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Thread: Govt to suspend Cash for Clunkers program

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    Re: Govt to suspend Cash for Clunkers program

    Quote Originally Posted by WillRockwell View Post
    If 225,000 new cars are sold, how is the economy not helped?
    Because a false market has been created.

    A viable economy is built upon the truth of producer supply vs. consumer demand. When the government essentially "subsidizes" a market, it creates a false market grounded in decieving the market by creating scenarios that would not otherwise exist.

    There is supposed to be some Darwinism regarding a free market. The bad ideas/businesses die, or are defeated by the better ideas/buisnesses. Government interfering and propping up failing industries, delays or prohibits true stimulus, which comes from the root truths of the basics of supply/demand economics.
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    Re: Govt to suspend Cash for Clunkers program

    Quote Originally Posted by WI Crippler View Post
    Because a false market has been created.

    A viable economy is built upon the truth of producer supply vs. consumer demand. When the government essentially "subsidizes" a market, it creates a false market grounded in decieving the market by creating scenarios that would not otherwise exist.

    There is supposed to be some Darwinism regarding a free market. The bad ideas/businesses die, or are defeated by the better ideas/buisnesses. Government interfering and propping up failing industries, delays or prohibits true stimulus, which comes from the root truths of the basics of supply/demand economics.
    Whats funny is that I was looking for a reference to this so everyone could read about the Broken Window fallacy, which is what this is and it had at the end of it a reference to the cash for clunkers program.

    [ame=http://en.wikipedia.org/wiki/Parable_of_the_broken_window]Parable of the broken window - Wikipedia, the free encyclopedia[/ame]

    "The fallacy of the onlookers' argument is that they considered only the benefits of purchasing a new window, but they ignored the cost to the shopkeeper. As the shopkeeper was forced to spend his money on a new window, he could not spend it on something else. For example, the shopkeeper might have preferred to spend the money on bread and shoes for himself (thus enriching the baker and cobbler), but now cannot because he must fix his window.

    Thus, the child did not bring any net benefit to the town. Instead, he made the town poorer by at least the value of one window, if not more. His actions benefited the glazier, but at the expense not only of the shopkeeper, but the baker and cobbler as well.
    "
    I was discovering that life just simply isn't fair and bask in the unsung glory of knowing that each obstacle overcome along the way only adds to the satisfaction in the end. Nothing great, after all, was ever accomplished by anyone sulking in his or her misery.
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    Re: Govt to suspend Cash for Clunkers program

    Quote Originally Posted by Harry Guerrilla View Post
    Whats funny is that I was looking for a reference to this so everyone could read about the Broken Window fallacy, which is what this is and it had at the end of it a reference to the cash for clunkers program.

    Parable of the broken window - Wikipedia, the free encyclopedia

    "The fallacy of the onlookers' argument is that they considered only the benefits of purchasing a new window, but they ignored the cost to the shopkeeper. As the shopkeeper was forced to spend his money on a new window, he could not spend it on something else. For example, the shopkeeper might have preferred to spend the money on bread and shoes for himself (thus enriching the baker and cobbler), but now cannot because he must fix his window.

    Thus, the child did not bring any net benefit to the town. Instead, he made the town poorer by at least the value of one window, if not more. His actions benefited the glazier, but at the expense not only of the shopkeeper, but the baker and cobbler as well.
    "
    I do not see a parallel with this cute story. the government is offering a cash incentive to owners of vehicles known to be the worst polluters. The cash incentive represents only about 10% of the value of a new car. The stimulus is sufficient to encourage people to buy new cars, helping the economy, and also junk their polluting vehicles, which also helps the economy in the long run.
    As a libertarian, I understand you would be against any sort of government involvement whatsoever under any circumstances, but perhaps even you can recognize this program is doing some good.

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    Re: Govt to suspend Cash for Clunkers program

    Quote Originally Posted by WillRockwell View Post
    I do not see a parallel with this cute story. the government is offering a cash incentive to owners of vehicles known to be the worst polluters. The cash incentive represents only about 10% of the value of a new car. The stimulus is sufficient to encourage people to buy new cars, helping the economy, and also junk their polluting vehicles, which also helps the economy in the long run.
    As a libertarian, I understand you would be against any sort of government involvement whatsoever under any circumstances, but perhaps even you can recognize this program is doing some good.
    I understand that in the short term this will yield positive results no doubt but we must always look into the future instead of the now. Short term is not sufficient, in my mind, as it can amplify future problems.

    The case in point now would be the recession. I was amateurishly predicting that something like this was going to happen a couple of years ago.

