Forget 'Cash for Clunkers': Try 'Dough for Dumps' 65 comments
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After having given away billions faster than even the optimists had anticipated, it was announced Friday that the federal government's "Cash for Clunkers" program is coming to an early end.
But, based on the standards of economic analysis which prevail in Washington, Wall Street and academia, the program must be considered a master stroke of public policy. These experts will tell you that by mandating that citizens destroy older (but still working) vehicles to receive $4,500 toward the purchase of a new car, the program not only revved up the economy by encouraging Americans to borrow more, but it may have, perhaps, made some great strides in saving the planet by reducing carbon emissions.
With this solid win-win now on the books, the time has come to put the strategy to work in other areas. For instance, the government could use these lessons learned to help the moribund housing sector. I propose the "Dough for Dumps" stimulus program. Here's how it would work:
Homeowners struggling to make payments on environmentally inefficient homes can apply for government aid to destroy their old homes and receive guaranteed loans to buy newly constructed houses, provided they are furnished with the latest "green" advancements in energy systems and building materials. As with the "Cash for Clunkers" program, this plan would solve many problems at once.
First, it will help put a floor under falling home prices by reducing the glut of houses currently on the market. The best way to stop prices from falling, and thereby reduce the foreclosure wave, is to reduce supply.
Left alone, the market would do this by lowering prices, which would bring more buyers into the market. But this approach falls on the back of homeowners whose only crime was to overpay for a house. A more socially equitable method would be for all taxpayers to shoulder the burden through a government bulldozing program.
In addition to contracting the supply of homes, the program would also stimulate the economy by providing funds to hire environmentally savvy builders and contractors (not to mention the workers needed to demolish the old homes). The resulting demand would help to reduce unemployment, especially in the housing sector. Government incentives and subsidies could also give an important boost to the developers and manufacturers of "green" windows, solar heating systems, furnaces and water systems.
Once this program has rejuvenated the real estate market, citizens should also be encouraged to burn their old furniture and clothing, thereby sparking demand for new goods from our nation's struggling retailers. When you think about it, the possibilities are endless.
If these proposals seem ridiculous, it is because they are. But they are no less ridiculous than the "Cash for Clunkers" program that inspired them. All are examples of the "broken window" fallacy of economics, which argues that economic activity can be stimulated by the need to replace something that has been destroyed.
Unfortunately, many of our "best" economists subscribe to the notion. But society gains nothing from redundant activities. Digging holes just to fill them up does employ workers, but the work offers no benefit to anyone not receiving the wage. Absent government incentives, such a job would create no profit and could only exist as a result of a subsidy from someone else. Such work also prevents workers from accomplishing tasks that create real wealth and actually benefit society.
In the case of "Cash for Clunkers," the government provided an incentive for citizens to destroy otherwise working assets, fully owned by their users, in exchange for a smattering of "green" tech and a lot more debt. Could anyone look at our country now and determine that our problems stem from a lack of new cars? Given our level of economic output, it is likely that we already have too many cars. On the other hand, it should be obvious to anyone that American consumers are already burdened by too much debt. The program distorts the market by giving car owners a powerful incentive to take out new loans for cars they may not need.
The environmental benefits of the program are much more difficult to quantify and extremely unlikely to overcome the waste inherent in the wanton destruction of working assets. On a practical level, the premature shelving of working cars will add extra pressures to our waste management capacity, and create emissions and pollution through the compaction/incineration processes that accompanies disposal. On an abstract level, this program punishes every consumer who sought to be ahead of the curve in environmental responsibility by using their own resources to upgrade a clunker. Some may think twice before making such a move without government money on the table.
More fundamentally however is the question of making wise decisions in a recession. Given the fragility of our finances, we should use our resources wisely, pay down our debt, replenish our depleted savings, and make investments in time and energy that offer a tangible benefit.
The "Cash for Clunkers" program is the exact opposite of what we need and a glaring example of the lack of economic understanding currently on tap in Washington.
