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You got it. Loaned it back to the employees, with interest, of course. Pretty slick, hah?
Unless of course you got reckless with giving loans, then the chickens came home to roost.
Bernie Madoff was merely a student of the US government. :P
Ol Bernie is just a symptom of the disease, and almost seems like a scapegoat to distract from the corporations. Not that I have any sympathy for him...but there's a lot more fish to be fried, and they seem to have now dipped below the radar, again.
I wonder what 3-4BN counts as relative to the total corporate welfare given by the Feds. I suspect it isn't much.
I resent that... I am not out of control....
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exotic vacations, lawn service etc etc etc.
This probably will cause you to be punished, is my guess. :P
A small portion of their constituents demanded. Every opinion poll I've seen on the subject shows that the majority of the public is against this program.
And for good reason-they're getting worked over coming, and going:
http://www.edmunds.com/help/about/press/154606/article.html
Like I predicted. Not that it took anything beyond a very basic knowledge of economics.
If sales in the 2nd half are 5.5 MM units or better and 5.5 MM units or better in the 1st half of 2010 then the program will have accomplished its purpose. It's far too early to tell after 3-5 weeks. Reassess in January.
My local Honda dealer has been moving the natural gas Civics out to the front as the gas Civics have dwindled away.....I guess the CNG Civics just aren't very popular even with a program like this.
But 153 cars!! And they were looking forward eagerly to the renewed volume that the extra $2 billion should bring. They have some incentives from Honda that are good until Labor Day, so this will be the all-time king of bonanza sales periods for them.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
FYP
And for good reason-they're getting worked over coming, and going:
http://www.edmunds.com/help/about/press/154606/article.html
Like I predicted. Not that it took anything beyond a very basic knowledge of economics.
Thank you for the confirmation. This shows that the plan is working exactly as planned.
Most dealers will have to do without inventory for most of August so this will dampen the numbers.
I think calendar year 2009 will prove to have been a very stressful one for those in the car business--feast or famine, on a weekly basis.
The simple truth is that the American auto industry is an unsustainable behemoth, engineered for the excess we were living in, and not lean enough to survive a 30-40% drop in demand. Further, they're not even capable of adapting to it, so our solution? We pump money into them to prolong their deaths. Wonderful.
People that proclaim this as a success tout the jump in sales. What about non-subsidized sales? Have they gone up? No. Obviously the subsidies won't be around for long, and thus neither will the influx of cash currently headed toward the automakers. Even 10 billion in a SINGLE car company's pockets can only keep them afloat for ~6 months - that much was evident from last year's auto bailout money given directly to them.
At the end of all this, we're left with the same unsustainable behemoth, and we'll all sit around and bemoan the impending downfall of our beloved automakers. "But we did C4C?!?! Wasn't that enough?" Failed. Business. Model.
What happens in that decade?
"The long run is a misleading guide to current affairs. In the long run, we're all dead."--John Maynard Keynes (Baron Tilton), A Tract on Monetary Reform (1923).
Can you identify the rest of the polls you saw? Do they release their polling data?
e.g. "Do you think hardworking, honest Americans should be given a helping hand in replacing their worn out, gas-guzzling cars, so that America can reduce reliance on Middle Eastern oil?"
e.g.2 "Do you think only certain select groups of Americans should be given taxpayer's money to buy new cars?"
You'll get opposing results from these two (admittedly exaggerated) examples, even if you ask the SAME people.
I would further stress that additional (artificial) demand today only lowers demand over the coming years, and I don't see how today's automakers (assuming we don't let one fail) will fare any better with even lower demand.
To get back to your question - in the decade following a major collapse, unemployment rises higher,many thousands of people on pensions through the collapsed find themselves without an income stream, and things feel quite unpleasant for a while. This is my point as well, however. We're so afraid of that pain that we're not doing anything to avoid this scenario, we're merely delaying it.
The bottom line is that if a business is too large to adapt to the demand of it's own industry, then it MUST fail. Fail or be nationalized, at which point you can fail on a different schedule. I don't see where nationalizing a business to prevent it's collapse was ever one of the "functioning" principles of capitalism, however.
