The Lunacy of Cash for Clunkers

| About: Ford Motor (F)

This is insanity.

Here’s an excerpt from an article in the WSJ concerning the C4C destruction program:

What Mr. Mueller discovered is that sodium silicate is the designated agent of death for cars surrendered under the federal cash-for-clunkers program. To receive government reimbursement, auto dealers who offer rebates on new cars in exchange for so-called clunkers must agree to “kill” the old models, using a method the government outlines in great detail in its 136-page manual for dealers: Drain the engine of oil and replace it with two quarts of a sodium-silicate solution.

“The heat of the operating engine then dehydrates the solution leaving solid sodium silicate distributed throughout the engine’s oiled surfaces and moving parts,” says the National Highway Traffic Safety Administration publication. “These solids quickly abrade the bearings causing the engine to seize while damaging the moving parts of the engine and coating all of the oil passages.”

The article notes that at one dealership the cars that were rendered forever inoperable included a 2002 Ford (NYSE:F) Windstar, a 1999 Jeep and a 1988 Dodge van. The van’s engine took the longest of all to seize.

Dispel yourself of any notion that this has a thing to do with the environment. This is a give-away to the auto industry and a lucky few car owners that happened to be ready to buy a car anyway. In the process, perfectly good cars are being destroyed in order to perpetuate a “green” myth.

If anything, this program represents in spades the American propensity to over consume at the expense of considered conservation. The political class is simply demonstrating that they have no clue as to what the road forward should be and in lieu of a plan they choose to fall back on a strategy that encourages the acquisition of new goods when the existing model is perfectly serviceable.

The real tragedy may be the success that the program is experiencing. One would have hoped that we would have learned a lesson from the past year. Apparently not.