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Thread: Cash for Clunkers con

  1. #1
    Vulture of The Western World Eric's Avatar
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    Cash for Clunkers con

    Of course the "cash for clunkers" giveaway is popular. The government is paying people to buy cars - and subsidizing the "sale" of cars, thereby temporarily improving the fortunes of the auto industry.

    But, is the program a success?

    If the criteria is political, the answer would be yes - at least in the short term. Thousands of people have lept into the breach to grab their handful of free government money. No surprise there. It's not often that Uncle Sam gives average people serious cash as opposed to taking it out of their pockets. Only a fool would leave that Old Beast parked in the back yard to rot for another 10 years when all you have to do is break out the jumper cables and a can of ether and gimp it down to your local new car dealership and swap it out for $4,500 toward the purchase of a nice new ride.

    Except, of course, it's these same individuals who have been taxed up and down the streets to provide the revenue that Uncle Sam then generously returns a portion of via the "clunker credit."

    And, we're grateful for this!

    It also probably hasn't occurred to the people trading in their "clunkers" for new cars that they are voluntarily signing up for a slew of new and higher taxes, too. By getting people out of paid-for and low-value older cars, the government knows it can extract a fortune in new sales and upticked personal property taxes.

    Insurance companies are rubbing their hands together also, no doubt.

    People of limited means trying to live within their means, on the other hand, are probably not. The pool of affordable transpo has just been reduced. Not just the total number of older cars - but also the availability of second-hand parts to keep the remaining still-operable older cars operable. Every car turned in under the clunker program must be "recycled" - that is, destroyed. This will exert additional cost-of-ownership pressure on the remaining older cars not crushed - and thus, on the people of limited means who depend on them to get around (and who are not interested in a $500 per month new car payment).

    To paraphrase the Queen of the Bourbons: Let them take the bus!

    Meanwhile, the car industry.

    It is indeed moving cars again. But that is not quite the same thing as selling them. What is happening is the government giveaway is helping to clear out the stacked-up inventory of brand-new cars that have been collecting dust on dealer's lots for months now. This gives the appearance of a recovery but once the giveaway goes away, so in all likelihood will the "recovery." And since Uncle Obama can't (we think) provide an endless 20 percent or so government-funded discount off the MSRP of every new car purchase, at some point, the rush to "buy" will be over.

    Then we are back to where we were - only the government (meaning, us) is now $3 billion lighter ($1 billion plus the additional $2 billion recently approved to finance the giveaway).

    It's clever shell game, but ultimately, it's still just a large-scale con that's no different in principle from what you'd find going on in a Brooklyn back alley.

    Nothing of real value has been added to the economy. Funds have merely been shifted and transferred. Taxpayers to taxpayers, taxpayer to car dealer, government to car dealer to car company.

    Eventually, the music stops and the con is exposed.

    Some, it's true, do benefit - as is always the case when it comes to government giveaways.

    But in the end, most of us lose.
    Last edited by Eric; 08-09-2009 at 08:18 AM.

  2. #2
    Senior Member DonTom's Avatar
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    Quote Originally Posted by Eric View Post
    Nothing of real value has been added to the economy.
    The economy runs on pure Bullshit. It's unreasonable to expect "real value". The most important thing is for people to believe the economy is getting better and then it will.

    IMO, this program will help a little and we can use all the help we can get. Especially if you wanna get all that money back that you lost.

    But I am not sure if I want the economy to get all that much better. At least not for myself. A better economy will mean higher gasoline prices as well as higher prices for just about anything that costs some bucks.

    BTW, we are taking a RV trip up to Alberta next month, First to Calgary and Edmonton and then down through Jasper National Park.

    Gas in Canada is already more expensive than here ($3.10 or so for 87 now in the SF area) and I will have a 70 gallon tank to fill up almost every day.

    When the gas demand goes up, you will know we left on our RV trip!

    BTW, I should be able to get on-line from just about anywhere during the entire trip. I now have Verizon Wireless Broadband with a little HP1151NR that costs me $60.00 per month for 5 GB. But it costs more when used from Canada (more than two bucks per MB).

