Next up: the Cash for Clunkers hangover
posted at 5:40 pm on August 25, 2009 by Ed Morrissey
Yesterday, as the Cash for Clunkers program finally ended in a flurry of showroom visits and dealer complaints, I wrote that the program was perhaps the most foolish attempt at government manipulation of the private market since the Community Reinvestment Act and the mandates for Fannie Mae and Freddie Mac to securitize sub-prime loans. I’m not the only one making that argument, either. The Washington Post warns its readers of the “hangover” coming after the government bender on outdated fenders:
The Obama administration declared the program a success. An estimate issued Monday by the White House Council of Economic Advisers said the program is projected to boost U.S. third-quarter gross domestic product by 0.3 to 0.4 percentage points and create 42,000 jobs by the end of 2009.
Many auto industry analysts and dealers expect sales volumes to fall now that the program is over. They worry that many people who took advantage of the program were merely accelerating purchases they would have made later in the year.
If that’s true, the premature sales could hurt automakers, which increased production in the third quarter to replenish clunker-depleted inventories that had already grown low because of factory shutdowns over the summer.
Because there’s a lag time between production and getting a vehicle to a dealership, the new vehicles “will hit when there’s a lower demand,” said Jeff Schuster, executive director of forecasting at the auto industry research firm J.D. Power and associates.
And when will that lower demand come? Right as the new models get to the dealers, when prices are highest anyway. Small wonder that Edmunds.com president Jeremy Anwyl says, “Nice party, but the hangover is awful.”
The problem with C4C and the CRA/Fannie/Freddie interventions is that they can’t change the basic laws of economics. Big-ticket sales have multi-year impacts that go far beyond the point of sale. In both cases, the investment in vehicles regulates who can buy, and when. The people who bought cars under C4C would likely have bought new vehicles when the prices dropped enough, especially if gas prices pushed them to look for more fuel-efficient vehicles. Destroying their trade-ins make it more difficult for other families to buy used vehicles, both by ensuring a lack of inventory and having the supply squeeze drive prices upward.
To the extent that the program pushed people only marginally able to buy a new vehicle through the magic of trade-in inflation into making these purchases, it encouraged them to take on additional debt they likely can’t afford. Since the chronic issue with American families is too much debt rather than too little, that aspect of the C4C program will almost certainly produce bad results in the long term. We can expect higher-than-normal repo rates and loan failures, exactly the problem that created the current economic crisis.
The Obama administration says that the program will create 42,000 jobs this year and boost the GDP in the 3rd quarter. Do we expect the White House to follow that up with reports on how it damaged new-car sales in Q4?
Blowback
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You usually need some sort of an intellectual high ground to make those type of statements…
Just a heads up.
crr6 on August 25, 2009 at 6:14 PM
Yeah, so what. It was updated during the Clinton administration and nearly a decade later, when it was at most 3% of all loans, it created the crisis. Are you serious? This is what you blame the crisis on.
How about this? The fed lowered the fed funds rate to below 1%. Kept it there for nearly two years. As such, banks borrowed like crazy. Then, they had more money than loans and created more loans. This caused a bubble which eventually popped.
So, let me ask you. Logically, which is the more likely culprit for the financial crisis, irresponsbile monetary policy or an obscure law? Well, which one is more likely to cause the crisis.
Here’s the irony. Mortgage brokers are often blamed for the crisis but CRA didn’t even apply to brokers. It only applied to retail mortgages not wholesale. AS such, the part of the business most blamed wasn’t even governed by CRA.
mike volpe on August 25, 2009 at 6:16 PM
I assumed as much.
lorien1973 on August 25, 2009 at 6:16 PM
Good Morning.
Time for your meds.
Itchee Dryback on August 25, 2009 at 6:17 PM
Can someone tell me how giving a $4500 rebate on new cars is going to create 42,000 jobs. The program only ran for what three weeks at best?
fbcmusicman on August 25, 2009 at 6:17 PM
You like this term “obscure” – but Reno and Clinton used it was a weapon to force banks to make loans to people who had no ability to repay. They used ACORN and affiliates to do this as well. First off, try to look into this a bit more deeply.
