09 Aug 2009
Clunkers for Brains

Wildly popular, I'm sure. And some folks have groused about the money being spent - $1b so far and soon to be doubled. But has anybody with an ounce of economic sense in government (and that may be an oxymoron at this point) thought about the side effects?

Effectively, for the duration of this program, the minimum price for a used car is $4500, the amount of the subsidy. That's a doh! realization - if I have a car I want to get rid of, why sell it in the paper for $3000 when I can get $4500 for it from the Feds? Well, that is, if I can qualify for a new car loan and actually afford it. If I can't, and I need to buy a used car, well, suddenly the market just got a whole bunch tighter, and the choices a whole bunch narrower.

In other words, poor folks just got screwed.

I've been looking far a larger truck - used, something I can pull a livestock trailer with. Maybe early nineties vintage ... and in the last week I have watched these kinds of vehicles just disappear off lots around here like crazy. I suspect that some folks who needed a new car were buying them for $2500 and then immediately trading them in for $4500 ...

And don't even get me started on the destruction of perfectly good machines to satisfy some political whim. It's the automotive counterpart of paying farmers to dump milk in ditches and plow under crops - and we all know how that practice saved American agriculture.

Morons.

In order to receive federal reimbursement for the subsidy consumers get for trading in their cars, dealers must first destroy the engine. One common method is to drain the car's oil and flood the engine with sodium silicate, or liquid glass. Dealers then turn the car on and rev the engine to let the solution harden. In just a few minutes, the car becomes inoperable.

(link) [Time]

Update:  Another unintended side effect.

09:08 /Politics | 0 comments | permanent link