Capitalism is an economic system. It's not a good form of government whatsoever.
The purpose of government is to regulate, and to protect us from the predatory abuses which may occur in business--regardless of the economic system in place.
No economic system runs without a governor.
The thing I like about Cash for Clunkers is that unline the direct bailouts it is fundamentally a measured, finite market-based response. It provides a little boost to customers, who then go out and choose from a wide array of products that meet certain socially desirable criteria. The money is trackable (if not quite as immediately trackable as NHTSA hoped), and the early results tell us that customers are (a) choosing more fuel-efficient cars, (b) buying from US companies at about the same rate as their current market share, and (c) financing those purchases either with cash, or with smaller-than-usual auto loans.
Is it a perfect response? Of course not. We might argue, as Sens. Collins & Feinstein did, over what "socially desirable criteria" to implement, and we might wish that NHTSA's registration and reimbursement processes had gone more smoothly. Some of us might have preferred a solution that gave preference to vehicles with a certain percentage of domestic content. Others might have preferred to see smaller rebates--to more customers--or some sort of pro rata scale that might have paid more for a 16 mpg improvement (my transaction) than for one that nets only a 10 mpg improvement. Fine--let's talk about those things, certainly before we attempt to implement another version of this program.
Should something like this become a permanent fixture in the US economy? I'd say not. But we inhabit a mixed economy, neither purely market-driven capitalism nor state-driven socialism, but containing elements of both. So this is a temporary example of the federal government intervening, for what some would regard as an acceptable tradeoff between short-term and long-term. As such, I'd say it's better than most: the spending is limited, the goals are relatively clear, there's a definite end point, and no one seems to expect that it will be renewed indefinitely. That makes it a far better use of stimulus funds than, say, purchasing GM stock.
In some respects the "capitalism" angle is a bit of a red herring. The US economy has nearly always been a managed one in some respects, as government subsidized the major railroad companies of the 19th century, began competing actively with private utilities in the 1930s, managed the growth of the commercial airline industry in the 1930s and 40s, and funded the massive expansion of the defense and aircraft industries in the 1950s and 60s--to cite but a few examples.
We have a poster here, by the name of kdhspyder, who is fond of saying that government and business in the US are essentially one and the same. I'd say that is a bit overblown, but to pretend that government and industry aren't cozy with each other (or haven't been for more than 150 years) would be naive.
Unbridled capitalism is anarchy. Unbridled socialism is the death of individualism. Somewhere in between lies what passes for prosperity, the greatest good for the greatest number, a utilitarian maximum.
Let's take GM for example. We nationalize them, and immediately realize an ongoing cash drain, the same they themselves have felt. So we "restructure"them to create a viable business. The first thing we do is cut a majority of the long-running pensions, yes? I mean, that's a burden we didn't sign up for, at least not at the buying price for GM. So that's done. Now, we close a good portion of the dealerships, say another 50% or so, and a good chunk of the manufacturing. How many jobs have we cut so far? How many incomes? Neat-o. Then, if we've done things efficiently, which of course we're known for, we can some day hope that little old GM can be sold for roughly what we've paid, and the whole thing will have come off cleanly. Is that the vision?
If you can find me one European company that was as large and as upside down as GM that was subsequently nationalized, restructured, re-privatized and returned to it's functional glory, then I will tip my hat to you.
Renault. Stronger than ever, and now (thanks to its relationship with Nissan), the number four carmaker in the world in volume, according to Wikipedia. Of course, it only took fifty years.
But again, you're conflating C4C, a market-based demand-side stimulus program with direct corporate welfare in the form of GM and Chrysler bailouts.
Classic consumer mindset behavior.
These "new" cars won't be able to be given away soon.
http://www.nytimes.com/2009/08/11/opinion/11herbert.html?hp
As far as C4C *not* equating to direct corporate welfare, I fail to see how. In my understanding of the program, the government's <= $4500 per sale ends up in the hands of whom? I'm sorry, perhaps indirect corporate welfare is a better title. Is it not also true that the majority of cars sold under this have less profit in them than the value of the rebate itself? If that's true, then the program is a one-time shot in the arm to the car companies, and nothing more. They can't sell cars at this rate on their own, and certainly not right after the most-likely-to-buy chunk of the population has gone and "got theirs".
