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Cash for Clunkers - Good or Bad Idea?

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Comments

  • chunglauchunglau Member Posts: 48
    Those calculations are wrong. For example, look at the Ford Escape prices. Before C4C, selling price/MSRP=24982/26582=0.9398, or a 6% discount. Not 5.7%. That same vehicle, after C4C, has a selling price/MSRP of 24786/26548=0.9336, or 6.64% discount.

    No idea how those numbers become 5.7% and 5.2%, respectively, in that table.

    The sales prices for the Chrysler's obviously did not take into account manufacturer's generous rebates.
  • fintailfintail Member Posts: 58,415
    Cafe Hayek...that's enough for me.

    The same people would never whine about the billions in aid we give to ungrateful artificial nations each year...
  • hpmctorquehpmctorque Member Posts: 4,600
    Sure, but does your conclusion factor in the environmental impact of the recycling process and the energy expended in recycling, plus the same for building the vehicles to replace those that, in some cases, are prematurely scrapped?
  • Mr_ShiftrightMr_Shiftright Member Posts: 64,481
    I'm not so sure anyone could prove that the scrapping of the vehicles sent into C4C was "premature". My brief anecdotal survey of my friend's dealership suggests quite the contrary. All I saw was cars that might have "looked" okay, but with deferred repairs that equaled the value of the car.

    I'm also not understanding how C4C could be viewed as possibly even remotely working for poor people. Poor people can't afford a new car even if you gave them $4500. Makes no sense to drive poor people into debt with "carrots".

    Obviously the program was to boost auto sales by tempting financially able consumers to take out loans (or buy outright) for cars that dealers deparately need to sell.

    C4C presented as a poverty-fighting measure would have been laughed out of Congress.
  • erniesdaderniesdad Member Posts: 37
    Here's a better idea. Eliminate the exemption of trucks and SUV's from the gas guzzler tax.

    I have an even better one. Repeal the CAFE act in toto. SUVs are the creation of the gas guzzler tax. 20 years ago, it was possible to get a station wagon that had a 5000lb towing capacity. 7 passenger space, and sedan fuel economy. However, since wagons are considered cars under CAFE, they got taxed virtually out of existence.

    Consumers should have the right to choose a vehicle that serves their needs.
  • stephen987stephen987 Member Posts: 1,994
    However, since wagons are considered cars under CAFE, they got taxed virtually out of existence.

    They were not taxed out of existence. The "sedan fuel economy" you are describing was no better than today's midsize SUVs, and worse than most of today's minivans. The bottom line is that the SUVs and minivans did the job better than the sedan-based wagons, for most customers. In other words, the market system worked.
  • kdhspyderkdhspyder Member Posts: 7,160
    The answer is 'Yes it is alright.' Why? Because every modern President and evey recent Congress has increased the national debt because we as a society demand more from the Federal Govt than we give it.

    In this case the auto industry is demanding some of their future tax payments to be advanced to today. Over the last 8 years the Pentagon especially has demanded more than we were willing to give it...so the Feds borrowed the difference. Education demands more than we're willing to give it. Health and Human Services demands more than we're willing to give it. It goes on and on and on in every facet of governement and thus in our lives.

    This isn't one administration or another it's every single administration....even the sainted Reagan.
  • gagricegagrice Member Posts: 31,450
    This isn't one administration or another it's every single administration.

    That is true. However the only one you pointed out mandated by the Constitution is the defense department. All the others steal from our defense and so we borrow for all these Programs that the Feds have no business being in. That includes bailing out the automakers with C4Cs. Can we ever get out of the financial mess we are in. I doubt it.

    Don't forget that Ike is the ONLY President to pay down the National debt, way back in 1957. It has gone up with every president since Ike.
  • kdhspyderkdhspyder Member Posts: 7,160
    You can disagree all you want but the actual fact is that the bulk of the funding for the two wars under Bush/Cheney were 'off budget' emergency supplemental funding requests.

    By doing the funding in this manner the normal Pentagon budget was listed in the official budget document but everything that pertained to the two wars was never shown anywhere in the budget. It's called cooking the books.

    http://www.nationalpriorities.org/cost_of_war_tops_915_billion

    Obama eliminated this flim flam shell game and now is taking the heat for being upfront in what the cost of the two wars will be. Bush/Cheney were never strong enough to take that heat so they hid it.
  • kdhspyderkdhspyder Member Posts: 7,160
    You continually miss the most important point in all this....

