OK, so roughly a quarter million new cars have been sold by an artifically propped up demand that gave approximately $4,000 per traded in car to use up the billion dollars allocated.
Economic mistake number one: totally unsustainable sales - a one-shot deal. How long before any of these car buyers will need another new car?
Economic mistake number two: destroying the engines of all the trade-ins. Where are we supposed to put all of those unworkable blocks of steel that used to be automobile engines that are now laden with hardened glass?
Economic mistake number three: a quarter million cars worth of used car parts suddenly hit the junk yards across America - a huge, atypical influx. Oh, no engine parts though.
Economic mistake number four: plenty of would-be drivers in this country and abroad missed out on an opportunity to have an inexpensive working car - many nicer than others. Many tried in vain to get one from the various dealers, but they were told the cars had to be destroyed by law.
Economic mistake number five: American cars were outsold by the imports. Less than half of the sales (47%) were American (Ford, GM, Chrysler).
Economic mistake number six: only the Ford Fusion was in the Top 5 of cars sold - 3 Toyotas and a Honda were in there.
Economic mistake number seven: the used car market has taken a 250,000 car hit. Normally when a new car is bought, a trade-in becomes a used car opportunity.
Economic mistake number eight: they didn't get it right by only spending one billion dollars so now they are going to commit another two billion dollars to make mistakes 1-7 all over again.
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Welcome to our new world order. If one want to take a Government controlled system to change a market, not a company. A simple tax on gas over a given amount of years would accomplish so much more both good and bad. But, we have decided to have complete government takeovers. So "they" hated the conservative leader in Venezuela (probably, deservingly so) and "they" wanted change.....and they got it. Hmmmmm.
Steve - The Government cant run a billion dollar car program so why do the think they could run a trillion dollar health insurance program?
JP Lowry--Preferred Financial Funding, Inc
I have to agree Steve.If everyone turns in the same cars, who needs parts for those models. Looks like all those great PhDs should have gotten some real world experience before dipping into the real world...
Tim,
I'm really not interested in world order. Just give me my American capitalism. :)
Steve
JP,
Great question. The simple answer is "arrogance." They know more than anyone else. :)
Steve
Paul,
I like your insights and response. Thank you. :)
Steve
Steve,
Nice work laying out the economic mistakes with the Cash for Clunkers.
Although I see that some of the liberal bloggers on AR are touting Jobs, Jobs Jobs and recycled parts. It amazes me that the spin just keeps coming.
Instead of across-the-board tax cuts that would have the same effect on our whole economy, the federal government is trying to run a particular business by targeting just the auto industry. Our Government has decided it is best to keep rushing through bills, borrowing money from our children, and then saying, Hooray we've sold some cars!'" As I told the far left blogger that's not what the federal government is all about.
Also just an FYI the House proposes paying for the extension by using $2 billion approved in the stimulus package for loan guarantees for renewable energy, which may not sit well with energy project developers.
So as it stands now if the Senate approves this bill they are going to rob from the loan guarantees provided through the recovery package that, in the long term, will shift our country to home-grown, renewable energy while creating good 'green collar' jobs," according to a Reuters report.
So for all of those liberals who are worried about our environment this Congress will rob Peter to pay Paul once again.
Super bad idea.
Wealth transfer pure and simple.
The gov't takes my $4500 to give it to some guy who drives a $500 car.
The gov't takes my $8000 to give it to someone who buys a house.
And how is that supposed to help me?
Yeah Steve, thats why its so successful. Creating jobs and boosting the economy, thats what its all about. BTW why weren't you complaining when billions were thrown at the banks last Fall? Now that was a BAD idea.
Alice,
Thank, I refer you to my Home Sales Insights blog today where I lay out what I think is really the issue here - and it's not selling cars. :)
Steve
Janet,
You're beginning to catch on. No one is really supposed to be helped except the really poor. It's basically a trap to get people dependent on the government. :)
Steve
Terry,
How many jobs exactly have been created by selling 250,000 cars that were already made and sitting on dealers' lots? BTW, I was way out in front protesting the TARP from Bush and Obama. :)
Steve
Hi Steve
Destroy 250,000 cars, many ccould have been sold to people who can't afford a new cars? The parts would have been recycled and sold. The people in the country that will take the biggest hit on the program are the people in the lower eeconomyscale and the people who lost their jobs,they need serviceable used cars.
There about 250,000 less used cars in the market and well parts for repairs. The cost of used parts and cars will go up in price.
Our kids and grandkids will be paying for the cars.
Washington is spending into the abyss
Good luck and success.
Lou Ludwig
And I'll add about all the nonprofits that accept cars as donations and have suddenly got a gaping hole where their donations were... and those cars were then "recycled" to people who needed cars and couldn't afford them. That part was a working system, now broken.
Also, I saw a statistic about the amount of energy used to make said new cars: when you factor in all the energy used to make the car, it will take years before that balances out.
So how does this make sense, economically OR environmentally?
Lou,
Everything you say is true. Just remember that none of this was about selling cars - only about governmental power and control. :)
Steve
Shoshana,
The non-profits were intentionally messed up so they can rely on the government for for help. :)
Steve
Steve - I'm with you on that. I think that the government need to stop all the wasteful spending.
Robert,
We need a Congressmen in Recovery program - dependence on spending. :)
Steve
Interesting update.
The Obama administration is refusing to release government records on its "cash-for-clunkers" rebate program that would substantiate-or undercut-White House claims of the program's success, even as the president presses the Senate for a quick vote for $2 billion to boost car sales.
Transportation Secretary Ray LaHood said Sunday the government would release electronic records about the program, and President Barack Obama has pledged greater transparency for his administration. But the Transportation Department, which has collected details about 157,000 rebate requests, won't release sales data that dealers provided showing how much U.S. car manufacturers are benefiting from the $1 billion initially pumped into the program.
The Associated Press has sought release of the data since last week. But the public and Senate Republicans demanding more information will have to wait for details because federal officials running the program don't have time to turn over data delivered by car dealers, said Rae Tyson, spokesman for the National Highway Traffic Safety Administration. Here is (source)
Alice,
Thank you. I heard the same thing yesterday - that they were too busy spending money to take time to account for it. Duh! :)
Steve
Such a shame to destroy all these vehicles. Billions of tax dollars spent to put people in debt. I don't understand it.
Bob,
It's all to satisfy the egos of the Washington crowd that they can control the American people - so far they're doing pretty good. :)
Steve
Steve, it does not take a rocket scientist to run the numbers. The dealers are selling cars, = jobs, the car makers are selling cars to the dealers = jobs, the recyclers are recycling the cars = lots of jobs as the parts are distributed to the various resellers = jobs, jobs, and more jobs. But then if you don't want the program to work, you will blog about what a bad idea and failure it is. But it doesn't alter the facts. The real numbers will come out in time. I'll be waiting to post them for ya.
Terry,
I don't see where any jobs have been created - every job you reference was already in place. Still, if any had been needed, it certainly is not the government's role or responsibilty to create them. :)
Steve