    Borrowing money like our government does is like leveraging (borrowing money) when you play the stock market or other similar trading enterprise, it amplifies the results both good and bad.
    I was discovering that life just simply isn't fair and bask in the unsung glory of knowing that each obstacle overcome along the way only adds to the satisfaction in the end. Nothing great, after all, was ever accomplished by anyone sulking in his or her misery.
    —Adam Shepard

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    Re: Govt to suspend Cash for Clunkers program

    Quote Originally Posted by WillRockwell View Post
    I do not see a parallel with this cute story. the government is offering a cash incentive to owners of vehicles known to be the worst polluters. The cash incentive represents only about 10% of the value of a new car. The stimulus is sufficient to encourage people to buy new cars, helping the economy, and also junk their polluting vehicles, which also helps the economy in the long run.
    As a libertarian, I understand you would be against any sort of government involvement whatsoever under any circumstances, but perhaps even you can recognize this program is doing some good.
    I forgot to add something important.

    People are now purchasing cars with longer loan terms and owning them for shorter amounts of time, I think the average is about 2 years while the loan terms have been extended to 5 1/2 to 6 1/2 years.

    In order to realize the full value of a vehicle you have to own it for about 10 years or more. I'll have to see if I can find the official numbers for it.

    What that means though is that we should not be encouraging people to buy cars they don't need and instead pushing people to own their same cars longer with shorter loan terms.
    I was discovering that life just simply isn't fair and bask in the unsung glory of knowing that each obstacle overcome along the way only adds to the satisfaction in the end. Nothing great, after all, was ever accomplished by anyone sulking in his or her misery.
    —Adam Shepard

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    Re: Govt to suspend Cash for Clunkers program

    Quote Originally Posted by Lakryte View Post
    This program is going to be a failure, and will cause problems down the road. In the short term, it might do some good. But in the long term, it will end up costing more than it is worth, and when the program ends any new workers hired will no longer be needed and they will be laid off.
    I don't think it's going to much good in the short term. The only thing that the car companies accomplished, was to clear out all the vehicles they were overstocked on.


    Quote Originally Posted by WillRockwell View Post
    If 225,000 new cars are sold, how is the economy not helped?
    It didn't help the economy, because you're only recycling money. Robbing Peter to pay Paul, as the saying goes. People didn't go buy cars because they're making more money now than they were 6 months ago. They're buying cars because the government gave them a really nice down payment. The killer, is that the car dealers pumped up the sticker prices $3-$4,000 then took the clunker money as a down payment. Then, there are clowns that went in and bought $40,000 cars that they can't afford. How will the economy be helped when half the cars sold this week get repo'ed?



    Quote Originally Posted by Smoke[MaxX] View Post
    Man, if all you Conservatives can look into your crystal balls and see into the future, why didn't we realize that Bush's policies would head us into a recession? Hmm...
    And, which policies would those be? Please be specific. Thanks in advance.
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: Govt to suspend Cash for Clunkers program

    Economic stimulus is a tricky thing, you guys. For one thing, it is common to assume the consumption and spending is enough to lead to economic prosperity. But not all consumption is equal. It's a much better economic boost to invest money in infrastructural improvements and industries that produce capital, rather than the results of capital.

    For example, buying a car for one person is not a really wise decision, as the car requires expensive upkeep and depreciates in value, as well as not producing any more goods. Investing money to buy a piece of upgraded machinery, would hypothetically increase the capacity for that machinery to make more of it's product, and because the product can be sold, more wealth is generated to the purchaser of such machinery. It's a return investment.

    So, as we see, not all spending leads to improved wealth. It depends quite a bit on whether the value of whatever you are spending on increases or depreciates with time.

    Given that, I think that this cars for clunkers program is not really a wise decision in the long run. Most of those new cars become something close to a clunker in just a few years, and the people who buy those cars get little return value. The companies who make them, on the other hand, instead of investing in excess markets and expanding, will most likely continue to make cars, thus saturating the market.

    In the long run, I suspect the wiseness of this program.
    Kennen Sie Ihre Gedanken zunächst, Ihre Vorurteile zweite, Ihre Ziele Drittel.

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    How to Win the Clunker Game

    There are some opportunities here for certain buyers and potential hazards for others. If, after taking stock of all the factors in play and doing your research correctly, you decide this is for you, remember the most important rule of all:

    DON'T BUY A 2009 VEHICLE!

    Dealers will do their very best to convince you to take these aging units off the lot--it's their job--but what they can never do is offer you a discount equal to a year's depreciation. You will negate the entire amount of clunker money and rebate money and likely even more. A model-year will always carry massive weight in resale value, particularly down the road a few miles.

    Many brands have 2010 models on the lot today, with many more on the way. Consider only these.

    Who can this program help the most?

