Tuesday, May 05, 2009

Obama Plan To Raise Used Car Prices

The Obama Administration has another plan to screw poor people. He is working with Congress to drive the poorest people out of the used car market. The plan is called Cash For Clunkers.

Committee members emerged from the meeting Tuesday claiming a modest victory. They said they agreed to embrace a "cash for clunkers" plan that would provide $3500 or $4500 to people who replace old, low-efficiency cars with new, more fuel-efficient models.
Brilliant. What will happen? People in the market for a new car will buy a $1,000 (or cheaper) running used car to sell to the government and the government will give them $3,500 or $4,500 for their junker. This will help clear the used car market of the very lowest price cars and it will help raise the price of all used cars. It effectively puts a floor of $3,500 (or more - depending on the "generosity" of Congress) an the price of a used car. The $500 and $1,000 used cars will be vacuumed from the market.

So what is the point of raising used car prices for everyone and especially the poorest of the poor? I think it is rather obvious. The Democrats hate poor people and love inflation.

Cross Posted at Classical Values


tsw said...

Once again, obamanomics fails to predict unintended consequences.

Self evident truth - If your goal one thing, but your means are to try and fool the masses into thinking you are doing something else, you eventually fail. In this case, the failure is evident even before the mass illusions are started, such is the level of deception by these despicable people running our country today.

robert said...

No, that is not what will happen. The person with the clunker has to have owned the car for one year or more and have had it insured for one year or more. This keeps people from buying a junker to flip it into a Cash for Clunker qualifying vehicle. Many 'clunkers' don't even qualify because they were rated at more than 18mpg in EPA combined city/highway ratings.

It is important to rant about something when you have the facts first.

This program has proven to be the most successful stimulus yet. It is unfortunate that many low priced cars will now be unavailable for purchase now that they are destroyed.

M. Simon said...


Used car prices are already rising in a tanked economy. Perhaps you ought to check your market data more frequently.

M. Simon said...

And let me add Robert. It is not just unfortunate. It will hurt the poor the most.

robert said...

Believe me, I do understand the market. I am in the automobile business in a senior sales position with 16 years experience. Used car prices have risen as more people can't afford a new car. People will always need some form of transportation and in most areas that is the automobile. Vehicles are depreciable and eventually expendable. Yes, it is too bad that these vehicle can't find another home. This program has proven to be a big boost to dealers and the manufacturers, not just the American ones either. Many low cost cars never qualified as their MPG rating were too high. Low cost, good MPG vehicles are the ideal ones for people with low incomes since the cost of ownership is less. A gas hog for the working poor is a bad choice, but sometimes the only choice. This is a perfect example of helping one facet can be at the detrimit of another. The local charities are getting the short end of the stick. But the program is over and it will hopefully be back to normality soon. Many who quailified chose not to sign up for a new car payment and I respect that.

I still believe that more good than harm resulted from the program. People with used cars to trade or sell will see increased value for them. The middle class is the driving force of the economy and this program was a success in stimulating sales and considerable tax revenue for the states. People are going back to work at assembly plant and the suppiers that provide parts. Hopefully the economy is starting to recover, or at least not contracting further. It will be quite a while before we may be back to 2007 levels.

Again, nothing can be positive for all concerned, just hopefully help more that it hurts and the help will be in a range that affects the economy positively in a broad way.....and cash for clunkers came in under budget---now that is rare for a Federal program!

M. Simon said...

I still believe that more good than harm resulted from the program. People with used cars to trade or sell will see increased value for them.

A transfer of wealth from the bottom to the top (relatively).

I don't see the good of that.

robert said...

Anytime something happens, there will always be someone that doesn't like it. The Internet is the best place to share opinions. I guess this is one time where we don't agree. Most of the people doing the cash for clunker program were middle income folks with good credit that spent their money wisely. They owned the trades for years (one year was the minimum anyway) and most were not in the market until this program came along.
The middle clash is the driving force behind the economy and this was a program designed for them. There was a cap on how much the car could cost, so most BMW and Merceded were exempt. It didn't even have to be an American built car.

Anytime someone buys anything, wealth is transfered. Without sales, our country just stops. At least this transfer of wealth wasn't to make bombs to destroy foreign lands---but that is another discussion!

Now I hear there will be another program to upgrade home appliances, too bad hardy any are built in the USA anymore. We need to get this country back on track. That isn't protectionist, just common sense.

M. Simon said...

Part of that wealth was transfered at the point of a gun. The dollars the government paid for the clunkers.

I generally prefer voluntary transactions. The kind where both parties benefit from the exchange under most conditions.

You know like what if I don't want to pay for some one else's clunker to be made worthless but would rather have a new tool for my shop?

I kind of object to other people deciding what I should value and by how much.


But if we are going to go that route I'd prefer that we buy all the under $1,000 cars from poor people and give them all $30,000 vouchers for new cars. That would make more sense to me.

And you will probably tell me we can't afford it. And I will tell you - yes we can. We just steal more money.

There is no limit to the good that can be done with other people's money.

robert said...

Mr. Simon, you and I will probably aggree on far more than we disagree. Rarely does a government program help in the long term and practically never does anything within a reasonable budget. Too bad most of the things we paid our taxes on orriginally are now crumbling like roads, bridges and other public works. Those things don't get votes and that seems to be the only thing that counts anymore. We are spending ourselves into the greates debtor nation the world has ever seen and our livelyhood is and will continue to suffer. I wish us all well on getting back out of the prolonged recession and hopefully we have all learned to save for the future instead of spend our future. Now is only the government could do the same thing.

robert said...

Gee, I wish I would have proof-read that last post---several misspelled words or gramma errors. I am edumecated!

M. Simon said...

We don't hold much on ceremony or grammar here.

If the government wanted to waste some money usefully - research - not too stupidly done - often helps.

Carbon nano-tubes - especially for conductors and transistors would be a good place to waste some money. Up through pilot production. Say 1,000 tons a year for conductors.

That should absorb some cash and has the possibility of some serious return.

robert said...

I will read up on nano-tubes. Research money can be very well spent. We have lost our lead in a lot of areas. Many people thought the space race was a waste of money while complaining on their laptops and other micro electronic devices that were direct descendants of space and military technologies. A lot of great developments have been created while looking for something else. I would like to see a Manhattan Project focus on nuclear fusion. This could lead to the inexhaustible supply of clean energy we so desperately (or are convinced we are running out of)need. The fuel cell is neat, but current technology makes creating hydrogen supply using more energy than that which would be created in the reformulation through the fuel cells themselves. Kind of like the ethanol boondoggle. ADM loves it, but we use more fuel than we make. The answers are out there and research should be a public work. If we aren't moving ahead, we are getting passed.

This country can regain a lot of lost ground if we can focus on something besides better bombs or more humane killing....how can killing be humane anyway? "I'm going to kill you, but it won't hurt much!"

M. Simon said...

Some one has to keep the sea lanes open. I do not trust the Russians or Chinese. The Euros are idiots.

Read these on what happens when the sea lanes close:

Decline and Fall

Desolation Row