    For the 201st time.... this legislation was created by the auto makers and their dealers to assist themselves. They created it and gave it to Congress to write the legislation. You bet your life they wanted a big number to draw in a lot of folks.

    It's worked exactly as the auto industry and dealer network planned for it to work...except a lot faster than any of them foresaw. Every brand now is scrambling to restock their dealer network.
  • gagricegagrice Member Posts: 31,450
    the actual fact is that the bulk of the funding for the two wars

    If truth be actually known, that money has kept more people working in the USA than the Billions wasted on the banks, GM and Chrysler. I think that Obama learned right off, if you shut down the war all the people employed making bullets, guns, rockets, humvees etc, etc will be out of a job. So being the bright guy he is, the war efforts will be expanded. They say doubled in Afghanistan. Government business as usual.
  • Mr_ShiftrightMr_Shiftright Member Posts: 64,481
    It's better to look at the RATE of increase of the debt, rather than just the total $$$ amount. This graph rather dramatically illustrates what happened to us these last 10 years or so.

    (scroll down to How Has the National Debt Grown Over Time?)

    Rate of the Debt's Increase

    Look especially at years 2000-2008. I'm sure 2009 doesn't look any better.

    RE: Bailouts of auto companies. If anything, the incredible failure of Cerberus to save Chrysler only emphasizes that private capital, and "innovation", etc., is not going to save the auto industry. It isn't enough to do the job. It requires tremendous financial horsepower---which only the US government has.
  • kdhspyderkdhspyder Member Posts: 7,160
    The CAFE system is an ingenious creation of the intelligence and military groups in the Federal Govt that hides behind the recent 'greenie' movement. When it was first created there was no 'greenie' movement. Now there is. The ones that first created CAFE after the first Arab Oil Embargo now maintain it in place and when necessary ( such as when they prompted Bush II to increase the standards ) they strengthen the system.

    You have a snowball's chance in h*** to get this repealed when it's the intelligence, military and law enforcement segments of the US Govt that want it to stay in place. Never gonna happen.
  • kdhspyderkdhspyder Member Posts: 7,160
    I agree this was a socialistic job-creation program by the Feds on behalf of the defense contractors. Just listening to the debate on the cancelled F22 was enough to prove this. Jobs, jobs, jobs.

    So why is it then that a socialistic program to prop up the defense contractors and their workers is good to certain people but a socialistic program to prop up the auto industry and its works is bad?

    As you said ... and I've said many times herein... business and government as usual. They are one in the same entity.
  • kathyc2kathyc2 Member Posts: 159
    If he could only be upfront and tell us what the cost of his health plan will be, or even what it will be. Whatever happened to the CSPAN covered round table discussions that included people from the medical field?
  • kathyc2kathyc2 Member Posts: 159
    I think it's closer to 500 times you've said that. :shades:

    But the fact remains that Congress voted for it and Obama signed it.
  • srs_49srs_49 Member Posts: 1,394
    So your justification of Obama increasing the national debt is it's okay since Bush did too?

    IMO, Obama's reasons for deficit spending to bring us out of a recession are orders of magnitude better than those trumped-up reasons that were put forth to invade another country. I won't mention the difference in the lives loss.
  • srs_49srs_49 Member Posts: 1,394
    Mr. President, I bought this 15 MPG Yukon through no fault of my own. Will you help me?

    The devil made him do it :shades: ?
  • srs_49srs_49 Member Posts: 1,394
    But, I think it takes more energy to refine a gallon of diesel fuel than it does a gallon of gasoline. So, that being the case, the fuel economy improvements of a diesel are somewhat countered.
  • srs_49srs_49 Member Posts: 1,394
    f truth be actually known, that money has kept more people working in the USA than the Billions wasted on the banks, GM and Chrysler...

    The defense industry was doing just fine before Iraq and Afghanistan, thank you very much. And will continue to do well after those conflicts are put to bed.
  • kernickkernick Member Posts: 4,072
    So why is it then that a socialistic program to prop up the defense contractors and their workers is good to certain people but a socialistic program to prop up the auto industry and its works is bad?