Was CRA the only culprity? No. Was it part of it. Yes.
It’s undeniable.
lorien1973 on August 25, 2009 at 6:18 PM
Or the government could have stayed out of it, the people who really needed to get a new car could have negotiated AT LEAST 3 k off the MSRP, donated their old car (which was not a clunker) to a charity or sold it to a family that needed a car that ran worth 1-2 k AND in the end paid LESS for the same car.
Then they could have taken their savings and put that into the economy as THEY see fit.
And others could have saved even more if they waited a few more months until the manufacturers rebates were coupled with selling at invoice or near dealer hold back just to get last years model off the lot.
What 42,000 jobs? Are they “green jobs” – the car killers? Are we hiring government workers to destroy cars and that is the “jobs created”? Are we double counting the FAA workers now reassigned to the c4c? Is this 42,000 permanent jobs? real jobs? Doubtful, because if that were the case they would say what those jobs were, it’s BS with a bow on it.
batterup on August 25, 2009 at 6:18 PM
Shut up. That’s why.
lorien1973 on August 25, 2009 at 6:18 PM
42,000 new jobs? The sale period is over, half way through Q3.
Cars are being destroyed – no used car salesmen/women.
Domestic companies were the minority of sales (with additional cars on lots as is) Foreign are at normal manufacturing levels.
Q2-first half Q3 is the buying season.
I imagine the WH anticipated Healthcare going through, which would have given billions to UAW, thereby allowing them to “rehire” out of work employees on the union rolls and count it as “new jobs”.
I expect a revision on that number by Thursday to +/- 0 new jobs.
Odie1941 on August 25, 2009 at 6:18 PM
Heh, heh..ha..hahha..BWAAAAAaahahahah.
Itchee Dryback on August 25, 2009 at 6:20 PM
I’m surprised you can get it up there, what with his own being so far up his own arse.
mjk on August 25, 2009 at 6:20 PM
Ph – and factor in higher insurance premiums for a new car compared to used cars. You know, the full coverage you need when buying on credit…
All smoke and mirrors to artifically prop up UAW, GM and GMAC.
Here’s the “new” GM pink sheet stock, after billions were wiped out. I dont see an increase factored in.
http://finance.yahoo.com/echarts?s=MTLQQ.PK#chart3:symbol=mtlqq.pk;range=3m;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
Odie1941 on August 25, 2009 at 6:21 PM
Stop asking questions…racist!
Itchee Dryback on August 25, 2009 at 6:21 PM
What exactly to you cal Fanny and Freddy?
Count to 10 on August 25, 2009 at 6:21 PM
Yeah, bummer. Sorry!
jimmy2shoes on August 25, 2009 at 6:23 PM
It will be many weeks before Obama starts paying the car dealers. I suspect some deals will never get paid. Car dealers will then be very slow to replace low inventory. Obama doesn’t know the car business.
seven on August 25, 2009 at 6:23 PM
CRR ….hmm based on an estimate that is 70,000 dollars per job.
The fact that you don’t see this as a joke only proves your obedience. At least you don’t have to worry about being audited. Of course usually an income is required.
CWforFreedom on August 25, 2009 at 6:23 PM
Next citation: Wikipedia.
mjk on August 25, 2009 at 6:23 PM
Yes, but none of those banks were wholesale banks which is where the no doc, stated, niv, option arm loans were. It wasn’t even in the top 100 causes of the crisis. CRA was for retail banks. That’s your local bank. Those banks are still around because they are far too conservative to get involved in aggressive loan programs. Where all the junk loans were at was wholesale which isn’t even governed by CRA. The program is stupid but conservatives muddy the issue by focusing on it because they create a reality that didn’t exist. CRA was inconsequential. It had nothing to do with anything. Teachers weren’t allowed to state that they make $200k yearly because of CRA. They did it because a bubble was created and there was an insatiable appetite for loans. That bubble was formed because of loose money policies by the fed. That’s what happened. What you are doing is arguing about nonsense. You are creating a reality that never happpened.
mike volpe on August 25, 2009 at 6:24 PM
He doesn’t know the health care industry either, but it doesn’t appear to be stopping him.
mjk on August 25, 2009 at 6:24 PM
I dunno but we already know they are county temporary positions.
