Hey! Randy

Turning Iron into Gold

Posted by heyrandy on August 1, 2009

We have all heard about the federal government’s Cash for Clunkers program.  If your old car meets certain criteria, the federal government has authorized itself to force taxpayers to subsidize your new car purchase if you trade in your old car.

It was just recently announced that the program is so successful that it ran out of money in the first week.  The federal government is in the process of authorizing itself to force the taxpayers to spend even more money on this subsidy.

I hope the government hurries.  If there is no new money for the program, there are going to be a lot of walking people.  That is bad for the program.  It seems that the car dealers cannot submit the paperwork for their reimbursement unless the dealers certify that the engines of the old cars have been destroyed.  If the program is out of money, how will all those who are awaiting for their new car get around if they are forced to take back their old car, now with a destroyed engine?

So far no one has addressed the issue of how this program is going to affect the used car market.  Most of us can not afford a new car even with the subsidy.  We have to buy used.

No one is saying how this will affect the used car parts market.  Those destroyed engines were once quite valuable.  Now they are scrap iron.  This greatly reduces the vaue of these “clunkers” to the junk yards.  Is it even worth the junk yard’s time to come and tow away the now immobile clunker?

This program of scrapping usable cars is another example of the government’s short sightedness.  There was not thought given about the consequences.  It is characteristic of the political class to pander to the prevailing pressure group without thinking through the secondary issues.  All that matters is image.  It must appear that something was done.  Most voters demand that.  Most voters are suckers.

This whole program is a giant boondoggle.  It is a political gift to the auto companies and their unions.  It is a political pay back for votes cast.

So what else is new?

Has anyone thought of what will happen next year?  The pool of eligible buyers will be vastly depleted by this year’s program.  Who will buy a new car next year?  Will the government have a new program, a “Cash for Clunkers II”?

You have to ask?  This is the same group of folks that handled so well the transition to digital television.  How is your reception?

The US auto industry is doomed.  Once an industry is nationalized it always declines.  Nationalize industries are in effect monopolies.  They do not have competition to force the needed changes  to keep the industry healthy.   No government bureaucrat looses his job because his bureau looses money.  The most that happens is that a low level nobody is cashiered.  Never underestimate the power of a sacrificial lamb.  No senior managers are ever punished.  Just look at the military torture scandals.

If you don’t get your cash for the clunker you traded in at someone elses’ expense, just wait until next year.  Then you can tow that old hunk of iron to the mint and cash it in for gold.  Taxpayers are standing by.  And they never run out of money.

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