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This article has 65 comments:
our government has killed two birds with one stone.
I heard a rumor they’re now talking about a new program for old appliances. Perhaps we should sit on our wallets until whatever we were going to buy gets it’s turn at the trough. Even Pavlov’s pooches would eventually figure this out.
Schiff: Did you announce your candidacy yet?!?
Brand new flat screens have never been more energy efficient!!!
"moolah for mansions"
The anyone can afford a 3000 sq ft home program to stop the price decimation of high end domiciles.
"funds for furniture"
Any unit piece over $500 is now within reach for the average American
"loot for laundry"
Let's save the appliance businesss together!!!!
"bread for boats"
The wide world of boating is now for everyone!!!
All signs of a vibrant U.S. economy.
WHAT WILL AMERICA BUY YOU NEXT?
At least major infrastructure spending could have done something useful and created real jobs. Those who consider themselves our betters who can spend someone else's money more legitimately could have had a shred of credibility. Fasten your crash helmets!
en.wikipedia.org/wiki/...
Okay, they're not calling it that - I made it up. Still, it's catchy, don't you think?
On Aug 23 05:16 AM basehitz wrote:
> If you win a Senate seat and advance logic like that, some of the
> entrenched pork specialists may have a brain hemorrhage. Hope C-Span
> happens to catch that episode.
>
> I heard a rumor they’re now talking about a new program for old appliances.
> Perhaps we should sit on our wallets until whatever we were going
> to buy gets it’s turn at the trough. Even Pavlov’s pooches would
> eventually figure this out.
Considering that the Dem/Socialists have now taken all of our money that they can, they now have to figure out programs where they can give some of it to keep people surviving.
How else will I get to all of the mid-level manufacturing job interviews I have lined up, in style. Suzuki makes great car's, they do!!!! Yesireee
What will taxpayers help me afford next?
Thanks America
On Aug 23 04:15 AM Steven Hansen wrote:
> Cash for Clunkers was an overwhelming success for foreign car makers
> who increased market share at the expense of Ford, GM, and Chrysler.
> We now have more fuel efficient autos reducing our dependancy on
> oil, and less people with jobs to drive them.
>
> our government has killed two birds with one stone.
The man on the street who thinks that he or she is a more capable economist than Noble prize winners actually does not have a clue, witness the failure of the majority to competently manage their personal finances--swimming in debt, no long-term plan for retirement, nothing in the bank for a rainy day.
On Aug 23 04:24 AM Faisal Humayun wrote:
> All the policies of the U.S. government have one thing in common...They
> are all short sighted...So in the near term money printing might
> make people feel that thing are recovering...But it is a disaster
> in the long term...The same goes for other policies as well...I hope
> one day they decide to leave the free markets work....But I guess
> its too late for that....
> jack
Cut the capital gains tax 5% or more. This will spark a huge increase in investment with cash going strait to the wounds of every publicly traded Co. It will pay off debt, create jobs and increase "efficient" spending. All without increasing inflation or loss in government revenues.
We'll short term ourselves right out of existence.
On Aug 23 09:02 AM milkchaser wrote:
> Perhaps they could send ACORN and SEIU out to break a million windows.
> Think of all the jobs that would create!!
>
> en.wikipedia.org/wiki/...
We as a country don't have what it takes to pull ourselves up and out of this mess...
We’ve lost sight of the principles that made this country what it was…
We've had it too good for too long… and have made too many wrong choices…
The instant gratification chickens are coming home to roost…. So get ready…
Please run for the senate!
"The "Cash for Clunkers" program is the exact opposite of what we need and a glaring example of the lack of economic understanding currently on tap in Washington."
The President keeps saying he has the smartest people advisihg him, and it is true that they are all very smart. And they understand perfectly well what is needed and how the economy works. But they put their self and short-term interests first. So they will always choose the easiest, quickest, most painless and most politically expedient "solution", never mind the problem will become even bigger in the future -- who cares about the future?
Can't even figure out how much I will "save" when Health Reform comes along.
