Wednesday, August 19, 2009

How does Cash for Clunkers help the economy?

If someone wishes to buy a new car, then by all mean let them but why should the Federal Government get involved? In a time where Americans are losing their jobs by the day, isn't the Federal Government encouraging bad behavior? Buying a car isn't like buying a pair of sneakers, it takes a lot of research and financial planning. It's easy to go to the dealership and sign either the lease or loan, the hard part is to pay for it. I don't know how it is in other states but in New York if you take out a loan to buy a car (either from the dealership or a car loan from the bank) you are required to get full insurance coverage (collision, liability, etc). Of course the price tag on your insurance varies by the vehicle, your personal driving record and possibly other life factors. As I stated before if one can ride the waves of the financial burden that is involved with a vehicle purchase by all means help out your local dealership. The problem is that Federal Government is encouraging people to drown themselves in debt at a time where we should be saving and cutting unnecessary costs.

Encouraging debt burdens isn't the only thing that the Feds have created with this program. They are also creating more waste, with the destruction of the vehicles. Majority of vehicle owners have felt the bullet of expensive repair jobs with my personal favorite being parts you can only get from the dealership instead at your local Napa. In the CARS program, dealerships are required to destroy the engine although some are refusing either on principal or for profit reasons. The old adage "One person's trash is another person's treasure" comes into play here. Recent market trends have said that used cars sell better than new cars. Why? because it's much cheaper to buy a used vehicle and keep it running as opposed to a new vehicle. If you don't have a lot of money and need a vehicle, going to Bob's used car emporium is much for cost effective than Johnson's Ford. By destroying the "clunker" the Federal Government effectively destroys a potential ride for someone who doesn't have that much money and/or a trove of engine parts that junk yards can salvage and sell at a cheap price as opposed to going to a dealership. Supporters say that the whole vehicle isn't destroyed, just the engine which is true but how often do people need doors, bumpers and other body parts as opposed to say a water pump or a fan belt?

So now we have the Federal Government encouraging debt allocation and eliminating vehicles for low income people. What was the objective of this program again? To get people to have more fuel efficient vehicles? The clowns that run Washington need to realize that this is a unrealistic goal. In rural areas having a tiny little Toyota isn't going to do anyone good when there is dangerous amounts of snow on the ground. People (myself included) buy trucks, jeeps and SUVs for a reason, not to be hip like the Yuppies in New York City. Those in Washington need to realize that the more they try to fiddle with the economy the more they make it worse.

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