    -Don- SSF, CA

  3. #3
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    Great article and summary of the evil of Cash for Clunkers.

    I don't believe for a minute that this program is going to end. When was the last time that a government program was eliminated, except for, say something constitutionally authorized, like a defense program? The rats in Congress simply do not operate that way.

    We are going to be stuck with this program until this economy throws another rod.

    The only winners in this game are car dealers and the idiots who absolutely wanted to trade their perfectly running car that they were still paying for to have its engine destroyed at the order of some shyster crook in dealer management in the back by the car wash guy at Rip U Off Hyundai. The other winner, as Eric pointed out is government, who will snare more people into their idiotic mass transit systems.

    What this program will end up doing eventually is raising the price of cars by $4000.00 in both the new and used markets since the rebate is passed through the dealers. To keep the shine on the program, the government will have to double the size of the rebates to keep up showroom traffic. It is unlikely that will happen. What will likely happen is that things will return to a more normal market as people will likely be taking more care of the cars they have, as the relative strength of the rebate diminishes.

    AS Eric pointed out, this cheesy sounding "Cash For Clunkers" program could have only be written by a Democratic-leaning or a pea brained Chimponian new car dealer is going to hurt poor people disproportionately. Cash for Clunkers needs to be retired with the Polyester suit and plastic wing-tip shoes.
    Last edited by swamprat; 08-09-2009 at 10:22 AM.

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    Quote Originally Posted by DonTom View Post
    The economy runs on pure Bullshit. It's unreasonable to expect "real value". The most important thing is for people to believe the economy is getting better and then it will.

    IMO, this program will help a little and we can use all the help we can get. Especially if you wanna get all that money back that you lost.

    But I am not sure if I want the economy to get all that much better. At least not for myself. A better economy will mean higher gasoline prices as well as higher prices for just about anything that costs some bucks.

    -Don- SSF, CA
    You hit that right on the head. With the money sitting around waiting to be loaned, prices are set to double in a short time. Maybe even triple. It won't just affect things that cost a lot of money this time around. Everything and everybody will be hit. As a result, any recovery will likely last no more than a year or two before it crashes again.

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    Cash for Clunkers another view

    By Bob Gordon
    President and Co-publisher
    The Auto Channel

    Boy do I feel like a disloyal jerk...my 1992 Volvo with 210,000 miles will be turned-in for cash as a clunker against the purchase of a new hybrid SUV (improvement of 11 MPG thank-you). Yeah I know she isn’t what she used to be (but hey who is?), and I know that continuing to use her everyday is really pushing our luck, and that now she is worth more as the clunker that she is than as a rat hole for mechanic’s expenses, ok that’s the reality.

    But do I feel good and proud and excited about my new super deluxe car…NO! I can only think of some grease monkey at the dealership smiling with joy as she/he pours a government prescribed poison into my trusty steed’s gut and then revving her over her redline…until her heart stops...how sad.

    I have never before felt this way when disposing of an old car of mine...is it because I am older or is it because of the definitive finality of this ignominious end for a car that has been more than terrific to my family over these past 17 years?

    My turbo charged, leather interior-ed, power window-ed old girl still has most of her original parts that were stuffed into her in Gothenburg 18 years ago, and her turbo still purrs and she can still cut a mean corner…but enough of these maudlin thoughts…I have to think positively right now…hmmm, maybe her steel will end up in a new life saving medical device or it will end up in the bomb that rids our planet of the vermin that exist here…I can only hope.

    When I drive down the road over the next two decades(hopefully) in my hybrid suvI will continually think, "hey new car you’ve got big tires to fill"...so RIP my good servant and companion…I know that if there is a heaven for great cars you will surely have a rock star's parking spot, so rock on gray lady!. Do any other car nuts out there feel the same way as I do? bgordon@theautochannel.com

  6. #6
    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by DonTom View Post
    The economy runs on pure Bullshit. It's unreasonable to expect "real value". The most important thing is for people to believe the economy is getting better and then it will.

