Clunker of a stimulus

NY Post ^ | George F. Will

[Scanian]

Looking back with pride, the British are commemorating the 70th anniversary of the Battle of Britain, when Churchill said of the pilots fighting the Luftwaffe: Never “was so much owed by so many to so few.” Looking ahead with trepidation, Americas are thinking: Never have so many of us owed so much.

Actually, they owed slightly more when the recession began, when household consumer debt was $2.6 trillion. The painful but necessary process of deleveraging is proceeding slowly: Such debt has been reduced only to $2.4 trillion. Add to that the facts that the recession has reduced household wealth by $10 trillion, and that only 25 percent of Americans expect their incomes to improve next year. So they are not spending, and companies, having given the economy a temporary boost last year by rebuilding inventories, are worried. Hence, rather than hiring, companies are sitting on cash reserves much larger than the size of last year’s $862 billion stimulus.

Democrats who say another stimulus is necessary for job creation, but who dare not utter the word “stimulus,” are sending three depressing messages: The $862 billion stimulus did not work; the public so loathes the word that another stimulus will not happen; therefore prosperity is not “just around the corner,” as Herbert Hoover supposedly said (but did not). Consumers and businesses are responding to those messages by heeding Polonius’ advice in “Hamlet”: “Neither a borrower nor a lender be.”

Hoover — against whom Democrats, those fountains of fresh ideas, have been campaigning for 78 years — is again being invoked as a terrible warning about the wages of sin. Sin is understood by liberals as government austerity, which is understood as existing levels of government spending, whatever they are, whenever.

[November 2010]

For each family reducing its debt there is another in financial need grabbing whatever debt it can to put food on the table. Damned Democrats.

[KingLudd]

For the Brits, that WAS their finest hour.

[November 2010]

One of my cars is eating oil and anti-freeze. We’ll be shopping for a used car soon. Thanks Obama for “Cash for Clunkers” for folks that could afford a new car . . . because those of us that can’t have to pay 10% more now for used cars. Bastard.

[grania]

I love George Will's words. He backs his sentiments up with facts and logic.

Another point about the Hoover stimulus...a real lot of those WPA public works are still in use, and still archealogical and engineering treasures. I wonder how many of the crummy projects this summer will last even to the end of the decade.

The best thing the feds can do to improve the economy is abolish every extension of government since Bush the First took office. It'll be a start.

[Vaquero]

Ya know I was thinking....Winston Churchill's mother was a natural born American… …of course his father was a Brit. and Winny was born in....Hawaii...yeah that's the ticket Hawaii....now that means that the British Bulldog was really and American Pit Bull...and believe you me he would have made a better POTUS than socialist FDR any friggin’ day. And his superiority over our current POSOTUS is too huge to make an intelligent comparison.

Just saying is all.

[raybbr]

One of my cars is eating oil and anti-freeze. We’ll be shopping for a used car soon. Thanks Obama for “Cash for Clunkers” for folks that could afford a new car . . . because those of us that can’t have to pay 10% more now for used cars. Bastard

That's a myth. The program only took 690K cars out of 240 million. That's about .03% of all used cars.

The program was attempted feel good payoff to U.S. car unions. It didn't work and the program did nothing to "stimulate".

I see more used car lots filling up around me every day. The real reason that used cars may be higher is that people are buying less new cars. In places where the economy is tanking worse than others used car prices are up because that's all they can afford.

Use your local Craig's list to find a used car. Buy one from an owner. There are good cars available.

[November 2010]

You are making assumptions that are incorrect. Used car sales are down. Demand is down, prices are up, which means supply is down.

http://www.autoobserver.com/2009/02/used-car-sales-struggle-along-with-everything-else-auto.html

[November 2010]

Used car prices went up every month in 2009, fueled by a decrease in trade-ins and lower inventories from Cash for Clunkers. Analysts believe prices will start to level off in 2010 as new car sales increase at an expected rate of 15%. While it is good news, these same analysts say it will take several years before supply returns to the levels of the previous decade.

http://blogs.cars.com/kickingtires/2010/01/used-car-prices-could-drop-in-2010.html

[raybbr]

Demand is down, prices are up, which means supply is down.

