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Getbig Main Boards => Politics and Political Issues Board => Topic started by: Hedgehog on October 29, 2009, 07:09:05 AM
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The results are starting to come in on the Cash for Clunkers program where old cars could be traded in and a new one bought with a rebate.
While I've seen numbers that shows that car sales are up temporarily by as much as 5-6 percent, the problem is something that the European Central Bank has picked up on:
http://74.125.77.132/search?q=cache:VbD9090eag8J:online.wsj.com/article/SB10001424052748704107204574474882638790854.html+EBC+Slams+Cash+for+Clunkers&cd=2&hl=en&ct=clnk&gl=us
They points out that "the programs could harm the economy by distorting consumers' spending patterns and competition".
Ie, the car market have the potential of drying up as soon as the steroid injections stops.
At the same time, perhaps it was a good idea to use the Cash for Clunkers as a "bridge" when the economy was at the low point.
To keep things moving.
I'm not sure who are right at this time.
Don't think anyone really knows, and it's hard to evaluate before everything has played out.
What's your take?
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HORRIBLE WASTE OF MONEY:
________________________ ________________________ _______________
FOR IMMEDIATE RELEASE
Contact:
Jeannine Fallon/Chintan Talati
Edmunds.com Corporate Communications
www.Edmunds.com
Media Hotline: 310-309-4900
pr@edmunds.com
Cash for Clunkers Results Finally In: Taxpayers Paid $24,000 per Vehicle Sold, Reports Edmunds.com
SANTA MONICA, Calif. — October 28, 2009 — Edmunds.com, the premier resource for online automotive information, has determined that Cash for Clunkers cost taxpayers $24,000 per vehicle sold.
Nearly 690,000 vehicles were sold during the Cash for Clunkers program, officially known as CARS, but Edmunds.com analysts calculated that only 125,000 of the sales were incremental. The rest of the sales would have happened anyway, regardless of the existence of the program.
Ironically, the average transaction price for a new vehicle in August 2009 was only $26,915 minus an average cash rebate of $1,667.
"This analysis is valuable for two reasons," explained Edmunds.com CEO Jeremy Anwyl. "First, it can form the basis for a complete assessment of the program's impact and costs. Second—and more important—it can help us to understand the true state of auto sales and the economy. For example, October sales are up, but without Cash for Clunkers, sales would have been even better. This suggests that the industry's recovery is gaining momentum."
The chart below sets forth actual SAAR (Seasonally Adjusted Annual Rate) compared to Edmunds.com's forecasted rate if the program had never been implemented.
Actual (or Forecast) If no Cash for Clunkers Difference Sales Volumne
Jan '09 9.59 9.59 n/a 654,922
Feb '09 9.14 9.14 n/a 687,182
Mar '09 9.69 9.69 n/a 855,146
April '09 9.20 9.20 n/a 817,096
May '09 9.85 9.85 n/a 923,141
Jun '09 9.67 9.80 -0.13 857,447
Jul '09 11.22 10.11 1.11 995,216
Aug '09 14.06 10.45 3.61 1,258,747
Sep '09 9.19 10.63 -1.44 744,367
Oct '09 10.40 10.89 -0.49 n/a
Nov '09 10.40 10.82 -0.42 n/a
Dec '09 10.61 10.85 -0.24 n/a
"Our research indicates that without the Cash for Clunkers program, many customers would not have traded in an old vehicle when making a new purchase," Edmunds.com Senior Analyst David Tompkins, PhD told AutoObserver.com. "That may give some credence to the environmental claims, but unfortunately the economic claims have been rendered quite weak."
To conduct the analysis, the Edmunds.com team of PhDs and statisticians examined the sales trend for luxury vehicles and others not included in Cash for Clunkers, and applied the historic relationship of those vehicles to total SAAR to make informed estimates. These estimates were independently verified through careful examination of sales patterns reflected by transaction data. Once the numbers were determined, Edmunds.com's analysts divided three billion dollars by 125,000 vehicles to arrive at the average $24,000 per vehicle.
Coincidentally, a parallel analysis of the first-time homebuyer credit was reported yesterday by MIT Sloan Professor Simon Johnson and Yale law student James Kwak, who both blog about economics at The BaseLine Scenario.
