Public Service Announcement - Cash For Clunker's Ends Monday

[erik822]

The thing with programs like this is that they are a shot in the arm for an industry. What the program has helped dealers do is clear out excess inventory they couldn't afford to hang on anymore and to get automakers a slight boost to get them over the worst hump they've ever experienced.

The dubious ecological benefits are just mentioned to keep the tree-huggers from getting up in arms about a program that encourages more cars and more driving.

One other, pretty insignificant perk I've personally seen from the program:
My neighborhood looks nicer with some of the rusty, ugly POS that used to always be parked on the street gone and replaced by shiny new cars.

The program isn't intended to save the world. It's not supposed to have any direct long-term implications. It's the equivalent of borrowing money from your parents to pay for a credit card so you get out of the hole you dug yourself into and won't get financially screwed worse down the line.

[angler]

The thing with programs like this is that they are a shot in the arm for an industry. What the program has helped dealers do is clear out excess inventory they couldn't afford to hang on anymore and to get automakers a slight boost to get them over the worst hump they've ever experienced.

The dubious ecological benefits are just mentioned to keep the tree-huggers from getting up in arms about a program that encourages more cars and more driving.

One other, pretty insignificant perk I've personally seen from the program:
My neighborhood looks nicer with some of the rusty, ugly POS that used to always be parked on the street gone and replaced by shiny new cars.

The program isn't intended to save the world. It's not supposed to have any direct long-term implications. It's the equivalent of borrowing money from your parents to pay for a credit card so you get out of the hole you dug yourself into and won't get financially screwed worse down the line.

That is all fine and good, if you believe in not letting a market correction run its course.  IMHO by bailing out industries we are encouraging the same sort of bad business behavior that got us in to this mess in the first place.  Our past level of consumption was unsustainable.  We could not continue to fund consumption by borrowing from the future based mostly on overinflated value of our real estate. 

So what should we have done to encourage sustainable consumption?  Not spend $3 billion dollars to try and get back to the same unsustainable level of consumption.  How does it make any sense to go further into debt to correct a problem that going further into debt got us into in the first place.

Everybody loves a bail out, except the economy.  The evidence is pretty clear that the New Deal (and other recovery programs) after the depression prolonged the recovery period.  While it may have lessened the pain, it drug the pain out longer. 

Market corrections happen because markets need to correct.  Corrections are supposed to teach us what to avoid in the future.  By continually applying band-aids to the symptoms, we never let the disease run its course.

[ducatiz]

Market corrections happen because markets need to correct.  Corrections are supposed to teach us what to avoid in the future.  By continually applying band-aids to the symptoms, we never let the disease run its course.

I would compare free markets to forests and market corrections to natural forest fires.

They are necessary.  Modern forest fire-fighting has finally acknowledged this in the last few decades.  One cannot let that much brush build up and not let it burn naturally, else it will build up SO much that the final fire will be so big as to destroy the forest completely.

[angler]

I would compare free markets to forests and market corrections to natural forest fires.

They are necessary.  Modern forest fire-fighting has finally acknowledged this in the last few decades.  One cannot let that much brush build up and not let it burn naturally, else it will build up SO much that the final fire will be so big as to destroy the forest completely.

An apt analogy......

[Grampa]

sooo.... I should burn down all those foreclosed homes?

[derby]

sooo.... I should burn down all those foreclosed homes?

no, the foreclosed homes are the fire...

[cyrus buelton]

I would compare free markets to forests and market corrections to natural forest fires.

They are necessary.  Modern forest fire-fighting has finally acknowledged this in the last few decades.  One cannot let that much brush build up and not let it burn naturally, else it will build up SO much that the final fire will be so big as to destroy the forest completely.

That's a pretty solid analogy, izaak.

When the hold bailout was going down, the famous economist from Harvard (or Yale, can't remember) was the first "expert" to speak out against.

I am thinking that guy knows more than most..........