    IMO, this program will help a little and we can use all the help we can get. Especially if you wanna get all that money back that you lost.

    But I am not sure if I want the economy to get all that much better. At least not for myself. A better economy will mean higher gasoline prices as well as higher prices for just about anything that costs some bucks.

    BTW, we are taking a RV trip up to Alberta next month, First to Calgary and Edmonton and then down through Jasper National Park.

    Gas in Canada is already more expensive than here ($3.10 or so for 87 now in the SF area) and I will have a 70 gallon tank to fill up almost every day.

    When the gas demand goes up, you will know we left on our RV trip!

    BTW, I should be able to get on-line from just about anywhere during the entire trip. I now have Verizon Wireless Broadband with a little HP1151NR that costs me $60.00 per month for 5 GB. But it costs more when used from Canada (more than two bucks per MB).

    -Don- SSF, CA
    Hope the trip goes well!

  7. #7
    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by swamprat View Post
    Great article and summary of the evil of Cash for Clunkers.

    I don't believe for a minute that this program is going to end. When was the last time that a government program was eliminated, except for, say something constitutionally authorized, like a defense program? The rats in Congress simply do not operate that way.

    We are going to be stuck with this program until this economy throws another rod.

    The only winners in this game are car dealers and the idiots who absolutely wanted to trade their perfectly running car that they were still paying for to have its engine destroyed at the order of some shyster crook in dealer management in the back by the car wash guy at Rip U Off Hyundai. The other winner, as Eric pointed out is government, who will snare more people into their idiotic mass transit systems.

    What this program will end up doing eventually is raising the price of cars by $4000.00 in both the new and used markets since the rebate is passed through the dealers. To keep the shine on the program, the government will have to double the size of the rebates to keep up showroom traffic. It is unlikely that will happen. What will likely happen is that things will return to a more normal market as people will likely be taking more care of the cars they have, as the relative strength of the rebate diminishes.

    AS Eric pointed out, this cheesy sounding "Cash For Clunkers" program could have only be written by a Democratic-leaning or a pea brained Chimponian new car dealer is going to hurt poor people disproportionately. Cash for Clunkers needs to be retired with the Polyester suit and plastic wing-tip shoes.
    Thanks!

    One of the things I worry about is a follow up that will involve efforts to make owning a "clunker" (or driving it on pubic roads) illegal.

    They could, for example, pass laws requiring that "clunkers" meet "modern car" fuel economy/emissions/safety standards.

    I put nothing past them.
    Last edited by Eric; 08-10-2009 at 07:33 AM.

  8. #8
    Vulture of The Western World Eric's Avatar
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    It is understandable that some people are taking advantage of the program. But it's really no different than food stamps or corporate welfare. It's just another government transfer scheme - taking money at gunpoint from taxpayers and then giving a portion of it back (with strings) to some other group.

    I've written out the reasons why I object to the program, but on a personal level, it annoys the hell out of me that once again, the responsible people (as with the mortgage bailout, bankster bailouts, etc.) get nothing although they always get to pay for everything.

    How do I mean?

    Buying a new car is a terrible move, financially, regardless of your circumstances but most especially for the typical middle/working class person (most likely to own a "clunker"). But this program encourages more living-beyond-your-means consumption and short-term thinking, all of it on the dime of taxpayers.

    Meanwhile, people who are not wealthy but who are prudent avoid buying new cars, just as they avoid houses that are too expensive and mortgages beyond their means. Instead, they either nurse an old car ("clunker") along or they buy a mechanically solid used car.

    Such people never get a huge government handout (not that they are asking, but still). But they do get taxed to pay for the bailouts and handouts given to others - others who are very often people who deserve, frankly, to suffer the consequences of their dumb decisions.

    But increasingly, they don't - because they can vote - and because they will vote for pols who promise to "help" them... at the expense of the growing smaller handful of people who prefer to help themselves.
    Last edited by Eric; 08-10-2009 at 07:47 AM.