Then quadruple the total "free" money mentioned above, and you wind up pretty close to the National Debt/citizen that we all owe.
Of course, the real debt, when you add in Currency and Derivatives exposure is only about 20 times that (~$645 trillion).
usdebtclock.com
Upload the above site and sit back for a moment and watch the dollars fly.
you can bet that every piece of value has been salvaged before landfill; the landfill of net trash is miniscule compared to national annual totals.
have you ever seen a destitute/broke auto salvage dealer?
IF I'M WRONG ON THIS, PLEASE LET ME KNOW.
On Aug 23 09:04 AM a. palmer jr. wrote:
> Your title just got me thinking...you know, some parts of a car (or
> anything else) won't get recycled, such as switches, wiring, old
> instrument panel gauges, worn pedals, etc. Guess what happens to
> them; they end up in a landfill somewhere. So, given that tradeoff,
> are we helping the environment or not?
Almost half of us don't any taxes. More than half don't bother to vote. Many complain about the few who pay most of the taxes but not about the Congress that spends more than its revenue every year.
Maybe we are just getting the government and the results we deserve.
but sadly -
Loot for Appliances IS starting next week
Ugh ------
On Aug 23 08:18 AM j-dub wrote:
> "rebates for rabbitt ears"
> Brand new flat screens have never been more energy efficient!!!<br/>
>
> "moolah for mansions"
> The anyone can afford a 3000 sq ft home program to stop the price
> decimation of high end domiciles.
>
> "funds for furniture"
> Any unit piece over $500 is now within reach for the average American
>
>
> "loot for laundry"
> Let's save the appliance businesss together!!!!
>
> "bread for boats"
> The wide world of boating is now for everyone!!!
>
>
> All signs of a vibrant U.S. economy.
> WHAT WILL AMERICA BUY YOU NEXT?
>
>
>
>
>
>
>
[ for his On-Line Town Hall for Healthcare and it NEEDS *OUR* [LOL] donation n support]
What's Joe Doing ?
Don't get in JOEs way when fighting - spending or Wall Street reform ?
[LOL ! - BS !]
How can U propose New reform without finding and cutting waste and KNOWN abuses?
Since Goverment [SEC] CAN-NOT enforce laws with Wall Street and
[MDA & FDA] HARDLY-EVER enforce Health Care Companies, Bad Doctors,
slow-antiquated Research/Approval of New Drugs
- - - shouldn't they be FIRED/DISMANTLED and appoint Independant companies
[overseen and accountable to the USA [n Congress - LOL]]
to watch/fine and use fined Monies to prosecute violators and help Lowering costs
to BEGIN WITH ? ? ?
Wouldn't it reduce Goverment n OUR Taxes ? ? ?
Y R WE overpaing for Inept FAILED UNACCOUNTABLE GOVERMENT Agencies !?!?
WHY ? Is it SO HARD to figure it OUT ?!?
Maybe it's just time for a complete paradigm shift on how society is structured. We simply have too much stuff now and we don't NEED any more stuff. Is anyone upset because they don't have a 3rd plasma for the guest room ?
Question for Peter Schiff: I recently read that china would only be able to provide work for 50 percent of the roughly 24 million citizens searching for employment this year. If china is going to 'decouple' from the world economy how is their internal demand going to proliferate with so many unemployed people without income? Where else in the world will demand for goods and services come from and flourish ?
The website that tracks USA's debt is:
usdebtclock.org
Just for a minute, I suggest watching our economy hemorrhage in real time.
Yes it will end - the outcome would be lot worse with all these dumb policies – huge tax rises and inflation down the line – children and grand children will be under permanent debt. But as long as we are current America that very strictly believes only in borrowing and consuming - that is the chosen path – dough from dumps.
www.schiffforsenate.com/
Run, Peter, Run!
1. Now poor people have to pay more for a used car.
2. Only helps those that can afford a car payment.
3. Creates a forced buying scenario that boost people who would not buy right now to buy, this will create a down side on sales when the program ends.
