Modern Vespa

Not going to get drawn in, you think what you think and see what you see.

My figures are correct.

Anything further locks the thread.

P

No, your figures are not correct. There is no 150% return on investment, there is a net loss on the $1 billion investment, because they:

A: Liquidate the clunkers for no value.

B: Send 57% of to money to foreign made car companies, propping up their car businesses.

C: They cause people to incur more debt than they should.


If they wanted to do this right, they would have given a tax rebate on any new American car or truck, and then sold the trade ins to get the money back.

I haven't posted in a few days because I was at an economics conference in San Diego. This particular sentiment was echoed consistently by all the economists but the 'keynote' speaker was Dr Donald Ratajczak, director of the Economic Forecasting Center at Georgia State who's quite famous for developing econometric models and is consistently in the WSJ and on CNN etc

Anyway, he and the others pretty much blew off the CARS program since incentives of this kind, (coupons) don't really add economic value to an economy but rather shift buying from a future date till now. These are cars that eventually would have been purchased. All the money spent was to shift spending vs. increase it. (therefore the happiness today will be more pain tomorrow) He also quoted that the net mileage gain in the program is between 4 and 5 mpg so that the program doesn't justify itself on ecological terms.

Another item, in simple supply and demand terms, is that taking the 'clunkers' out of the market (which need to be destroyed per the program) just took part of the 'supply' of used cars out of the system therefore raising the overall price of used cars, probably hurting lower income people more than higher ones.

There are other costs to consider; the cost for demolition, the waste of resources involved (not really adding waste to the waste stream but rather changing it's timing).

Congress just tripled the program, in their wisdom. So again, the lawyers we vote into congress ignore the economists when making economic decisions, just as they ignore the finance community when they make their finance and accounting decisions. (If you watch C-span sometimes you've got to wonder what the heck those people are thinking... and I mean both sides of the aisle.)