Wednesday, June 10, 2009

Can These Clowns Do Anything Right?

I admit it. I have not paid any attention to the "cash for clunkers" bill winding its way through the geniuses in Congress. Today, however, I caught the story in the Nick DeLeeuw-designated Ivory Tower about this ridiculous proposal.

Less than a week after it was reported that The One's "economic" program is having the opposite of the intended effect (i.e., instead of rejuvenating the housing market, the massive spending is driving up interest rates and choking off investment), we now have the "cash for clunkers" bill (let's call it CFC), apparently designed to destroy vast segments of the auto market.

Most people hear about CFC and think it's a simple incentive to buy a new car. Not so fast, sparky. Here's how it works -- you take your qualifying car or truck (one that gets less than an EPA combined mileage rating of 18 mph) and take it your nearest dealer (hurry, before they're all gone). Don't worry about negotiating a trade-in allowance for your vehicle -- there won't be one! Why? Because the car or truck you trade in cannot be resold; under CFC, it must be crushed or recycled. In fact, the car or truck traded in becomes . . . wait for it . . . property of the federal government! Here's the language from the bill itself:

For each eligible trade-in vehicle surrendered to a dealer under the Program, the dealer shall certify to the Secretary [of Transportation], in such manner as the Secretary shall prescribe by rule, that the dealer--

(i) will arrange for the vehicle's title to be transferred to the United States and will accept possession of the vehicle on behalf of the United States;
(ii) has not and will not sell, lease, exchange, or otherwise dispose of the vehicle for use as an automobile in the United States or in any other country; and
(iii) will transfer, on behalf of the United States, the vehicle (including the engine block) and the vehicle's title, in such manner as the Secretary prescribes, to an entity that will ensure that the vehicle--

(I) will be crushed or shredded within such period and in such manner as the Secretary prescribes; and
(II) has not been, and will not be, sold, leased, exchanged, or otherwise disposed of for use as an automobile in the United States or in any other country.
Fancy that.

The government incentive is not all it seems to be -- if you have an old car worth $4,500, trade it in on a new car, and get a $4,500 incentive, you are no better off than you were before. If your vehicle is worth more than the incentive, you are worse off, and it makes more sense to keep the vehicle.

So, the supply of used cars will be strangled. What are teenagers supposed to drive?

Goodbye, used car market. Goodbye, auto parts stores. Goodbye, after-market parts and accessories manufacturers.

Goodbye, common sense -- we look forward to your return, but we will continue to suffer through your absence.


  1. Teenagers and other people (i.e., my husband)used to actually be able to fix cars without an information technology mechanical magician degree (certified ITMMs!) and without a gazillion dollars in equipment. Now one needs a gazillion dollars just for labor to boot.

    What other countries will be crushing their cars in solidarity? ...since I take it the rationale is global warming & dwindling supply of oil-rich nations ripe for invasion...

    I try to look on the bright side though - we can corner the market in crushed plastic.

  2. The answer to your question is that no other countries will be crushing their cars in solidarity, because the whole idea is ridiculously stupid!

    Thanks for checking in! How are all the little Rolls?