4. Now charities dont get the used cars to help fund food and shelter to the poor.
5. The legal fees and admin costs for the program are more than the $4500 rebate. I wonder what the real cost per new car is.
6. The enevitable tax increases for all these programs, has to hit us soon.
The Government does not give away anything, it loans us our future tax dollars before we earn them. People are so naive.
Well, our government probably knows best.....................
After all, they fixed the crisis!!!!!!!
RIGHT?
On Aug 23 01:55 PM conceptwizard wrote:
> Cash for Clunkers:
>
> 1. Now poor people have to pay more for a used car.
> 2. Only helps those that can afford a car payment.
> 3. Creates a forced buying scenario that boost people who would not
> buy right now to buy, this will create a down side on sales when
> the program ends.
> 4. Now charities dont get the used cars to help fund food and shelter
> to the poor.
> 5. The legal fees and admin costs for the program are more than the
> $4500 rebate. I wonder what the real cost per new car is.
> 6. The enevitable tax increases for all these programs, has to hit
> us soon.
>
> The Government does not give away anything, it loans us our future
> tax dollars before we earn them. People are so naive.
Peter has always talked about accountability and responsibility both at the personal and governmental levels, I don't think that promulgating a macro prospective of our situation is inapplicable to this audience...not everything has to be a specific opinion of why I should "sell x, hold y and buy z" in order to have value, even on SA. Even if the argument takes the form of "A Modest Proposal".
Thanks for your efforts, Peter.
1) For the past 8 years we've given out sizeable tax breaks which benefitted the wealthy far more than others, leading to substantially increased income inequality
2) Each year we give out hundreds of billions in tax credits to certain industries (see farming, the oil industry) and corporations.
3) Wall Street, in the words of George Bush, "got drunk". As a result Wall Street leveraged the world 40/1 in an attempt to make even more obscene profits and as a result had to get bailed out by the govt, since Wall St put the world financial on the verge of financial armageddon.
4) We're spending trillions to bail out the financial services sector, including banks. We saved Govt Sachs by allowing AIG to make them 100% whole on counterparty agreements. Not even a 10% haircut.
5) We give the banks billions and billions to lend and instead they sit on it
6) So everyone gets upset when we come out with a program which gives vastly smaller amounts in money directly back to the people.
7) Quite frankly if we had given the banks far less and instead started a much broader say $50 billion Cash for Clunkers program , we could probably have avoided bailing out GM and Chrysler and the economy would have been out of the recession months ago. This "mere" 3 billion has already led to workers being recalled.
8) We need to start "making stuff" again this country and quit this obsession with service sector and financial industry jobs. We'er just sending vast sums every year to China and the Middle East
In Phoenix Arizona a man, (“allegedly” for all the legal eagles), hit and killed another man and left the scene of the accident. The next day this man took his car to a body shop and the shop told him that the car was totaled so guess what he did? If you picked took advantage of the cash for clunkers program and traded the car in then you would be correct.
The car that was used in the hit and run was spotted by someone, (not sure if it was the police or someone familiar with the case), in the cash for clunkers parking lot of the dealership that took the car in as part of the program and the police had the “alleged” suspect arrested at that point.
This story first and foremost is saddest for the victim/family of the victim as nothing can replace what has happened to them.
This story, (to a far lesser degree), is sad for everyone who will eventually pay for a program such as this. How can a car deemed to be totaled be taken in by a dealership to take advantage of a Government rebate program of some sort? I know that many will yell that this is an isolated case but just how many of these types of vehicles made it through the cracks of the program?
Search out the local news outlets for Phoenix Arizona and you should be able to find a reference to this story if interested.
Peter,
You ommitted to tell us if the homes that are going to be sold under your ''dough for dumps'' plan will be ''marked to model'' or ''marked to market''.
All in all, when you consider the level of economic waste on making a slew of new cars and pollution it creates it will be a decade before it shows any real benefit to the environment when the new cars will be ready to be rotated out for a new one. There is no real environmental or economic benefit. It is a mirage we pay for with our own money.
