Tag Archives: cash-for-clunkers

UPDATE: Cash-4-Clunkers Impact

Cash_for_Clunkers_-_Dodge_Caravan

Remember this program? One of the first ideas from the Obama administration was to enable people to trade in their old cars for new fuel efficient, green cars thus bolstering the floundering auto industry. Free money to buy a new, car from the government? What could go wrong?

A lot of us sitting on the sidelines, with real life experience, expected that things wouldn’t go as planned. And they didn’t. As always, when taking a plan from chalk board to reality, there are unexpected consequences. Here were just a few:

Program didn’t help poor people and hurt many. Of course, those with real clunkers, couldn’t afford a new car no matter.  Auto_scrapyard_1What the program could have done was allow people to upgrade from their super gas guzzler to a more efficient used car. Instead, the used car market crashed because the Cash-4-Clunkers program required the older cars to be destroyed. Those I knew personally who participated were going to buy a new car anyway that year but simply took advantage of the free government money.

CNN Money estimated taxpayers about $24,000 per car.

Ouch.  

But surely the program did help the bailed out and struggling American automotive industry?

See for yourself: The top ten vehicles purchased using the program

1.Toyota Corolla
2. Honda Civic
3. Toyota Camry
4. Ford Focus FWD
5. Hyundai Elantra
6. Nissan Versa
7. Toyota Prius
8. Honda Accord
9. Honda Fit
10. Ford Escape FWD

Double Ouch.

So at least the program was helpful to the environment. Right?

Not according to E The Environment Magazine.

You remember the 3 R’s of helping the environment: reduce, reuse, and recycle? Apparently, the Obama administration missed this part. Because the car engines had to be destroyed, even though most were still in good operating condition, they were not reused. According to the Automotive Recyclers Association up to 95% of a car, including the fluids could be recycled. But since the regulations required a freeze up the engines many of the cars were sent to the scrap yard bypassing the recycling centers. Because the mandate demanded quick destruction of the used vehicles salvageable parts were not available, raising prices at the salvage yards and toxic residue was lost to the environment with waste was added to the landfills. Even MSN Now called the program an environmental wreck.

In the meantime, my friend who had a clunker car that she struggled to get through local emissions tests could not afford to buy even new ‘used’ car because their prices suddenly shot up.

Are you surprised? Common sense caused me to realize this was a program that had not been thought through. The consequences were surely ‘unexpected’ to this administration. It’s a darn shame this update was not widely shared prior to the election. Perhaps even the ‘greenies’ would have rethought their position.

Obama 2012 Motivational Poster Released: Forward!!

FORWARD

Three years of agonizing torture has been ended as the Obama campaign has finally unleashed their new slogan on the voters of America: FORWARD! It didn’t take long before we were also greeted with posters and such to illustrate the meaning of such a brilliant slogan. Who knew we could make cash for clunkers work?

Thanks to scottoncapecod.com for letting us display his awesome work.

Obama's Policies Not Going the Distance

Other than Jimmy Carter, I am not sure we’ve had a President in recent history with so many policies that failed so dramatically so fast.  President Obama promised that he would do health care reform, wall street reform, and then he had his Keynesian stimulus policies tested.  So far, the mighty Obama.. has struck out.

Cash for Clunkers
Cash for clunkers: clearly the best medicine for ailing Detroit (which we Citizens had invested heavily in 2/3 of.  Certainly, the pouring of tons of federal dollars (a.k.a. your money) would help float the unions .. I mean manufacturers.. so that they help the economy recover.  Well, not really.  In fact, it shows that $3 Billion of tax payer money, does not buy happiness – or economic recovery as the case may be.  In fact, it may have delayed the recovery by 4-6 months as the industry was already seeing an upward slope in sales until the program caused them to see a quarter-over-quarter sales rate loss during the program.  One whole month showed a spike, after which a devastating drop in sales showed up, well below where the manufacturer’s numbers were before the program began.

If that wasn’t the medicine of truth, how about the truth about medicine?  Health care reform has now been cast into daylight – burns a little doesn’t it?  The government’s own Congressional Budget Office is saying that the program does not cut costs or the deficit now that the facts are known, doctors are dropping Medicare patients at unprecedented rates, pharmacies are running away from the program and even Canada, Oh Canada, is re-factoring it’s overly-expensive, government-run system (I know, not Obama’s fault, but he did try to  model this mess after them).  Then again, Speaker Pelosi did honestly say that Americans would find out what was in the bill once it got passed – we’re learning.

Then we have the President’s wall street reform (aka Financial Reform).  Even the liberal media admits that the financial reform bill doesn’t end “too big to fail”.

So cash for clunkers turned into your cash in the toilet, health care reform has given your cash to the reformers, and the financial reform doesn’t do anything to prevent your cash from disappearing into the bowels of  Wall street.  The President is claiming success on all of these things, and is thrilled about the Duke jersey he scored.  The rest of us.. not sure what we’re getting for well over $3,5 trillion dollars in reforms and stimulus.

So what’s an all talk, no action President supposed to do?  Well, ours is talking more – this time about cap-and-trade, alternate energy, and cap-and-trade policy, more new policy.  So far.. he’s Oh-for-three.  Can he take batting .000 after four at-bats?  .000 with the bases loaded even?  Sure he can – his contract isn’t up until 2012.  Let’s not renew it.

The Economy is Not Getting Better.. Yet

Much of the media has been declaring an end to the recession.  I have been on the sidelines for months now and a few talking heads were not going to get me to throw my assets at a loser market.

I have done my best not to sound like Chicken Little, but there was absolutely no way I could in good conscience influence my readers into putting their assets into this bubble after the bubble.  The government needs you leveraged, consuming and cash-strapped.  This is not the time to be any of those.  Despite the GDP rise, which is quickly-becoming a false indicator, we are not recovering.  The government can’t even figure out why the GDP rose, but both of their explanations point to government liquidity in the market, not economic recovery.  My recommendations?  Put away some cash, get out of debt, invest, by cool stuff.  In that order.

I am not hedged against gold, a short on the market or in any other way trying to influence you so that I can make a buck.  I am conveying my current position.  My positions in the market during this whole fiasco have allowed me to increase my retirement account by11%, make money on a few equities, and overall protect my family’s assets.  Why?  Because I did not believe the Bush crew, I do not believe the Obama team, and I never believe the media.  I do my own research, look for true indicators, not just the cool meter that CNBC flashes or that Bernanke points at.

If I am wrong, I’ll admit it (my promise is that if Q4’09 and Q1’10 show growth over last year… I’ll write an article entitled, “I was wrong”), but so far… hasn’t happened.  I am struggling to figure out if we will go inflationary or deflationary because our government can’t make a decision and is making some of the most dramatic and ill-advised moves in history.  That is the same reason that business will cease to spend money.  A wise investor will not put money into a market if they cannot understand the principles upon which the market it based.  Our leadership wants to disassemble capitalism “brick-by-brick”, redistribute wealth, control the media, etc.  These uncertainties prevent me from doing any real investing.

In September we see that consumer spending dropped off dramatically.  Why?   Because the government wasn’t buying cars and houses for people anymore.  It proves that the economy isn’t recovering, only that the government was propping it up.  Even the administration admits that the growth in GDP was due to cash-for-clunkers and the stimulus bill.  That means that the American economy didn’t do anything.  It also means that the government’s artificial propping-up of the auto and housing industries will just cause a secondary crash in both.

I do not intend to cry, “the sky is falling”, but if that’s what it takes to prevent you from losing your nest egg, house, or livelihood, then so-be-it.  Call me Mr. Little if you must, but save, de-leverage, invest… then buy cool stuff.