Huh? If demand is down how do prices go up?

[November 2010]

Only figure I could find was 40 million used car sales a year:

40,000,000 and 690,000 = 1.75%

Remember that in a recession most will keep the car they have rather than buy new or used. So less go on the market from that as well, but demand will reduce also.

Used cars can be sold multiple times and this idiot government DESTROYED the cars. So it’s a muliplier past 1.75%

http://goliath.ecnext.com/coms2/gi_0199-1209438/Of-the-around-40-million.html

[raybbr]

Used car prices went up every month in 2009, fueled by a decrease in trade-ins and lower inventories from Cash for Clunkers.

Cash for Clunkers didn't start till July 1, 2009. How did a program that didn't exist raise car prices for six months before?

[raybbr]

The 240 million is the number of registered vehicles on the road. Since they are registered and being driven that makes them used. Any one of the could be a potential used car sale. Using the sales figure doesn't include cars available but unsold.

BTW, I just bought a used car $2500 below KBB price and just below private sale price from a dealer.

[November 2010]

Huh? If demand is down how do prices go up?
_______________________________________________________

Supply is down. Supply and demand set price in a free market, they balance based on pricing, or price responds to demand and supply, depending on how you look at it (it’s individuals making decisions on supply demand and pricing). The curve moves not just based on demand but also on supply. With the emphasis on Keynsian thinking in academia a lot of the brainwashed fools that are produced think only about demand and ignore supply in setting prices and economic activity.

[raybbr]

Supply is down. Supply and demand set price in a free market, they balance based on pricing, or price responds to demand and supply, depending on how you look at it (it’s individuals making decisions on supply demand and pricing). The curve moves not just based on demand but also on supply. With the emphasis on Keynsian thinking in academia a lot of the brainwashed fools that are produced think only about demand and ignore supply in setting prices and economic activity.

Thanks for the insult.

In any case if demand and supply go down the curve goes down with it.

Are you arguing that if demand goes down and the supply goes down with it the prices will rise? Seriously?

[November 2010]

Supply. People are holding onto their cars longer. The cash for clunkers program hit the used car market when it was already down. Further, financing is harder to get, so supply is down and demand is restricted only to those who can self-finance. It all works out according to supply and demand . . . but the bottom line is a huge number of the cars that are sold each year, 690,000 per your numbers, were destroyed by the government. Prices have risen by 10%. It was a stupid and destructive program that has hurt the poor, the middle class, and the thrifty.

[November 2010]

Are you arguing that if demand goes down and the supply goes down with it the prices will rise? Seriously?
_________________________________________________________

Look at your statement. You actually have to have quantities to do an analysis. We know the outcome. 10% rise in price. So we know your disbelief is counter-factual. Supply and demand have interacted to increase price in a recession. Just google “supply and demand” and read.

[raybbr]

...but the bottom line is a huge number of the cars that are sold each year, 690,000 per your numbers, were destroyed by the government. Prices have risen by 10%. It was a stupid and destructive program that has hurt the poor, the middle class, and the thrifty.

Believe me. I am not arguing for the program.

Based on your previous figure of 1.75% how does that increase the price by ten percent.

I know it's fun to blame a stupid govt. program for the increase but that's a small part of it.

Someone posted to me on a similar thread that a bigger part of it is rental car companies are holding cars longer and people were not buying new cars. He claimed to have been a former car dealer.

I hate everything Obama does/is/will be but as I said there are good deal available. I think used car dealers are using this as an excuse to keep prices high.

[EVO X]

Excuse me for butting in. New car sales are way off. At one point they were down to 9M a year from 16M. The way I count
it, that means at least 12M less used cars since the economy tanked.

[raybbr]

Excuse me for butting in. New car sales are way off. At one point they were down to 9M a year from 16M. The way I count it, that means at least 12M less used cars since the economy tanked.

Right. It had very little to do with Cash for Clunkers.