However, it is still better than $700 billion going to banks that still have $trillions more losses hidden and needing to write off on citizens interest to loan spreads. Thus part of the popularity is the feeling that, "Hey everybody, I got a peice of the squadered Washington DC money just like the banks and fat cat GM, AIG, and Freddie Mac execs."
If you DON'T go out there and put yourself in debt, your neighbors will!!! Then, they will be getting the GOODIES that you are being taxed for!!!! That would be crazy now, wouldn't it!?!?
C'mon now people, lets all get arm in arm and march down main street and go $hopping!!!
It would be funny if it weren't such a tragedy.
We can expect more of this 'Crystal Nacht' thinking from this Congress/Presidency combo. Just look at it's Botox leader in the House, Pelosi. Her face is an ossified smile, like the corpse of her idol, Karl Marx. How will the country avoid bankruptcy if the ideas from the Congress are bankrupt?
On Aug 23 11:08 AM ron_paulite wrote:
> Another excellent article, Peter.
> Please run for the senate!
>
> "The "Cash for Clunkers" program is the exact opposite of what we
> need and a glaring example of the lack of economic understanding
> currently on tap in Washington."
>
> The President keeps saying he has the smartest people advisihg him,
> and it is true that they are all very smart. And they understand
> perfectly well what is needed and how the economy works. But they
> put their self and short-term interests first. So they will always
> choose the easiest, quickest, most painless and most politically
> expedient "solution", never mind the problem will become even bigger
> in the future -- who cares about the future?
FNE and FRE are going to go bankrupt anyway so why not give back some of that cash?
Oh, sorry it cant happen because GS doesnt get a piece of it up front.
Where is it that Chelsea Clinton works on wall street????
C4C is simple wealth redistribution to the politically connected. Why we need the charade is beyond me. Just write the checks directly and be done with it.
Appliances are next. Amazing. Someone be sure to cut the grass on capitalism's grave. What the hell did you people do to America?!
On Aug 23 10:11 AM Kalani Martin wrote:
> I'm a big fan of Peter Schiff the "Financial Advisor". Where has
> he gone? This piece should be an op-ed in the NYT, not on SA. You
> sound more like a politician everyday (that's not meant to be a compliment).
> It would be nice to hear some market commentary from you again someday..................
news.yahoo.com/s/bw/20...
"Beginning late this fall, the program authorizes rebates of $50 to $200 for purchases of high-efficiency household appliances. The money is part of the broader economic stimulus bill passed earlier this year. Program details will vary by state, and the Energy Dept. has set a deadline of Oct. 15 for states to file formal applications."
Earlier manufacturers went bakrupt giving these cash rebates and 0% APRs - now the Govt and taken up the onus - where will the Govt end up?
On Aug 23 12:39 PM PG13_Funnys wrote:
> My question[s] for OBAMAs RSVP email newletter 8/18
> [ for his On-Line Town Hall for Healthcare and it NEEDS *OUR* [LOL]
> donation n support]
> What's Joe Doing ?
> Don't get in JOEs way when fighting - spending or Wall Street reform
> ?
> [LOL ! - BS !]
> How can U propose New reform without finding and cutting waste and
> KNOWN abuses?
> Since Goverment [SEC] CAN-NOT enforce laws with Wall Street and<br/>[MDA
> & FDA] HARDLY-EVER enforce Health Care Companies, Bad Doctors,
>
> slow-antiquated Research/Approval of New Drugs
> - - - shouldn't they be FIRED/DISMANTLED and appoint Independant
> companies
> [overseen and accountable to the USA [n Congress - LOL]]
> to watch/fine and use fined Monies to prosecute violators and help
> Lowering costs
> to BEGIN WITH ? ? ?
> Wouldn't it reduce Goverment n OUR Taxes ? ? ?
> Y R WE overpaing for Inept FAILED UNACCOUNTABLE GOVERMENT Agencies
> !?!?