CWforFreedom on August 25, 2009 at 6:24 PM
The dealers made out like bandits on this program. They inflated prices by $3500 to $4500. The consumer ended up paying the same with or without the rebate and the dealers (assuming they actually get paid) will be laughing all the way to the bank.
angryed on August 25, 2009 at 6:25 PM
Agreed – he proved that out of the gate by closing down successful independant dealerships, withgout understanding – they are the product buyers initially.
But I dont think B2B was part of his AA/entitlement pedigree.
Odie1941 on August 25, 2009 at 6:25 PM
We should have just given 42000 people 70000 dollars each and told they them they had to buy a car and they could keep the rest
CWforFreedom on August 25, 2009 at 6:25 PM
I am not sure they inflated it the full amount but no doubt they did some. They would be dumb not too.
CWforFreedom on August 25, 2009 at 6:26 PM
Again, mortgage brokers weren’t covered by CRA. If you were a bank that got your loans from a broker, you didn’t have to worry about CRA. If you got loans on your own, then you were governed by CRA. Fannie/Freddie created loans specifically for CRA, Home Possible and My Community, and no one I know did any of these loans. So, either this all happened without any mortgage brokers knowing it, or more likely, blaming CRA is blaming a myth and a ghost that doesn’t exist.
mike volpe on August 25, 2009 at 6:26 PM
Try reading.
lorien1973 on August 25, 2009 at 6:27 PM
Let’s not forget that C4C is a gift that will keep on giving. Just wait to those who participated get their tax bill from the state for the $4500 of ‘income’ they received via the program.
Surprise!
DrW on August 25, 2009 at 6:27 PM
Toyota news:
“8/25/2009 – Toyota Motor will cut its global production capacity by one million vehicles, or 10%, as soon as this fiscal year, according to a MarketWatch report that cites Nikkei. Production volume peaked at 9.5 million in 2007 and is expected to fall to 6.7 million vehicles in 2009.”
Toyota knows that programs like C4C pulled in demand and are now cutting production in anticipation of falling sales. Meanwhile, GM is increasing production just in time for a decline in sales.
GCM on August 25, 2009 at 6:29 PM
Most assuredly. The end of the model year is a great time to get a deal. With the increase in dollars chasing those vehicles, the dealers had no incentive to lower prices. Just another in the long line of examples where government spending artificially inflates prices.
ICBM on August 25, 2009 at 6:29 PM
No, its all out there. The Government subsidized, guaranteed, and unsustainably enforced risky behavior on lenders. Yes, the fed easy money policy also inflated things, and would have caused other problems, but the boom in housing came from moral hazard.
Count to 10 on August 25, 2009 at 6:29 PM
Some dealers ran out of inventory. That would tell me they could charge a premium and people would pay it. You have to remember the average American is a complete effing moron who doesn’t understand basic math and thinks paying $299 a month for a 72 month lease is a bargain.
angryed on August 25, 2009 at 6:30 PM
Yeah…in Japan.
AUINSC on August 25, 2009 at 6:31 PM
You are most assuredly incorrect mike. Before CRA, we had a healthy and self regulated SubPrime industry that required pretty stiff entry into low down payment loans. After CRA, with ‘alt A’ programs mainstreaming low-doc high ltv loans that landed in Fannie and Freddies laps, the meltdown was inevitable. You seem to have missed the middle of the movie, sir.
DrW on August 25, 2009 at 6:31 PM
I wonder what % of car loans issued during the past 4 weeks will end up in default within 12 months…anyone care to guess? I say 20%.
angryed on August 25, 2009 at 6:32 PM
It was a circle jerk of perfectly bad policy. All with good intentions.
lorien1973 on August 25, 2009 at 6:32 PM
You know, sweetie, you could just shorten your arguments by saying “I blame BOOOSSHHHHH!!!”
