Cash For Clunkers Is A Waste

Ahhhhhhhhhhhhh....our efficient government at work again. Come on!

http://www.cnbc.com/id/32235069

This is a great example of how giving government a pool of money (TARP) to stimulate the economy is an entire waste.

Cash For Clunkers gives people OTHER people's money to buy a new car they otherwise would not buy. (either because they didn't really want it, or really couldn't afford it)

See, people are not buying cars for two reasons: 1) They have too much debt and can't or don't want to take on any more - in other words, they can't afford it. 2) Prices are too high! There is a huge glut of vehicles on the market and prices have not fallen enough to entice hesitant buyers in to the market. In short - HUGE over supply, anemic demand, and sticky prices have frozen the auto market.

The governments solution? Let's subsidize vehicle prices (keep them artificially high) by offering hesitant buyers taxpayer cash!

So, you don't need to be a genius to figure out this program is a subsidy for the already failing U.S. auto industry that will keep prices stuck where they are for longer, discourage consumers from saving up enough money to make their own down payment, and saddle them with a large loan on a rapidly depreciating asset. Sound a little like the housing bubble?


It would be like prescribing pain killers for a headache that is caused by a blood vessel in the brain about to rupture. Sure, the patient might feel better, but only temporarily, before their inevitable death. The TARP money is the pain killer the government stole from your medicine chest! The patient (the auto industry) doesn't need a pain killer, it needs emergency surgery! It may fail anyway. Either way the government should not play doctor, but let falling prices be the cure. If this means the death of the American auto industry as we know it, so be it. It is dying anyway, any money the government throws at it is pure waste.

Oh sure, we will have a few months of increased vehicle sales. Great.....that will solve our problems. My God, why don't we require basic economics in high school! The sad fact is that the majority of people just don't know enough about the subject to evaluate the governments' actions.

And the ones who do understand and make those socialist policies any way............well........that's another post.