> WHY ? Is it SO HARD to figure it OUT ?!?
If you read the instructions to auto dealers in the"cash for clunkers" program, you will learn that the engines are filled with a sodium silicate solution and run for a minute or two until the engine seizes up. It is worthless after this, and the transmission is not allowed to be salvaged either. Uncle Sam wants the vehicle to be recycled as scrap metal, not as usable spare parts. Not too much winds up in the landfill under current recycling methods. You are right when you say hat you do not see too many scrap/salvage yards going bust.
On Aug 23 10:11 AM Kalani Martin wrote:
> I'm a big fan of Peter Schiff the "Financial Advisor". Where has
> he gone? This piece should be an op-ed in the NYT, not on SA. You
> sound more like a politician everyday (that's not meant to be a compliment).
> It would be nice to hear some market commentary from you again someday..................
How many people with degrees in economics are good investors? Ask the majority of degree holders on Wall Street who lost their ass in 2008 and will likely again in 2009-2010.
I said it before. Schiff is probably not the best person to listen to about investing. HE is just too $%^&*(!@ rational. It is hard to time markets using rational analysis.
Don't read Peters stuff if you you don't want to learn, just stop whining about it.
On Aug 24 03:37 PM Editrice wrote:
> Once again, I agree with Kalani Martin. I have been considering
> canceling my "Following" of Mr. Schiff on SA because I'm just not
> learning anything about the market from him anymore. (Clearly Mr.
> Schiff's acolytes are many and the loss of my readership will not
> affect him in any way. Still, I wish he would consider KM's comments.)
>
Save your money and go down to the local bank and pick up a good used car cheap next year....:-))
On Aug 24 03:16 AM Econ 101 wrote:
> Why not just take all those loans held by Freddie and Fannie and
> forgive them? That would give 25% of all mortgage holders a boost
> and increase their free cash flow significantly.
>
> FNE and FRE are going to go bankrupt anyway so why not give back
> some of that cash?
>
> Oh, sorry it cant happen because GS doesnt get a piece of it up front.
>
>
> Where is it that Chelsea Clinton works on wall street????
My Daughter and Son in Law did buy a house. Thanks for the 8 grand. They were going to buy one anyway....Hope and Change--
Although I agree with your principles in general regarding the “Cash for Clunkers” program, I think that you are misinterpreting the Obama Administrations more esoteric intent of the program.
Examine the timing of the event, and who was more set to gain: the Japanese. The program was designed to boost the Japanese economy to help the LDP, which of course failed.
Further, if we look deeper into what is going on, a picture will develop that it is the United States that is assisting China and trying to buy the Chinese government time to straighten out its economy and boost internal consumption—not to save the United States, but to maintain internal stability. The Chinese cannot hope to maintain their 8% growth--and if one looks at how much money they have had to spend in the last 6 months to get it, they would easily see how disappointing the 8% return was. Because of this the Chinese are not going to abandon the US because it is through China that Mr. Bernanke has been conducting his check kiting scheme.
Also, the disgruntled anti-government people within China have been remaining very quiet, they've learned from Tiananmen Square, and they are waiting in the wings for when the Chinese government hits its economic wall--which won't be too much longer.
Ultimately this will fail, and the political transformations that China needs to do to build a middle class they cannot hope to do in time, and when they can’t replace the void of the US liquidating its country to buy Chinese goods, their industrial over production and inefficiencies (as is the case of pseudo communistic countries) will no longer be able to be subsidized by the government at some point, thus causing social unrest from mass unemployment.
Assuming that the Federal Reserve loses its appeal concerning Bloomberg’s FOIA, I suspect we will see many central bank names on recipients of Federal Reserve “loans”.
This also goes with Obama’s health care plan—it is not a socialistic agenda, it is a bait and switch on public pension recipients. If President Obama’s health plan passes, then we will see the government begin a mass default on public health plans, thus forcing the pension recipients into the public plan, which in essence now makes them a co-payer to their health care.
