us from each other like cars and housing. That goes for the products filling up those houses too.

America is in shambles. Our government is reckless and our bankers are thieves.

The book "Life Inc" has an interesting take on how we got to where we are now. It is even more amusing how the government is trying the same policy prescriptions 50+ years on.

"Get housing going, and you get America going". Yes, enslave our working class with debt. A "stake" in the American dream. Whoopee!

One big pile of poppy cock as my grandfather would say.

Public Library said...

Before the Great Depression taking out a mortgage was seen as a bad thing. Something you did to get you through hard times.

This implies you owned the land and therefore could mortgage it out if necessary. When did it become fashionable to take out debt?

When the Government created cheap Federal home loan programs to put people in houses they could not really afford. Sound familiar?

As a nation, we need to wake up and smell the roses.

GaRY said...

I have mixed thoughts on the clunkers. Too many useful used cars were junked to hep the auto industry and probably increase fuel economy. But there were exceptions. On Monday morning I helped tow a Mercury mini-van with 197,000 miles, fatal body rust, and a trashed transmission to a Toyota dealer. The van had to be driven onto the lot to qualify for the clunker cash. We parked just short of the driveway to the dealer, started the van, and drove it a hundred yards with the salesman watching. The old van was destined for the junk yard anyway. My friends got an extra $3500 and a new car.

MW said...

Interesting comment from Rosenberg:
"...a CNW Research poll found that nearly 1 in 4 Cash-for-Clunkers beneficiaries now regret making the decision to buy a new car they had no intention of purchasing just yet — because now they are faced with a huge financial bill to pay. Think about it, nearly 700,000 sales with an average amount to finance of nearly $16,000 means that the government induced the household sector to take on more than $11 billion of new debt. It was an overextended consumer that got us into this financial mess to begin with, and now Uncle Sam just induced the household sector to expand its balance sheet by $11 billion instead of doing the prudent thing, even if at the expense of auto consumption over the near-term, and providing lessons on how to live within our means."

Thought this was worth mentioning as the comments have focused on the effect of destroying productive capacity rather than on consumers adding debt.

Scott Grannis said...

Excellent addition to the post, thanks.

There's just no way this program made sense for anybody. It's just mindless Keynesianism.