    That's a pretty easy question to answer. Military bases, forces, and the industry to manufacture and resupply the military are essential. A war could break out tomorrow or next week; there is no time to begin hiring and training, and starting up military industries. It would be ridiculous to think that we could buy our military equipment foreign-made.

    On the other hand autos, TV's, furniture PC's, clothing ... are not essential to have those industries tomorrow, and can safely and easily be imported.

    Ronald Reagan's debt - I'd gladly have had Ronnie run us deeper into debt, with the great result he had of running the Soviet Union into economic and political collapse by trying to match our military buildup. Winning the Cold War was about 1,000X better than the Soviet Union still existing. Oh and the economy was much better when he left in 1988 then what Carter left him in 1980.
  • srs_49srs_49 Member Posts: 1,394
    I agree this was a socialistic job-creation program by the Feds on behalf of the defense contractors

    You talking about the wars in Iraq and Afghanistan??? You gotta be kidding.

    I agree with your inference of the F-22 program. Too costly, no mission, and took just too long to bring to fruition (I know, we've been working on some of its avionics for over 20 years now).
  • kdhspyderkdhspyder Member Posts: 7,160
    From a discussion on NPR I believe that I understood he recognized the errors of the Clinton strategy of putting together an entire package at the WH ( Hillary ) and then giving it to Congress saying 'Pass this'. It was too easy to pick apart the program and kill it.

    The Obama WH strategy is the reverse. Healthcare reform is a priority. But it will be Congress that will create it and pass it. Until Congress does so there's no way to know the specifics. The specifics and the costs have yet to be settled by all the interested parties at the Congressional level, meaning our representatives.

    That's a different discussion on a different site.
  • kdhspyderkdhspyder Member Posts: 7,160
    Again, government and business are one in the same. Congress wrote the words legalizing the appropriations that their constituents demanded. Obama signed off on the appropriations that his constituents demanded.

    Nothing new to see here.
  • fintailfintail Member Posts: 58,415
    Sorry, the US didn't win the cold war. The Soviet mentality is alive and well today, its criminals NEVER faced prosecution for their crimes, the area is still loaded to the gills with nukes, and right now Russian subs are cruising along the eastern seaboard. The US winning the cold war is baseless propaganda, just like the "liberation" we have brought to so many places.
  • kathyc2kathyc2 Member Posts: 159
    LOL

    You sit here Bush bashing and talking about the war on several posts. I post one about Obama breaking a promise he made to the American people and you chide me for being off topic??

    Typical.
  • fintailfintail Member Posts: 58,415
    As long as [non-permissible content removed] Israel is spending like a madman with our endless supply of wallpaper-printed dollars, our defense contractors will indeed be doing just fine.

    I'd rather give my money to automakers than to artificial nations.
  • fintailfintail Member Posts: 58,415
    Some Americans believe they have a real say in their country. It's amusing.

    I suspect there will be another program like C4C, no matter what the people think (and I don't think it's a terrible use of funds seeing how much other waste there is that nobody cares about)
  • erniesdaderniesdad Member Posts: 37
    They were not taxed out of existence. The "sedan fuel economy" you are describing was no better than today's midsize SUVs, and worse than most of today's minivans. The bottom line is that the SUVs and minivans did the job better than the sedan-based wagons, for most customers. In other words, the market system worked.

    Um, check like vs. like. In 1991, the last year for the LTD Country Squire Wagon, the wagon had a 5000 lb towing capacity and 18 mpg, . The explorer had a 5600 lb towing capacity and 16 mpg. Cargo space is roughly even. The LTD was on the wrong side of CAFE numbers back then, and CAFE didn't apply to the explorer. The LTD was also a much better tow vehicle, equivalent in cargo capacity, and a far more comfortable vehicle to take on a long trip.

    The final argument for the wagon is that SUVs today are becoming far more carlike. Look at the Ford edge, the flex, the Mazda cx-7/cx-9, the Acura RDX, etc, etc, etc. They are all being based on car platforms, lower ride heights, etc. They are suvs in name only.
  • erniesdaderniesdad Member Posts: 37
    Um, yeah, sure. Whatever. You've made this assertion numerous times. Yet most of the Marines and military people I know drive their families around in Suburbans.