  9. #9
    Senior Member DonTom's Avatar
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    Quote Originally Posted by swamprat View Post
    As a result, any recovery will likely last no more than a year or two before it crashes again.
    Yes. And the old rule, buy low and sell high, makes such an economy an easy way for almost anybody to get rich.

    So don't complain, just take advantage of it!

    -Don-

  10. #10
    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by DonTom View Post
    Yes. And the old rule, buy low and sell high, makes such an economy an easy way for almost anybody to get rich.

    So don't complain, just take advantage of it!

    -Don-

    You're right but I'm really turned off by the predatory/shyster nature of our deliberately manipulated "boom-bust" economy.

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    Cash for Clunkers Benefit Foreign Carmakers

    The Obama administration has declared the wildly popular 'Cash for Clunkers' program a success, saying it has revived the country's ailing auto industry and taken polluting vehicles off the road.

    But the data shows that the program, which ends Monday, has apparently benefited foreign automakers more than their U.S. counterparts.

    Smaller, more fuel efficient vehicles like the Toyota Corolla are top sellers, while buyers are trading in SUV's like the Ford Explorer to be scrapped, turning the already dwindling number of American car owners into the growing ranks of foreign car drivers.

    Toyota vehicles accounted for 19.2 percent of the 489,269 sales, while General Motors had the second spot at 17.7 percent.

    The Honda Civic was the second best-selling vehicle, followed by the Ford Focus in the third spot. Foreign cars occupied eight of the 10 spots on top-selling vehicle list. The Ford Explorer was the most traded-in vehicle under the program, with U.S. cars occupying all top 10 spots on the list.

    Jonas Max-Ferris, a business analyst, told FOX News that domestic automakers did well because "they sold more cars than they would have without the program."

    "But they didn't do as well as foreign car makers," he said, noting that Detroit's Big Three represent about 47 percent of U.S. car sales and only sold an estimated 42 percent under the program.

    "They did a little worse than they normally would do…which means people were favoring Honda and Toyota primarily," he said. "And there's a reason for that. The program was basically geared around miles per gallon. It was not an incentive to buy U.S. cars. In many cases, the foreign car companies have better cars in those miles per gallon categories."

    Car buyers have until Monday night to take advantage of the $3,500 or $4,500 incentives offered by the program, which as of Friday had used up $2 billion of the $3 billion Congress set aside for it.

    Congress poured an additional $2 billion into the program when the original $1 billion ran dry in early August and as of Friday, nearly 490,000 vehicles have been sold through the program, data shows.

    General Motors and Chrysler, fresh off government-led bankruptcies, have boosted production, along with Toyota, Ford and others. GM is rehiring more than 1,300 laid-off workers, Hyundai is bringing 3,000 workers back to an Alabama plant, and automakers are paying workers overtime to meet demand.

    But many auto analysts questions whether the program will have a lasting impact, robbing sales from the final months of 2009 and 2010. A slight auto industry recovery in July and August could be offset by declining sales in September and October and wipe away the bump in consumer confidence.

    "We've got inventories tight, prices going up, incentive activity dropping, new cars coming out in October at even higher prices," said Jeremy Anwyl, CEO of the auto Web site Edmunds.com. "There's not going to be much momentum that's going to drive sales to the levels that we've seen."

    The Associated Press contributed to this report.

  12. #12
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    Quote Originally Posted by Eric View Post
    You're right but I'm really turned off by the predatory/shyster nature of our deliberately manipulated "boom-bust" economy.
    Have you heard that people will have to pay income tax on the $4,500 rebate!!! Yeah, they will get 1099's for the amount of the rebate.

    Serves the cheap bastards right. Everyone's a scammer, even the Feds.

  13. #13
    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by dBrong View Post
    Have you heard that people will have to pay income tax on the $4,500 rebate!!! Yeah, they will get 1099's for the amount of the rebate.

    Serves the cheap bastards right. Everyone's a scammer, even the Feds.
    I hate to be vengeful but I can't help it. Good!

    I paid for my damn cars with my own damn money. I don't see why the F I should be taxed in order to "help" the guy down the street buy a brand-new car.

    F that.

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