Cash for Clunkers unintended consequences.

[Desertdog]

After thinking about what is going to be the unintended consequences of the Cash for Clunkers law.

One Cash for Clunkers new car buyers traded in a 1998 SUV.  Both of my vehicles are older than this and are running great.
I am assuming that there are later models than that being traded in. 

#1 - I didn't think of, but heard it on the radio. 
The buyers of new cars are turning in their clunkers to the dealer instead of donating them to charities, which will reduce the charities income. 
The unintended consequences will probably be the charities will cut their services for the poor.

#2 - Since  that all of the Cash for Clunkers cars must be distroyed, the numbers of used cars in the market will be greatly reduced.  Results probably will be much higher used car prices and less choices.

#3 - Dumping all the Cash for Clunkers cars in the scrap metal markets will probably reduce the price of scrap metal and reduced income for recyclers at every level until the glut of vehicles is used up.

[Monkeyleg]

People who bought their cars with our money as down payments were turning in cars that aren't that old. That means that there will be fewer really cheap cars available if this program continues.

Who buys cheap cars? Mostly young people and the poor. What do they need them for? One important purpose is getting to work. No money for car=no car=perhaps no job.

Of course, lacking a car won't matter when it comes to jobs if cap and tax passes, as there will be far less jobs available.

Yessir, the Dem's are the party of the disadvantaged. They create as many disadvantaged people as possible.

[Parker Dean]

The rising prices for used cars was a given, even without the C4C program.

IIRC, we scrap about 12 million cars a year in the US. Production of new cars has been in the 10 million range for a couple of years now, so we're at least 4 million cars in the hole so to speak. C4C only exacerbates the coming supply problem. I don't know if the 12 million figure includes the not-insignificant number that head south of the border and overseas. If it doesn't, then the hole is that much deeper. The used car "crunch" is expected to peak in the 2011 time frame, so if you're wanting an average type of used car then you best be jumping on one because it's not likely to get any better price-wise.

[Harold Tuttle]

can junk yards afford to scrap vehicles
that don't have engines?

[Ben]

As mentioned by Desertdog, I just read that all the "donate your car" charities are hurting. No one wants to donate their car for a tax write-off if they can get the $4500 "cash" for a new one. So now even more people too poor to buy a newer vehicle are SOL.

This also adversely affects people who don't want to get into debt. I have never made a car payment in my life. I've always paid cash. My first two vehicles were older used cars because that's all that I could afford at the time. If this program continues for any length of time, if I wanted to buy my first car in the immediate future, I'd likely have to take a loan out because of what will now essentially be artificially inflated prices on the limited choice and amount of used vehicles that will be on the market.

That or buy something with 200K on the odometer that will end up nickel and diming me, because the way this program seems to be working, it's taking all the "mid-range" less than 10 year old, under 100K, vehicles off the market. You're left with the really old clunkers and "newer" used vehicles that will be out of many people's price range.

[Standing Wolf]

Government has no business being in the car business in the first place, and less turning the nation's hard-earned tax dollars into so-called "welfare" to buy votes for representatives of the Democratic (sic) party.

[Desertdog]

Government has no business being in the car business in the first place, and less turning the nation's hard-earned tax dollars into so-called "welfare" to buy votes for representatives of the Democratic (sic) party.

It could still backfire on BHO.  If the new car buyers or their spouse lose their job, there could be a lot of repos of new cars.

[Monkeyleg]

I know I'm not alone in feeling the way I do, but I have to vent. The expense that gets in the way of all other bills and spending every month is taxes. I'm constantly writing checks to the feds, state or local government.

Now I'm screaming mad that I'm writing these checks to help people buy bigger homes than I have or more expensive cars than I have. This is absolute insanity.

Anyone with children should be doubly mad, as it's the children of today who are really going to be hit for this. As the interest accrues on the T-bills, the fuse will be getting shorter.

[FTA84]

I haven't seen anyone mention it (or maybe they did, but I missed it).  But the first time I heard of this programme, it sounded like a thinly veiled attempt to 'destroy' anything that wasn't envirofriendly.  The first step in enviroworship is to destroy the choice not to worship the environment.