Just to save time and all.
mjk on August 25, 2009 at 6:33 PM
I really don’t understand everyone fussing about this NOW? I mean where were you when CSPAN was running the hearings and debates on this before it passed…The forty eight hour review on the whitehouse web page and NOBODY spoke up then?? I’m dissapointed//
KZnextzone on August 25, 2009 at 6:35 PM
I agree – long posts all based on a single article are always a dead ringer that there is a Libtard behind the post.
dpierson on August 25, 2009 at 6:35 PM
Yeah, and I can read Sowell or Thomas Woods and get the same perspective and it’s still all wrong. I don’t need to read. I was there. I’ve done loans since the beginning of 2003. I saw the crisis develop. I saw the bust and the aftermath, and so I don’t need some conservative economist to tell me what happened. I was there, I know what happened.
No one I knew had heard of CRA until conservatives like this guy started blaming it for the crisis afterwards. Somehow the industry moved along and created a crisis and no one knew the exact source of it. Does that sound reasonable? Mayb, it’s more reasonable to blame the Fed because the Fed’s action has a lot more effect on the economy then does some obscure law. Again, Fed Funds Rates dropped below one percent. Lot’s of money was available. More money than loans. New loans were created. This fed a monster and we had a bubble. That’s what happened. That’s reality.
mike volpe on August 25, 2009 at 6:36 PM
I was going to put down a bunch of particulars like:
If you don’t think $3B in government seed money would be multiplied twenty times then you are a racist but if you are sane and disagree with the Obumbler, you are a racist.
jukin on August 25, 2009 at 6:37 PM
Not Bush, Greenspan. Though, Bush looked the other way while mass fraud was perpetrated and did nothing either.
mike volpe on August 25, 2009 at 6:37 PM
And nobody else was? And maybe if you had read, you would know what was happening…
AUINSC on August 25, 2009 at 6:39 PM
I’m not so sure about the ‘good intentions’ part. Let’s not forget that the outgoing Clinton Admin landed nearly intact on Fannie’s board. Further, Rep. Frank and his crew revised the compensastion package for Fannie’s board to include volume bonuses. When viewed in context with CRA, it was a ‘chocolate, meet peanut butter’ moment.
DrW on August 25, 2009 at 6:40 PM
Your only beef with Bush on this is that he was under the mistaken impression that the Fed would have to have an easy money policy for the US to recover from the recession that was beginning as he took office.
Count to 10 on August 25, 2009 at 6:41 PM
AND THOSE $4,500. ‘REBATES’ ARE TAXABLE! I bet few knew that when they rushed in there driving cars they probably could of sold for $4,500 PLUS the amount of tax they’ll now be paying on that rebate. Thus, they’re again suckers.
Lourdes on August 25, 2009 at 6:43 PM
“Our Liberal friends know so much that isn’t so”
Ronald Reagan.
BetseyRoss on August 25, 2009 at 6:43 PM
No, my beef with Bush was that there was mass fraud in mortgages and he did nothing about it. That’s my beef with Bush.
My beef with Greenspan was that he solved one crisis by creating another crisis.
mike volpe on August 25, 2009 at 6:45 PM
Not sure. Pardon my ignorance but I have a business and haven’t noticed in easing of the credit markets at the retail level. So were these sales mostly to people like me that pays cash for their automobiles or was there a special secret financing vehicle. I sense few of the dealers really beleived the government in its timetable for reimbursement or for that matter approval of applications.
HoustonRight on August 25, 2009 at 6:45 PM
When crr6 is on the “job”, yes. Barack knows that “blow” is just a figure of speech.
Yoop on August 25, 2009 at 6:45 PM
So the 3 Bil that Obongo put into the program saved or created 42,000 jobs, huh? And by my Mac calculator, that’s $71,428 per “employee.” Would it not be better for him to just hand that money out to anti-HR3200 leaders and buy some townhall silence?
I was reading that Mexican illegals were buying old junk for $500, taking the cars to dealers and getting the rebate. They then take the new car to Mexico and resell it. All courtesy of Obongo.
leftnomore on August 25, 2009 at 6:45 PM
Too bad that the majority of these new purchases were foreign makes.
The Ugly American on August 25, 2009 at 6:45 PM
No you are adding anecdotal evidence to your misinformation – keep going might be a carrier in politics in it for you.
