Cash for clunkers and the 800lb gorilla
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Artist:
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Track:till wrong feels right
So Has anyone else noticed how simaler the cash for clunkers program is to the cheap housing program a few years ago? Remember when you could get into a 200k house for no cash down? Remember how this got a ton of people into houses the couldent afford? Remember how when they defaulted on their loans when the intrest rate went up it caused a collapse in the houseing market?
Now riddle me this: If everyone who can afford a new car gets into one this year because of the cash for clunkers program, and everyone who thinks they can afford a new car does too. How then is anyone gonna be able to sell cars next year? First of all those who only thought they could afford a new car are gonna default causing a hit to the banks that they can't really afford to take. Second the people who could afford a new car already have one from last year and won't be buying. So car dealerships and companies won't make any money. Thirdly is the section that could afford a new car but then lost their jobs causing them to default. So lets review cash for clunkers brings in people who drive clunkers, people who drive clunkers drive them for a reason. That reason is that it's all they can afford. They default and a ton more people lose their jobs. which of course causes more people to default and the snowball grows bigger. Now I'm a transient merchandizer for Home depot. I have a High School education. I can see where this is headed. What the FUCK is the government thinking? Either this is a calculated plot to destabalize the economy even further or our elected officials took the short bus to work! I think it's high time we took the economy into our own hands. it's time to tighten up the belt, cut up the credit cards, and stop living above our means. cause if we don't the doller will become inflated to the point where we'll be lighting our burn barrel fires with hundreds and letting the kids play with bricks of 20's because they are cheaper than real toys. Time to wake up and smell the corruption!
Comments (10)
If the goal is to save the car companies and therefore jobs and therefore all the support industries, I think it is an interesting idea (with the cleaner air benefit)..As you point out it isn't a good idea in terms of folks tightening their belts. It doesn't help with our consumerism problem..
In some ways I don't like it, but in others I do..Our economy is based on spending and this is people spending (I don't like that our economy is based on this, but it is what it is), so that is kinda good.
The other thing is perception..if you can remove the climate of fear and qualified people get loans, that drives the economy and creates good news, which begets investments which begets jobs.
On the negative side, it smells a lot like when Pres. Bush told folks everything was OK after 9-11..go out and shop.
In both cases, I think we could've done better. Of course the CARS program is a hell of a lot smaller than the various housing stimlus things that got done..In the end I think it is more about perception and good news.
I don't know if it will be in my lifetime, but our consumer culture is going down..you give good advice when you say to tighten the belt..It makes sense..But that just isn't the way we roll in the USA...yet.
Well, one thing you want to happen is already happening - the savings rate in this country has skyrocketed over the last six months. It's at a 15-year high at 5 percent - quite a change from last year at this time, when it was literally 0.1. For much of 2007 and 2008 it was actually in negative territory. In fact, the shutdown in consumer spending has been so quick and sharp that it has become a huge economic problem; that money pumped into the system creates jobs and sustains businesses. There's no question that we need to wean ourselves off this consumerist mentality that is driving us toward bankruptcy. But going cold turkey comes with a steep downside.
Which is where cash-for-clunkers comes in. It's purely a short-term solution for the auto industry, slipping it some cash flow until it can come back in its slimmed-down, ecologically-less-hostile new form. It's also injecting some money into the system. With credit being as tight as it is, the chances that unqualified buyers will be approved is far, far less than it would have been two years ago, when people were being actively encouraged by mortgage brokers and credit card companies to get in over their heads with debt.
Though your line of reasoning is solid, the one part I don't agree with is that all people who drive clunkers do so "for a reason" - which is, presumably, that they can't afford anything better. Not necessarily so. I know quite a few people who simply want to wring every last bit of value out of a car. They're the ones who are most likely to jump on these deals. The others won't be qualified. It's unfortunate that the dealerships are making such a big deal out of this, and in the process unwittingly getting folks' hopes up. But then again, that's what they do with 0% financial and all the other gimmicks that get bodies into the showroom. Is cash-for-clunkers a gimmick? Sure. But it's not a terrible one.
....Cash for clunkers was & is an unnecessary evil. A bald bailout of the UAW. The cold hard fact remains that more & more people are buying "foreign" cars. (a large percentage of which are asembled in America, with ancillary support from both here & abroad). It is protectionism, pure & simple. By encouraging (in dictating) companies & consumers to "buy American" we are essentially undoing years & years of carefully wrought negotiations, & causing backlashes from our major trading partners
......While it is important to get cash flowing to kick start things I'd rather not have my governmennt taking my tax dollars & giving them to me to buy a car from a car company I as a taxpayer own. It creates no wealth, it gives me nothing. It takes from me in a continued quixotic quest for sherwood forest fantasies & other assorted schemes for wealth redistribution.
.......As it stands.....$2300 of every GM vehicle sold is directed towards pension benifits. Benefits far beyond the dream of the average American. These benefits were hard fought entitlements which the unions were able to negotiate. Fair enough. So...for 15 straight years the American Auto Industry has seen it's market share shrink. The reasons are myriad, of course, but perceived quality played a large part in consumer quality. Non-unionized shops, with much lower labor costs were therefore more nimble, able to adapt to consumer demands more quickly. The BIG THREE were quickly becoming dinosaurs in the tarpits. The UAW played a HUGE role in getting our current President elected. So in addition to being given 33% ownership of GM....our government wants me to buy it's cars.
I'll keep my clunky old Kia. Its clean & paid for.
...and i like the song too.
I'm not optimistic about this and I think in a couple years I'll be able to repost this and say i told you so. But of course we'll have bigger problems then and this will hardly rate.
What you are calling a consumerist scociety is actually a scociety living on money it dosn't actually have. How long do you think this can go on before someone calls in our debts?
When our savings is on average more than our debts I'll agree were doing ok. till then I do believe were fucked!
I agree..but I don't think Cash for Clunkers is anything more than a short term thing that will have zero effect in two or three years. Could everything go in the tank by then, sure? But I don't think so. I actually can't think so..
way to stay positive cody!
I'm trying it for awhile..I've been the other way for years.
Yeah Negative is soo much easier. Positive takes work. And for that I applaud you. Tho I do believe we'll have to agree to disagree about cash for clunkers. I don't think it'll single handedly crush the economy but I think it's a symptom of a larger problem with America.
....people have to work. They need cars to get back n fourth to work