    1) Folks whose personal circumstances have changed. Kids grown? Out of the house? This may be a great time to unload that minivan your friends tease you about.

    2) Folks who are interested in a sub-$17k vehicle. While it is rarely advisable to purchase a new vehicle, at this price point, the weight of depreciation is eased a little. Kia, for instance, is also running a manufacturer incentive of several thousand dollars on certain brands. Between these two factors, you might be still be near actual value after a year! Not two, though.

    3) Folks who want a Toyota Prius. What can we say? Prius recently held near original retail value for over two years, a sublime performance. Also, going from a MPG 'clunker' to a 'best mileage ever' Prius should grant you induction into the Carbon Footprint Hall of Fame.

    Who might this program harm the most?

    1) Folks who might be blinded by what seems like a check for thousands of dollars being handed to them. It really would be a check for thousands of dollars if it included used vehicles as a purchase option. As this bill is written, the objective is not to help out bill-challenged consumers. Not at all.

    2) Subprime and limited budget buyers. By providing these funds directly to the dealer, there will be an opportunity for some dealers to obtain funding for folks who otherwise may not qualify.

    Dealers may be able to show these funds as a 'down payment' or the like to make the deal look less risky to lenders, and this can easily encourage folks to bite off more than they can chew. For more on how this dynamic can lead to difficult circumstances for buyers and banks and others, google 'worldwide financial crisis and real estate meltdown of 2008'...

    Many folks happen to love their clunkers, which is often NOT a 'clunker' at all. It is either highly useful or powerful or both. If you love it, keep it! $3500 is not going to seem like a lot of money when you are trying to get up that hill, the one you used to JUMP over like them Hazzard boys.


    .

    T. Jefferson: 'There is not a truth existing which I fear or would wish unknown to the whole world....

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    Re: Govt to suspend Cash for Clunkers program

    Quote Originally Posted by DasTränegras View Post
    Economic stimulus is a tricky thing, you guys. For one thing, it is common to assume the consumption and spending is enough to lead to economic prosperity. But not all consumption is equal. It's a much better economic boost to invest money in infrastructural improvements and industries that produce capital, rather than the results of capital.

    For example, buying a car for one person is not a really wise decision, as the car requires expensive upkeep and depreciates in value, as well as not producing any more goods. Investing money to buy a piece of upgraded machinery, would hypothetically increase the capacity for that machinery to make more of it's product, and because the product can be sold, more wealth is generated to the purchaser of such machinery. It's a return investment.

    So, as we see, not all spending leads to improved wealth. It depends quite a bit on whether the value of whatever you are spending on increases or depreciates with time.

    Given that, I think that this cars for clunkers program is not really a wise decision in the long run. Most of those new cars become something close to a clunker in just a few years, and the people who buy those cars get little return value. The companies who make them, on the other hand, instead of investing in excess markets and expanding, will most likely continue to make cars, thus saturating the market.

    In the long run, I suspect the wiseness of this program.
    I think a ten year old Prius will have less negative impact on the economy than a ten year old Hummer, and that's precisely what this program is designed for. By my calculations, the program has already saved 45,000,000 gallons of gas per year, based on annual driving of 10,000 miles and a 1/3 increase on mileage over the clunkers that are being turned in. That, plus the stimulus to the economy and the much-needed income for the auto industry, pretty much convinces me this was a good and timely idea.

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    Re: Govt to suspend Cash for Clunkers program

    Quote Originally Posted by DasTränegras View Post
    Economic stimulus is a tricky thing, you guys. For one thing, it is common to assume the consumption and spending is enough to lead to economic prosperity. But not all consumption is equal. It's a much better economic boost to invest money in infrastructural improvements and industries that produce capital, rather than the results of capital.

    For example, buying a car for one person is not a really wise decision, as the car requires expensive upkeep and depreciates in value, as well as not producing any more goods. Investing money to buy a piece of upgraded machinery, would hypothetically increase the capacity for that machinery to make more of it's product, and because the product can be sold, more wealth is generated to the purchaser of such machinery. It's a return investment.

    So, as we see, not all spending leads to improved wealth. It depends quite a bit on whether the value of whatever you are spending on increases or depreciates with time.

    Given that, I think that this cars for clunkers program is not really a wise decision in the long run. Most of those new cars become something close to a clunker in just a few years, and the people who buy those cars get little return value. The companies who make them, on the other hand, instead of investing in excess markets and expanding, will most likely continue to make cars, thus saturating the market.

    In the long run, I suspect the wiseness of this program.
    Economic stimulus isn't a tricky thing. Any given economy is based on one thing: cash flow. The more cash flow there is, the healthier an economy is. The government can't create cash flow.
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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