About Edmunds Inc. (http://www.edmunds.com/help/about/)
Edmunds Inc. publishes four Web sites that empower, engage and educate automotive consumers, enthusiasts and insiders. Edmunds.com, the premier online resource for automotive consumer information, launched in 1995 as the first automotive information Web site. Its most popular feature, the Edmunds.com True Market Value®, is relied upon by millions of people seeking current transaction prices for new and used vehicles. Edmunds.com was named "Best Car Research Site" by Forbes ASAP, has been selected by consumers as the "Most Useful Web Site" according to every J.D. Power and Associates New Autoshopper.com Study(SM), was ranked first in the Survey of Car-Shopping Web Sites by The Wall Street Journal and was rated "#1" in Keynote's study of third-party automotive Web sites. Inside Line launched in 2005 and is the most-read automotive enthusiast Web site. CarSpace launched in 2006 and is an automotive social networking Web site and home to the oldest and most established automotive community. AutoObserver.com launched in 2007 and provides insightful automotive industry commentary and analysis. Edmunds Inc. is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit.
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HORRIBLE WASTE OF MONEY:
How can anyone really know?
Assume this program prevented a lot of car dealers from going out of business.
What is the price tag on that?
And if it turns out that this somehow was part in keeping the US car industry floating, is the price tag too high then?
I am not saying you are wrong 3366.
As these car dealers and manufacturers may STILL go out of business.
But are you really certain?
I think there are a few things that suggests that other things could've been done.
Though I'm not really sure what - perhaps smaller, more long term rebates.
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How can anyone really know?
Assume this program prevented a lot of car dealers from going out of business.
What is the price tag on that?
And if it turns out that this somehow was part in keeping the US car industry floating, is the price tag too high then?
I am not saying you are wrong 3366.
As these car dealers and manufacturers may STILL go out of business.
But are you really certain?
I think there are a few things that suggests that other things could've been done.
Though I'm not really sure what - perhaps smaller, more long term rebates.
The problem Hedge is that we now have a lifetime of debt associated with this mess.
Serious question for you -
If you have a trade in, and coupled with the fact that we are in a severe economic recession, do you think you could neogitiate $4,500 off the sales price between those two without the govts' help?
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How can anyone really know?
Assume this program prevented a lot of car dealers from going out of business.
What is the price tag on that?
And if it turns out that this somehow was part in keeping the US car industry floating, is the price tag too high then?
I am not saying you are wrong 3366.
As these car dealers and manufacturers may STILL go out of business.
But are you really certain?
I think there are a few things that suggests that other things could've been done.
Though I'm not really sure what - perhaps smaller, more long term rebates.
What do you have against having an economy standing on it's own two feet? You kinda sound like a bodybuilder that can't train without taking steroids and expects that he's going to keep all the gains he made artificially.
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What do you have against having an economy standing on it's own two feet? You kinda sound like a bodybuilder that can't train without taking steroids and expects that he's going to keep all the gains he made artificially.
I believe in Keynesian economic principles.
In economic boom - fiscally conservative and cutbacks, as well as tax raises.
In economic recession - stimulate.
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I believe in Keynesian economic principles.
In economic boom - fiscally conservative and cutbacks, as well as tax raises.
In economic recession - stimulate.
Keyenes has been proven wrong so many times over already.
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We've been over this before. It distorted the marketplace and dragged forward sales and the CFC did it by paying people to buy cars and become more leveraged. It's the same thing with the $8,000 home buyer tax credit. To get people to purchase houses you are giving them $8k to go 100-200k in debt. This is not organic and it isn't growth.
The 3.5% GDP "growth" was in large part to these distorted programs. They are now over and they still might lead to a 4th qtr. GDP "growth" but it will be temporary. There is still no indicators, statistics, trends or whatever that lead us to believe the recession is over.
Whatever talking head the declared the recession over today is a tool and a cheerleading mouthpiece.
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I believe in Keynesian economic principles.
In economic boom - fiscally conservative and cutbacks, as well as tax raises.
In economic recession - stimulate.
FAIL