Unless you did about 50% of all loans in the last 10 years, then off course you experience counts.
dpierson on August 25, 2009 at 6:47 PM
That would be hard to do. Per the program you had to have the car for about a year i believe.
Per the CARS.GOV site
“be continuously insured and registered to the same owner for the full year preceding the trade-in”
CWforFreedom on August 25, 2009 at 6:48 PM
Translation: I blame BOOOOSHHH.
mjk on August 25, 2009 at 6:50 PM
Your argument holds true up until 2006 with regard to Bush but attempts were made after the dems took congress to curb the actions. I happen to have a friend that runs a bank and was on the end of some ACORN threats. This crisis is attributable to much. It was a perfect storm.
HoustonRight on August 25, 2009 at 6:50 PM
Yeah, like that is going to be followed. Silly goose.
mjk on August 25, 2009 at 6:51 PM
If that is the case not only are many going to be surprised by a tax bill many are going to find the gov. not sending the 4500.
CWforFreedom on August 25, 2009 at 6:56 PM
Let’s remember something else here. C4C was never designed as a stimulus program. It was supposed to get the worst polluters off the street- think people turning in their 1970s Ford LTD for a Prius or Focus. But, when the administration saw success in something they did they jumped on it and made it all about helping auto dealers (who they previously screwed in selecting Dem supporting dealers to stay in business while ushering others out the door).
highhopes on August 25, 2009 at 6:57 PM
Surprise the 4500 “rebate” is considered income and you have to claim it on your taxes.
http://www.rushlimbaugh.com/home/daily/site_082509/content/01125104.guest.html
milwife88 on August 25, 2009 at 6:57 PM
My argument simply holds water. Sub prime weren’t done through Fannie/Freddie. They could have reformed Fannie/Freddie and that would have saved us from bailing them out but it wouldn’t have stopped the sub prime loans that were sold to banks, hedge funds, insurance cos., and other financial services companies.
You can claim that actually being in the business means nothing but it means a lot more than being a conservative economist.
No one here has shown how CRA caused the crisis.
I will give my thesis again, and then I hope that someone will come up with a competing theory if you are going to continue to claim I am wrong.
The Fed lowers the fed funds rate so low that banks engage in mass borrowing. At the time, 2002-2003, we are still just beginning to move out of a recession and so the only industry that was moving was real estate. That’s because interest rates were very low. As such, banks, flush with cash, borrowed, and borrowed and put all that money into mortgages. Only they had more money than loans. So, new loans were created and the beginning of a bubble formed. Now, if I am wrong, please counter it, but countering it by misdirection or things that have nothing to do with the argument isn’t countering it. Pointing me to an article isn’t countering this thesis. If I am wrong, you should be able to pick it apart.
mike volpe on August 25, 2009 at 6:58 PM
If it is 42000 which I highly doubt as we noted earlier it comes at a cost of about 70k per job.
CWforFreedom on August 25, 2009 at 7:00 PM
42,000
jobs9/11 National Day of Service volunteers, mostly laid-off car salespeople …SouperConservative on August 25, 2009 at 7:00 PM
you mean the article you did not read? that one? just wondering as a bystander
CWforFreedom on August 25, 2009 at 7:02 PM
Don’t forget the body shop techs and mechanics
CWforFreedom on August 25, 2009 at 7:02 PM
Here in Dallas, on ABC News radio the other day (they do the news feed on the local talk station) they had a brief piece on the local GM plant that had been shutdown for awhile because of slow sales and overstocked dealer inventory. They interviewed an employee or two, but the gist of the story was that C4C had increased demand so much that GM was re-opening this (and other plants) to get production rolling again.
This, just a few days before C4C was being cancelled.
The sheer idiocy is remarkable, but not surprising – soon we’ll be hearing about the plant shutting down again because sales are down and dealer’s are overstocked, etc…
Midas on August 25, 2009 at 7:06 PM
One factor I think gets overlooked in this government manipulation of the market is what this does to the market for cheap cars. It used to be people with low income who just needed a car to get to work could get a “clunker” for a couple $thousand. Those people just got priced out of the market by the federal government.
taznar on August 25, 2009 at 7:08 PM
taznar….