I wouldn’t put too much on the surface arguments presented by the Obama Administration or from academics like Paul Krugman—unfortunately those who realize that what is being said and done doesn’t make sense are not fully following up on those instincts.
They are not committing any of their actions because of some Keynesian school of thought.
Having said all that, his original premise in the article--albeit a sarcastic and facetious proposal--would actually work, despite going against conservative principles.
That CASH FOR CLUNKERS program did work, absolutely. So what if it was artificial stimulus, it was a better bang for the buck than most of the bailout money that average Americans never saw tangible results from...
The true criticism on the whole cash for clunkers program is not whether it was effective or not, instead, it's that many dealerships were ripping off customers without them even knowing it.
How is this so? Well, 30 days prior to the implementation of the program, dealerships were overweight with 2009 inventory they couldn't dump at any price. Take for example, the Dodge Grand Caravan, which you could have bought all day long in a range of $19k-23k tops across the board. The moment the cash/clunker bill was in play, those same dealerships jacked those prices up, at a minimum, by the $4,500 anticipated rebate. I saw prices back in the high $29-34k range as if they were rolling out new 2010 models off the factory floors. As the inventory began to dry up, dealerships were now rolling prices back up to the maximum "INVOICE PRICE" for 2009 cars that were produced nearly a year earlier!
The irony is that, in most cases, customers were not getting a deal even after the rebate. They were paying exactly the same price--net-net--as they would have 30 days earlier, or worse, even more. Especially when you consider that rebate is taxable as well!
Some local and state's attorneys should investigate those practices by dealerships as price gouging.
While that wasn't specific to the Dodge brand, it just so happens I was helping someone shop for minivans prior to the cash for clunker program and had been paying attention to prices--I saw the same price gouging with other brands as well.
Dissatisfied, this person decided to wait until the 2010 models roll out and, most likely, will see the benefits with rebates and incentives since the demand was artificially pumped up in the short-term
But then again, the banks are basically borrowing money from the Fed for free, yet the average homeowner who struggles to make payments and manage their debts, where is the adjustment in their interest rates relative to the decline in the prime?
On Sep 03 01:18 AM C.S. Jefferson wrote:
> I enjoy seeing Mr Schiff making acute commentaries on mainstream
> media. I think what lends credibility is more to do with his temperament,
> as opposed to blindly shouting rhetorical nonsense from an ideologue's
> scripted playbook. Peter Schiff does make reasonable arguments
> that are worthy of debate.
>
> Having said all that, his original premise in the article--albeit
> a sarcastic and facetious proposal--would actually work, despite
> going against conservative principles.
>
> That CASH FOR CLUNKERS program did work, absolutely. So what if
> it was artificial stimulus, it was a better bang for the buck than
> most of the bailout money that average Americans never saw tangible
> results from...
>
> The true criticism on the whole cash for clunkers program is not
> whether it was effective or not, instead, it's that many dealerships
> were ripping off customers without them even knowing it.
>
> How is this so? Well, 30 days prior to the implementation of the
> program, dealerships were overweight with 2009 inventory they couldn't
> dump at any price. Take for example, the Dodge Grand Caravan, which
> you could have bought all day long in a range of $19k-23k tops across
> the board. The moment the cash/clunker bill was in play, those same
> dealerships jacked those prices up, at a minimum, by the $4,500
> anticipated rebate. I saw prices back in the high $29-34k range
> as if they were rolling out new 2010 models off the factory floors.
> As the inventory began to dry up, dealerships were now rolling prices
> back up to the maximum "INVOICE PRICE" for 2009 cars that were produced
> nearly a year earlier!
>
> The irony is that, in most cases, customers were not getting a deal
> even after the rebate. They were paying exactly the same price--net-net--as
> they would have 30 days earlier, or worse, even more. Especially
> when you consider that rebate is taxable as well!
>
> Some local and state's attorneys should investigate those practices
> by dealerships as price gouging.