I just read a post on CNN about how Cash for Clunkers is good for the economy. What a bunch of nonsense. First and foremost, artificial manipulation of the economic cycle is going to create a temporary illusion of stability, with a harder crash to come. Its like building a levee to keep out the flood waters, you know what, that water is still going somewhere; you are just forcing it somewhere else (for now). When the levee breaks, its going to be a whole lot more devastating.
What happens to the dealerships and Automakers once this 3 billion runs out? Not only does the demand drop to previous levels, its LOWER now because anyone who was in the market already cashed in. At this point there aren’t many people in the market for new cars who haven’t already traded something in. NOW the dealerships have to equal the 4,500 cash incentive themselves to sell anything at all, cutting profits to the bone, and further.
How exactly is this helping parts manufacturers? New cars don’t need replacement parts, so that market is going down. Oh, if there aren’t as many parts to replace we certainly don’t need as many mechanics, so there go those jobs. And if we don’t need the mechanics or parts, we don’t need the managers, secretaries and counter people to support them.
This is helping jobs at dealerships? If you call a 3 month job a boon to the economy, I guess so. Once again, once the money runs out the jobs go away. Are we planning on subsidizing the auto industry forever?
Now about the boast that “45% of the stimulus money is going to the big three”…Huh? This is a GOOD thing? 90%, 80%, even 75% would be GOOD, but less than HALF? Its our stimulus money, its our automakers, but 55% of the money is going to foreign countries? You can tell me all you want that Toyotas and Hondas are as American as a Ford, but at the end of the day, where is the corporate office? We are propping up other nations economies with OUR stimulus money.
The article goes on to say the Automotive industry affects the economy in many different ways, too many to sort out. Isnt this the same as saying “just trust me, its REALLY important” or “We are sure these town hall disruptions are organized, but we cant prove it”. If you cant quantify it, don’t ask me to believe you.
This guy then goes off on a tangent about saving lives. I tell you what, give me a 79 Thunderbird and you take a 2009 Nissan Versa. We will line them up head to head at 55 and see who makes it out alive. The only reason this will save lives is there wont be as many big cars out there to crush the tiny ones. Oh, by the way, saving lives takes money out of the Health Systems economy, so that’s a negative thing, right?
I bet the insurance companies love the influx of money they are seeing right now. New cars are definitely more expensive to insure, being the reality of the situation is 20 year old cars don’t carry full coverage. How long before I get charged more for insurance for driving an older car that causes more damage in an accident?
Speaking of money, here’s a problem no one want to mention. Say we spend as little as 10% less on gas due to this program. Gas is taxed at a federal rate of 18.4 and 27.2 (avg) for state tax. Diesel is even higher. A reduction of 10% of all excise taxes on this fuel is another cut to the budget of our federal and state governments. This is a number in the 10’s of billions. How do you think it will be made up for? Well, my bet is our politicians decide to raise the excise tax rate on fuel, with the reasoning being “they will only be punishing those who do not operate fuel efficient vehicles”. We all know those people are just plain bad, so what does it hurt to tax them more?
As long as we keep propping up the market instead of letting it fall (which is what brings lower prices) we are doing nothing more than making the dropoff steeper when it eventually comes. Pumping air into a flat tire does not fix the tire, you fix the tire, THEN put air back in it.
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