They way the libs look at …let em take the bus.
CWforFreedom on August 25, 2009 at 7:09 PM
Here’s one of many explanations of how CRA was a cause of the crisis:
http://www.reedconstructiondata.com/jim-haughey/post/how-the-subprime-mortgage-mess-began/
AUINSC on August 25, 2009 at 7:09 PM
He won’t read it; instead he wants you to read it for him and deconstruct his argument piece by piece.
dpierson on August 25, 2009 at 7:11 PM
Didn’t they hear? They’re supposed to go make refrigerators now.
gekkobear on August 25, 2009 at 7:12 PM
Hahaha, yeah, I know…plus, he’s not interested in reading any ‘conservative’ economists…I’m pretty sure Krugman is about the only one he’ll read.
AUINSC on August 25, 2009 at 7:13 PM
You’re actually dumb enough to think you’re being sarcastic.
Jim Treacher on August 25, 2009 at 7:15 PM
We need a Constitutional amendment that EXPRESSLY FORBIDS government from owning any portion of a private corporation ever or loaning even so much as a single penny for the purposes of a bailout.
This C4C is just another symptom of the power mad clowns in DC trying to prove to everyone that they are the smartest guys and gals in the room.
I have shoveled cow s*** with more brains than these people.
Anyone who has sat in Macroeconomics 101 long enough to have a syllabus passed to them knows that this program screws with the demand curve and will cause more harm to the economy than if nothing at all was done.
“That government is best which governs least”
By that measure, these people are abysmal.
turfmann on August 25, 2009 at 7:17 PM
Weren’t lending institutions required to process an certain amount of loans to “very low income” clientele? It started in the late 90′s at 10% and then…what??.. aiming at 40%? This caused an artificial business model imo. Because of this sudden for more properties, the asking price was driven up and that was the start of the bubble. As demand increased..and legitimate “good risk” clients became more numerous, the requirement for that percentage of “very low income” to be met caused an even greater loosening of oversight in lending practices. This was most likely nothing that could be rationally judged as a conspiracy to screw anyone, but just a seemingly obvious road to take in order to keep up business. The increase in property values moved along at a breakneck speed.
Whether or not you can point directly to CRA involvement, those demands for going against good business sense has it origins in government involvement more than evil busines imo.
Itchee Dryback on August 25, 2009 at 7:19 PM
And that’s why my home computer runs Linux.
unclesmrgol on August 25, 2009 at 7:24 PM
They’re giving car loans to anyone with a pulse these days.
angryed on August 25, 2009 at 7:41 PM
Come on, you can’t be that naive. It would take me about 90 seconds to produce “evidence” that I owned a car for a year. OK maybe 120 seconds since I have a slow printer.
angryed on August 25, 2009 at 7:42 PM
We have the mortgage bail out and soon we will have the car lien bail out.
Oleta on August 25, 2009 at 7:46 PM
Itchee, that’s CRA. Again, CRA was 3% of all loans. It created quotas but those quotas were negligible in the overall scheme of things.
Again, the Fed, not business, but the Fed was what created loose money policy. Business allowed for mass fraud and that is on them and on Bush. CRA had nothing to do with anything.
As for the article,
I read the article it’s no different than what Sowell says and what Woods said in his book and they all don’t show any evidence that CRA caused the crisis. They merely say that CRA caused banks to extend their credit in order to meet quotas and this caused the crisis. They don’t explain how the troubled loans were on the wholesale side and yet CRA was only on the retail side. They don’t explain how an obscure law was more important than Fed policy. I have read this article and articles like it and they are all fallatious.
This is getting boring. You all appear to have no intention of challenging my thesis. You have no intention of putting together any thesis of your own. You will just come up with nonsensical statements like I didn’t read an article.
mike volpe on August 25, 2009 at 7:48 PM
3% of all housing loans or 3% all loans? Just asking.
