Anyone who has ever clicked on an ad on the Internet, out of simple curiosity at the prospect of "working from home" and making fabulous money, is no doubt all too familiar with the accompanying barrage of subsequent emails when they opt out and decide that the program is a scam.
Once "voluntarily" exposed to the program, the unsuspecting visitors to these sites are latched onto by the purveyors like lampreys in a seemingly serene lake, who cling like leeches hoping to make weary their prey until they succumb. Users then undergo weeks of spam-reporting to their providers until the tide subsides. The fate of those who dare to actually register is not so easily reversed.
So it is with the auto dealerships across America that, naively believing that the "Cash for Clunkers" program would be a boon, have since learned otherwise. Consider the dealerships as the Internet service providers, and their clientele the poor end-users. The only difference is that while the end-users are off and happily driving their new vehicles, the provider is left holding the note.
"Cash for Clunkers" was supposed to be the "get-rich-quick-scheme" of the Democrats and the new administration. Designed to save the environment while stimulating the economy, it at first seemed a huge success, causing consumers to flock to dealers in droves, hoping to seize on the New Deal. It worked for the consumer; not so much for the already-ailing small businesses. (Never mind the negative impact on the environment, as it requires an enormous amount of energy to merely comply with the conditions of the program, destroying those vehicles traded in on the program).
Since its inception, about one half of all dealerships in the New York Metro area have decided that they can no longer bear the cost of the program. One might ask how this could be so, since the program is the brainchild of the Federal Government, with all of the financial backing that that institution enjoys.
That answer is rather simple, since Uncle Sam has belatedly realized that tapping the allegedly bottomless well of the American taxpayer would be political suicide. The only option left to an ostensibly well-meaning bureaucracy is to risk the spectre of the Repo Man, stiffing the people whom they once relied upon to aid in the success of a doomed program.
In the New York area alone, only 2% of the "clunkers" money has been reimbursed to dealers, who bear the cost up front and then have to trust the government for pay back. As a result, about half of those dealerships have abandoned the program, opting out while praying that an increasingly destitute institution will remain solvent and repay the outlay they have expended. 
Since the government is having trouble paying on the promise to car dealerships, and considering that Medicare and Social Security are plummeting towards bankruptcy, one has to wonder how anyone would entrust the same government with the fate of their health care. With all of his infomercials since becoming elected, Obama is less of a president and more of an annoying pop-up advertisement, and he should be clicked into the junk bin and reported as spam.
Wednesday, August 19, 2009
Delete Spam From Obama
Thursday, August 13, 2009
Sunday, August 2, 2009
Eight More Days
Congress - in their infinite wisdom - has fast-tracked yet another bill through the House, this one for an additional $2 billion to keep the "Cash for Clunkers" program alive. The money is coming from a renewable energy loan guarantee included in the stimulus bill, which was designed to stimulate the economy and create jobs. It has done neither, and neither will this extra cash, since the cars being scooped up by people seeking the $4,500 are buying existing inventory and not creating demand for manufacturing.
After having woefully calculated the first $1 billion's longevity - it was designed to last until the end of November but was gone after four days - Congress has determined that it would be a good thing to extend the program for another eight days, apparently. And despite the glowing reviews derived from a simple Google search regarding the dealerships' giddiness over the new throngs of buyers, this whole program will, in short time, be revealed as a glimmering rust bucket with a fresh thin coat of shiny spray paint. Here's why.
In order for dealers to receive reimbursement from the government, they must show proof that the clunker has had its engine permanently disabled. This is done by a technician at the dealership donning a protective HAZMAT suit, draining the oil and pouring a sodium silicate solution into the crankcase. The engine is then revved to a high rpm and within seconds, the sodium silicate hardens into a glass-like substance. The engine seizes and the car is worthless.
Now the dealer has to call a salvage yard to remove the vehicle(s) for destruction, but salvage yards do not make money by simply crushing old cars. They make money by selling off the parts - especially the engines, which are the most valuable part - and whatever else they can strip from the car. When it becomes cost prohibitive for salvage yards to accept these clunkers, the dealers are going to have one huge headache.
The other peril of this program is not all that dissimilar from the debacle caused by Fannie and Freddie in the housing market, albeit on a smaller scale. Nonetheless, more people are rushing out to buy new cars when they were driving their old clunkers for a reason; they couldn't afford a new one. The lure of a government subsidy in the amount of $4,500, combined with whatever trade-in value a particular clunker might have, is likely causing people to take on monthly car payments that they may discover they cannot meet a few months from now, especially in this economic climate.
This, of course, leads back to the dealers who will be faced with an increasing "inventory" of worthless cars that salvage yards won't want combined with a fleet of repossessed cars that buyers defaulted on. The current exuberance over the deceiving success of "Cash for Clunkers" will most likely result in an excruciating hangover for the dealers.
And we'll be out an additional $2 billion in about a week.
Friday, July 31, 2009
Learn From Government's Resumé
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Our illustrious federal government had the brilliant idea of stimulating the economy and saving the planet, all in one neat package called "Cash for Clunkers". For those unfamiliar with the program, it was designed to create jobs for the auto industry by offering up to $4,500 dollars for anyone trading in a gas guzzler for a new, more efficient car.
With a $1 billion kitty, the program was supposed to run until the end of November or until the money was used up. It lasted four days and is now suspended. It created no jobs, since the cars sold were from existing inventory, and the environmental impact is offset by the fact that all of the trade-ins are required to have their engines destroyed and the cars disposed of, ostensibly in landfills, somewhere.
What this offers, however, is a truly "teachable moment". It demonstrates the federal government's inability to run and manage a $1 billion program. Considering this when they are trying to ram through a $1 trillion health care initiative - without reading it - in the shortest amount of time possible should cause alarm in even the most ardent supporter of Barack Obama.
In other words...do you really want the same federal government who couldn't accurately forecast the results of "Cash for Clunkers" making decisions about the future health of you and your loved ones?
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