[griz]

Another thing I didn't see mentioned:  Since this is effectively a new car subsidy, the price of them will go up.  Of course that is the goal of the program, namely helping the auto makers.  But what happens when the C4C money dries up?  Will the car market crash even harder?  I don't know, but it just occurred to me that with congress being as generous as they are with all this free money, maybe they will extend it forever and a new car will become a "right" like health care.

[Monkeyleg]

This photo makes me sick.



Reminds me of book burning.

In the name of environmentalism, we are destroying real property that has real value, paying for it with the tax dollars of our children, and increasing the cost of cars to those who are least able to afford the cost increases.

This will not help the auto industry over the long term because the boost is artificial. A few years back, when the automakers were offering all sorts of deals at 0% interest, market analysts predicted that sales would plummet after everyone who intended to buy a new car had done so. Bailout, anyone?

[Boomhauer]

What makes you think that any of these "consequences" are unintended? None of this is "unintended". None of it.

[grislyatoms]

Whatever happened to Depression era ideals - "Make it work, wear it out, use it up or do without?"

Seeing perfectly serviceable vehicles, purposefully destroyed, incenses me.

I have some old tools that might have a little rust/discoloration on them but I'm not going to go chuck them in the river and then raid my child's college fund for replacements.

I'm not that irresponsible.

[RoadKingLarry]

I don't think there are any "unintended" consequences to the C4C abomination.
I was relieved though to see that my particular make/model/year of clunker was removed from the eligable list.

[tokugawa]

Trade in a paid for older vehicle for a new one with a payment- increase indebtedness.   check

Reduce the supply of used cars, drive up the price. check.
 
reduce the number of cars on the road without tracking systems/onstar or the like. check.

reduce the number of used parts available. check.
 
none of this is good. - the corrollary would be to "encourage " new home sales by burning down our houses.
 
Our country is being run by vicious amoral cretins.

[Ben]

the corrollary would be to "encourage " new home sales by burning down our houses.

Heh, I'm waiting for the next "bailout" that involves destroying all homes older than 10 years and putting up LEEDS certified homes in their place.

[Perd Hapley]

Whatever happened to Depression era ideals - "Make it work, wear it out, use it up or do without?"

As I understand it, Depression-era ideals were those of destroying produce to increase prices. 

[Monkeyleg]

Burn corn, wheat and soybeans to raise prices for farmers. It worked until the dust bowl hit and farmers weren't able to produce enough to feed the US.

[FTA84]

It is all about the politics of eliminating deflation so that the irresponsible don't end upside down in loans.

The two ways to reduce deflation:

1) Print more money -- which they are already trying to do at record pace.
2) Destroy supply (wealth)

Obama wants to get the stock market back to the number 14k, so that he can say he solved the crisis. He knows the general populace doesn't know that number reflects wealth relative to the worth of the dollar, it does not reflect absolute wealth.

[Gewehr98]

So if one wants to find a late-model V8 at a local junkyard...

Socialism runs deep with this administration, nicht wahr?

[Boomhauer]

So if one wants to find a late-model V8 at a local junkyard...

Socialism runs deep with this administration, nicht wahr?

Why would you want such an unpatriotic, enviromentally unfriendly engine, prole? You should at most have an econobox, and if you were more patriotic, you would take publik transportation.

[Desertdog]

Unintended consequences #4 - I heard this one on the news.
Reduced repairs on cars.  Shome shops are down as much as 50% because the owners had bought new cars instead of repairing the older cars.


#5 - Once the Cash for Clunkers runs it's course, what is going to happen to the new  car sales for the next 1 1/2 to 3 years?
I expect a drop even worse than the one that brought on the Cash for Clunkers.

[AZRedhawk44]

It's okay... since we've nationalized GM and Chrysler and nearly killed Ford, the next go-round we get to finish Ford off and maybe try for Toyota or Honda too!

Imagine that... us nationalizing a foreign corporation!

[RaspberrySurprise]

It's okay... since we've nationalized GM and Chrysler and nearly killed Ford, the next go-round we get to finish Ford off and maybe try for Toyota or Honda too!

Imagine that... us nationalizing a foreign corporation!

Well Obama did look pretty friendly with Chavez... maybe they shared some secrets for success?

[red headed stranger]

Heh, I'm waiting for the next "bailout" that involves destroying all homes older than 10 years and putting up LEEDS certified homes in their place.

I'd be in favor of burning down a bunch of the houses NEWER than 10 years old.  A lot of those new McMansions are all but disposable anyway.