Itchee Dryback on August 25, 2009 at 7:57 PM
He had Michelle on tonight, and Rush on tomorrow. Another ratings bonanza! Today was the first time I really watched Beck’s show, and I will certainly be watching tomorrow.
bookman on August 25, 2009 at 8:08 PM
Karl Denninger’s article:
http://market-ticker.denninger.net/archives/1371-Government-And-Car-Dealers-Hose-You-Again.html
I wonder how many who bought cars under c4c thinking it was “free” money will be caught off guard on Tax Day next year esp if they were just under a higher tax bracket. I have my violin ready.
journeyintothewhirlwind on August 25, 2009 at 8:21 PM
3% of all property, or housing, however you want to put it. By the way, I get that stat from an Issa report that tried to blame the CRA on the crisis. Also, that 3% was at its height. That was the most it was of the market. That’s about the amount of loans that option arms were and no one blames option arms on the crisis even though they were very corrosive.
mike volpe on August 25, 2009 at 8:22 PM
Huh…..(scratches head)….I didn’t know that this was part of the stimulus. How did it create even one job if the cars were already built?
Patriot Vet on August 25, 2009 at 8:30 PM
Didn’t need to — the suckers paid STICKER PRICE.
CaveatEmpty on August 25, 2009 at 8:34 PM
The dealers made out like bandits on this program. They inflated prices by $3500 to $4500. The consumer ended up paying the same with or without the rebate and the dealers (assuming they actually get paid) will be laughing all the way to the bank.
angryed on August 25, 2009 at 6:25 PM
—–
I have a friend who is a GM at a dealership. He says they sold every clunker deal at full retail price, and didn’t pay any factory incentives that were available on some models. He also says there will be a LOT of repos coming.
Meremortal on August 25, 2009 at 8:48 PM
And I’m supposed to trust these guys to subsidize my new refrigerator?
Don’t think so. Totally outrageous!
Dr. ZhivBlago on August 25, 2009 at 9:14 PM
+100, Jimmy. What? Barkey Oblabla didn’t give away car insurance, too? I’m shocked; shocked I tell you.
GrannyDee on August 25, 2009 at 9:46 PM
Will that $4500 from the government be considered ‘taxable income’ for those who purchased new cars?
GarandFan on August 25, 2009 at 9:48 PM
More negatives than positives to that program to be sure. I thought initially it would be a good thing, but being that it’s just adding another straw onto the debt camels back and not only did it NOT CREATE A SINGLE JOB (what a f’kin lie that is) it only put off laying off or firing some auto workers in the plants and suppliers.
The auto companies, if they have any brains left, will not replenish the inventories to where they were, and as said, this just stole from future sales so it probably actually hurt the auto workers more in the long run.
Way to not think a damned thing through.
Spiritk9 on August 25, 2009 at 9:50 PM
I kinda giggled when I read that people are getting upset when they realize that they’re paying sales tax on that 4500.00. Guess they didn’t read the fine print.
graywaiter on August 25, 2009 at 10:27 PM
Not to be picky..I’m just curious.
Is that 3% of value or 3% of the number of transactions. Was just “property” separated from housing and was that 3% individual home loans, i.e not business loans?
Itchee Dryback on August 25, 2009 at 10:32 PM
08/25/2009, 8:09 p.m.
AP is reporting, “Dealers Hope for Payment as Clunkers Program Ends”
http://www.foxnews.com/politics/2009/08/25/dealers-hope-payment-clunkers-program-ends/
One south Florida Chrysler dealer is estimating that he’s owed more than $1 million for 270 deals, but (so far) he’s only received payment for six vehicles!
GrannyDee on August 25, 2009 at 10:42 PM
I need a new car for my wife to shuttle the kids around. Her current car missed by 1 mpg to qualify for C4C. C4C prevented us from getting a normal, market-driven deal on an ’09 model when we wanted to buy one in what should have been the normal ’09 blowout season. Now ’10 models look to be overproduced. So we will wait for the ’10 models to come down to fire-sale prices and stick with our not-quite-government-approved-clunker until then. That the Genius distorted the market to no good effect is bad enough. Worse still is that he robbed us of $3 billion to do it. And the absolute worst of it all is that the dealers aren’t even getting paid and will probably lose even more money because of the overproduction on ’10 models. So what was the freakin’ point? Nice job, Genius.
csmats on August 25, 2009 at 11:23 PM
mike volpe on August 25, 2009 at 7:48 PM
Dear Troll,
Just check any of the postmortems on the mortgage/financial meltdown. There was a general oversight laxity. The overall design was to permit unqualified buyers to purchase the homes they wanted.