    And CAFE has been such a wonderful success that there hasn't been a single year in the past 30 that has seen oil consumption go down.
  • kdhspyderkdhspyder Member Posts: 7,160
    I work in the center of the largest military installation in the world. Most of our customers are related to the military in some way...many directly involved..deeply.

    There's the question of our fuel dollars being converted into roadside bombs and purchasing bullets for terrorists. Those involved deeply resent our overuse of fuel. But there's a larger issue which those in higher positions understand and that those in lower positions don't consider. The use of fuel supports the political regimes in Venezuela, Iran, Russia and other places not friendly to the US.

    In addition since we use so much - with our own supplies shrinking - that we are in a life and death competition with other world powers simply to have enough fuel for our daily usage. In this we're in competition with Germany, the UK, Japan, France, India, China and Indonesia. None of these huge powers have enough fuel supplies for their own daily usages. Here's a direct question. How many days a week would you like to drive by the end of the next decade?

    The new national concern which you'll hear all over the place now is 'energy security'. That means being able to secure enough energy to keep everything running. Bush's 5 Yr Energy Task Force gave it to him straight in the face back in June 2007. We're in a world of hurts come the end of the next decade. Not maybe..we are. So when do you want to react to this crisis?

    Your last sentence simply shows that you have no understanding about the concept of national usage vs individual usage and the basic reason for the creation of CAFE. Explanation upon request.
  • imidazol97imidazol97 Member Posts: 27,675
    > think that Obama learned right off, if you shut down the war all the people employed making bullets, guns, rockets, humvees etc, etc will be out of a job.

    Exactly right. Plus all those soldiers come home to no jobs. :( So much for those campaign promises to the peaceniks in the party!. :P

    2014 Malibu 2LT, 2015 Cruze 2LT,

  • steverstever Guest Posts: 52,454
    Let's get back to Cash for Clunkers now please.

    “There's been such a dramatic increase in revenue. ... I'm hoping this continues,” Wilkinson said.

    Program no clunker here: Biz jumps at scrap yards, towing companies (Crain's Detroit Business).

    "The cash-for-clunkers program could be a blessing or a curse for cash-strapped suppliers, depending on whether it creates a sustained gain in vehicle production, supplier executives say."

    Suppliers worry that clunker program might be false start (same source)
  • gagricegagrice Member Posts: 31,450
    I agree with you completely. The old station wagons were much more practical than todays foo foo CUVs. For example the Acura RDX will only tow 1500 lbs. Gets a whopping 19 MPG combined vs the old Ford wagons getting 18 MPG combined. My uncle ran his contracting business from the late 1940s till about 1990 with a station wagon. He had an old PU if he needed it for hauling heavy loads or long lumber. Towing with a short wheel base vehicle is not safe at all.

    I wonder how many of those old wagons will get destroyed?
  • erniesdaderniesdad Member Posts: 37
    Um, yeah, right, sure. If, as you assert, CAFE etc was part of some grand plan by the military industrial complex, the tri-lateral commission, or rogue agents of the John Birch Society, Skull and Bones society, then it should have been child's play for this same group to do the following:

    a)Drill off all the coasts of the US to increase domestic supply,
    b)Drill in Alaska, specifically ANWR, to further increase domestic supply,
    c)Sweep away the absurd regulatory climate towards nuclear power, ending the burning of petroleum products to produce electricity,
    d)add massive tariffs on imported oil to end oil imports,
    e)add massive tax breaks for coal gasification and processing of oil shale, and oil sand, all of which we have energy reserves that, if converted to liquid petroleum, are more than triple that in the Middle East.

    Considering that the US government has not implemented anything that I mentioned, the absolute fact that oil consumption has increased linearly with economic output since petroleum was first used for fuel, and that CAFE has not made the smallest dent in oil consumption, I would say that your assertion that CAFE is some law to benefit the military industrial complex is bovine scatology.

    Want the reality behind CAFE? A bunch of congresscritters decided to "do something" when oil prices went up in the '70s. So in their infinite wisdom, rather than let the market work to punish automakers that produced low mileage cars, they mandated cars have a certain mileage. However, being concresscritters, they left big gaping loopholes for trucks, while forcing sedans, coupes, and wagons to have ever smaller powerplants, weaker bumpers, more plastic in critical locations, smaller crumple zones, etc.

    Steel bumpers have been gone for years, and modern bumpers aren't even as good at taking damage as the old 60's era bumpers, let alone the 5mph ones in the late 70's and early 80's. Crumple zones have started to shrink and when the average fuel economy is 35mpg, they will cease to exist. You need to burn X BTUs per hour to move a car at 60 mph, and no act of Congress will ever change that.
  • kdhspyderkdhspyder Member Posts: 7,160
    The Detroit Scrap and Junker business. Is there a smaller unseen ( ignored ) business segment in the entire US? Yet the C4C program is immediately giving this small sector a big boost.

    It's amazing what happens when a plan comes together as drawn up...immediate stimulus. While this will be temporary it's this type of 'on the street' stimulus that works...and the net cost is small.
  • kdhspyderkdhspyder Member Posts: 7,160
    a)Drill off all the coasts of the US to increase domestic supply,
    b)Drill in Alaska, specifically ANWR, to further increase domestic supply,
    c)Sweep away the absurd regulatory climate towards nuclear power, ending the burning of petroleum products to produce electricity,
    d)add massive tariffs on imported oil to end oil imports,
    e)add massive tax breaks for coal gasification and processing of oil shale, and oil sand, all of which we have energy reserves that, if converted to liquid petroleum, are more than triple that in the Middle East.


    Your program here ignores two key factors, concentrated political pressure and concentrated business pressure.

    Bush's 5 yr Energy Task Force addressed all these issues. In its report to him in June 2007 it said that all the easy pickin's were gone. There was still a lot of energy available but it was horrendously costly to find, process and get to market. Frankly it was too expensive to develop given the current retail price of fuel. On top of that it would take many many years to bring these sources to market. Many years like the middle or end of the next decade.

    Drilling off the coasts is an issue for each state to decide. Political resistance.

    You can't get drilling in ANWR yet due to concentrated political resistance because there isn't a crisis-yet. Also there isn't enough oil there to do much good. Now the Bakken Formation is another issue. It may make ANWR moot.

    You can't yet build new nukes due to NIMBY public resistance.

    You can't add massive taxes to the oil imports due to concentrated and entrenched business interests.

    What you can do is boil a frog. Slowly and inexorably increasing the fuel efficiency of the vehicles, taking the worst offenders off the road step by step and making the American driving public use less fuel per person has no organized resistance .... and it works. There's nobody that wants to use more fuel than is necessary.
  • gagricegagrice Member Posts: 31,450
    Speaking of using less fuel. Have you sold any Tundra or Sequoias on the C4C plan? The Tundra 2WD should be available for someone trading in an old work truck.
  • Mr_ShiftrightMr_Shiftright Member Posts: 64,481
    Tired old ideas IMO. Nobody believes them anymore, even politicians who say them.

    We should be adopting the European models for cars, and matching European and Chinese massive investments in alternative energies and technologies. They are streaking ahead of us at an *alarming* rate.

    We are, sadly, being left behind. A nation without affordable and adequate energy makes for a dangerous world situation IMO.
  • kdhspyderkdhspyder Member Posts: 7,160
    It appears that only the new 4.6L 2WD Tundra qualfies but we have NONE. In fact were down to 10 days of sales in inventory, all products, and less than 3 days of sales on the 'clunker' products.
  • newdavidqnewdavidq Member Posts: 146
    China may be making large investments in alternative energy but they are also building a new coal fired power plant a week. And we should take what works from the Europeans, i.e. small diesel engined cars and especially trucks. We should also emulate France when it comes to nuclear energy; they get 70-80% of their power from this clean and renewable source. But we (read: The Government) are not doing these things; instead we're doing silly things like the C4C program to save energy and spur auto sales and on the other hand forcing GM and Chrysler, as part of the bailout agreement, to close thousands of small businesses (Dealers) most of which were profitable and large tax paying employers in their communities.

    If someone comes to you and says "I'm from the government and I'm here to help you ", Run away as far and a fast as you can.

    Regards, DQ
  • ponderpointponderpoint Member Posts: 277
    I finally got a hold of my analyst friend and her viewpoints on the "Cash for Clunkers" program.

    She admonished me and said calling the program a welfare component is incorrect because it is afforded to all types of people and economic brackets.

    The rest however, is not good..... I will quote her.

    "The only good thing about "Cash for Clunkers" is that it was not restricted to specific groups of people in the economy, anybody could participate".....