I was using the CRA as a metonymy or a specific connoting the general. Of course, implicit was the relationship between the two as the CRA certainly had a symbolic position in the poisonous swirl of the mortgage insurance cauldron. (On general rhetorical technique: See Herbert Spencer if you are literate enough). If not, kindly remember one of the favorite terms developed and cherished by the left, WATERGATE!!!
You guys know everything that came to mean. And it wasn’t just the DC complex. Heck, the left and the MSM made it more grand and sinister than Gulag, Pol Pot and Chappaquiddick combined.
The use of CRA by we sane people is apt since the behavior of Fannie, Freddie, and indeed most of the subprime actors were either under the protection of, or acting for the policy goals of our beloved government. And it is clear that the goals, the insurers providing the safety net and even most of the managers had a special relationship to the Demoron party. Even the foot soldiers were liberal pawns. The Demoron party had for years used Acorn and other pressure groups to interfere in the financial market, including mortgages.
On the other hand, it was not sound banking rules or properly underwritten loans that caused the economic mess we suffer today. It was the government meddling in economic activity for a desired social result. (Redolent of C4C?) Blaming President Bush is inaccurate. Blaming conservative ideology or standards is completely silly.
But back to my earlier post. I am anticipating that the liberals (Demorons) will cite the small number of C4C repossessions compared to the total number of loans, repossesions or possibly total cars sold to reduce the waste and foolishness of C4C. When things don’t work or go entirely haywire. You just did it with the 3% failure of CRA, after all. Then you always have the last refuge of scoundrels, the poor being hurt by some other evil aspect of free enterprise or, better yet, move straight to RACISM like kids move to the “double dog dare”. That shuts everyone up.
IlikedAUH2O on August 26, 2009 at 12:22 AM
A mistake.
Excuse, me you said 3% of the total market not a 3% default rate. I was giving you a break. Um…a 1.5% default rate used to be considered terminal for a bamk. So if half of the CRA deals went south, that would not be too good, would it? Make a nice down payment on the meltdown, at least. Go get a MBA to augment the social studies you love so much.
IlikedAUH2O on August 26, 2009 at 12:39 AM
I was there. I’ve done loans since the beginning of 2003.
mike volpe on August 25, 2009 at 6:36 PM
Have you done loans in the early to mid 1970′s? Before there was a CRA?
Let’s get this straight. The banks, through a period of time starting the CRA were forced to give loans to people who did qualify. The borrower was given a loan with little to no security up front so the bank had to carry all the risk up front in the name of the poor getting a house. The problem is, the poor are what they are because the choices they make, Not all but most.
Giving mortgages to the people with poor spending habits when they didn’t deserve it to begin with was beginning and main perpetrator in our finical mess we are in now.
Government, like Carter who started the CRA with good intentions didn’t see the unintended consequences down the road. Clinton gave his HUD secretary the power to go after and intimate banks into giving more loans to the people who didn’t qualify.
Now ere all paying for it. Even though you have been giving loans since 2003, history didn’t start then.
b1jetmech on August 26, 2009 at 4:27 AM
I own three cars for my family. All of them are over ten years old and qualified as clunkers. I keep them running – there are scabs on my knuckles, but I have to keep them running.
To all those who took the C4C deal: You’re welcome.
To all those who worry about the used car market: don’t sweat it – the repos will save it.
To all those worried about our country: me, too.
Cricket624 on August 26, 2009 at 8:11 AM
Thanks for wasting 3 billion dollars on a project that will produce no net increase in jobs, just a shift in when they are employed.
Those 42,000 new jobs will all be gone before the year is out, and be replaced by a deficit of at least 42,000 jobs.
MarkTheGreat on August 26, 2009 at 9:04 AM
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