    "The government, generally, guiding money or assigning asset to specific groups in the battle cry of stimulus is simply delaying the factor of moral hazard in a given sector. straying from a traditional role (the government) may prove to be disastrous but one must hope for the best.... These are very dangerous times and waters....."

    She is gravely concerned that individuals, just when they blossomed into a wonderful aspect of not having a car payment for a change and could build up savings have fallen prey to "Something that looks like a good deal, but really is not.... there will be a car payment, once again months after the apparent clunker is turned in", she agreed with a previous poster that proposed "Cash for Clunkers" is a perfect fit for a very minuscule fraction of the car buying public.

    "Really good insights", was her remark about this forum but, no she won't be posting here, she is generally not a car buff..... I, as always, will generally "lurk" and enjoy the discourse.... snark away!
  • 100chuck100chuck Member Posts: 149
    Well she just stated the obvious, 750,000 vehicles out of a projected 10 million sales for this model year. So you're talking about 7.5% of the car buying public at the max.
  • gagricegagrice Member Posts: 31,450
    The most important question is how many of those C4C buyers would have sold or traded their clunker in on a new vehicle this year without the program. My guess would be most of them. If your vehicle is in need of expensive repairs as many here have posted, they would be buying another vehicle. Maybe they would have bought used. Well that helps the used car salesman. Why direct money at a given segment? In the case of C4C as passed it only benefits the New car dealers and to a lesser extent the manufacturers. I think the Senate's plan to cut the amount and include used car deals would have been more beneficial to more people. For those that had totally worn out, worthless gas guzzlers, it was a no brainer. It will be interesting to see when the dust settles how many fit that narrow band of buyers.
  • gagricegagrice Member Posts: 31,450
    According to CARS you can trade in a Cat 3 truck on the Tundra 5.7L 2WD. Better get to selling. Though only 7.5% is allocated for work truck trades.
  • lemkolemko Member Posts: 15,261
    2007 wasn't a bad year for me. After all, I was able to get that new Cadillac DTS. I wouldn't have dare tried that this year or even last year. C4C would make no difference to me as I couldn't get the kind of car I wanted anyway. No way would I go from something like a Cadillac to a Prius.
  • lemkolemko Member Posts: 15,261
    It's not impossible. If you're willing to live like your parents or grandparents, it could be done. Don't buy a car until your old one is completely shot. Save up and buy that new car for cash and buy something like a Ford or Chevrolet versus a Lexus or Mercedes. Take a vacation at the New Jersey shore versus that exotic Carribean vacation or that tour of Europe. Buy a new television only when there is smoke pouring out the back of your current one. Don't waste your money on the latest electronic gizmos when they'll only be obsolete in 6 months. Don't buy that 5,000 sq ft McMansion in the newest subdivision when you can instead buy a 1,200 sq ft duplex in an older neighborhood.
  • Mr_ShiftrightMr_Shiftright Member Posts: 64,481
    You want Americans to embrace a sober and modest lifestyle not built on credit?

    Good luck. We've been spending money and living on borrowed money like out of control drunks, and so has our government, since circa 1980. This is because real wages have not gone up since the mid 70s, and Americans turned to credit to maintain their previous levels of prosperity. Voodoo economics only made this all worse.

    But necessity is the mother (or the enforcement officer) of invention, and perhaps people will continue the trend of buying more fuel efficient, and dare I hope, more sensible-sized cars. C4C seems to suggest that they are capable of doing that.
  • lemkolemko Member Posts: 15,261
    When I was younger and dumber, I lived a credit-fueled life of sin and excess that would've left Louis XIV blushing. I have since learned how stupid I was and have modified my ways. Still, even I'm not above performing some occassional reckless blunder that I later regret with extreme intensity.
  • fintailfintail Member Posts: 58,415
    Average income vs housing price in 1955 or 1985 is much different from today.

    My grandfather was just a paper-pushing midlevel civil servant - bought two new middle-class houses during his productive years (back when they were ca. 1500-2000 sq ft), had a new car every 5 years or so, raised two kids, grandma was a housewife who brought in a little from watching their absent neighbor's house - and they got by just fine - went on vacations, had a nice TV and furniture, etc. I don't think it could be done today.

    And to be on topic, he probably wouldn't have minded C4C...had it been introduced by Ike or Ronnie :shades:
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