It's a lovely, roundabout way to give money to the automakers. Here's a neat little anecdotal piece for you. At the nearby Chevrolet / Mazda dealer, the salesman said that in one weekend (8 days ago) they had sold 39 cars (a record for the last year). 28 of those cars were from C4C, and of those 28, 21 were Mazda's, and 7 were Chevy's. Ta-da! Mission accomplished.
The consumer who bought under the program. The cost of the vehicle did not go up by $3500-4500 so you cannot successfully argue that the money went to the automaker. That revenue was coming to the auto industry eventually; all C4C has done is sped up the timetable (possibly robbing the manufacturer of future revenue).
OK, not entirely the consumer. The auto dealer has seen average transaction prices rise so there's a little profit taking there. So the consumer is getting probably 70% of the benefit and the dealer the rest. But dealers are usually local businesses so that revenue is being pumped into the local economy in the form of commissions to the salesmen, etc.
Also, the firms who scrap and recycle the metal are seeing upticks in business. Again, the spike is temporary and may come at the price of future revenue.
As to long-term effect, consider this. Some people are in the market for a new vehicle but don't have a qualifying clunker. My car is worth < $4500 but gets 20MPG combined, for instance. As transaction prices have crept up I've stopped looking. After C4C is over and prices go back down some I'll re-enter the fray. Other smart shoppers w/out clunkers are probably doing the same. So post-C4C there should still be decent market activity.
Yes, sir. Guilty as charged C4C has one huge advantage - it removes junk from the roads, roads became safer without rusted behemoths.
Actually the money from the Feds ends up in the hands of the buyers only. The buyers take delivery of a vehicle that has a purchase value of $20000 for the amount of $15500. All the other ancillary benefits, those to the dealers, their suppliers, the intermediaries, the vehicle makers, their suppliers and the millions of workers employed by these companies all come from the pockets of those buyers.
Or another way of looking at this purchase would be to say that 25% of the expected improvement in the business level is government-driven and 75% is consumer-driven. If after all the consumers didn't take advantage of the incentive then there would be no improvement. They must go hand-in-hand.
Seems pretty obvious to me. Nobody is forcing customers to spend the C4C money on a GM or Chrysler product. They have the freedom of choice. That's what's missing from the direct subsidies.
Renault was nationalized in 1945 and is still a powerhouse in Europe. (to be fair to you, Renault was profitable when nationalized).
Rolls Royce Aero Division was nationalized in 1971 (I think that's the right date, or close) because it was deemed too vital to lose.
All American railroads were nationalized in 1917, then privatized again, and while not booming, are still vital to American interests and economy.
It has always been my contention that the D3 cannot ALL be allowed to fail simultaneously and suddenly.
If we nationalize the D3, and winnow them down to one profitable re-privatized enterprise---fine with me.
Cash for Clunkers Interest Slowing; Could Run Out of Steam Next Week (AutoObserver)
GM disagrees:
GM Sees Cash for Clunker Momentum Continuing; May Increase Production
In this economy, not a surprise, really, is it?
In terms of our local community, this is win/win. The dealer in question is a great community supporter of local events and charities, + he is going to forestall 2 layoffs + he runs a solid honest shop (always wins the "Best of ____" Awards from local newspaper polls).
I don't see any downside of C4C from this somewhat narrow point of view. I could only hope all my tax money would have produced such tangible local benefits.
I called the smaller local Toyota dealer two days. They have one Scion left and less than 20 new cars in stock. Their website hadn't been updated when I called and it showed 34 new cars in stock.
I do see downsides. Though I agree that C4C has shown tangible benefits. Too bad the other $797 billion has done little to nothing as a stimulus to the economy. If it was even a fraction of the C4C program the economy would be robust. There are not going to be 30 million jobs for all those in need of employment. We are sinking into the abyss and C4C has helped a very small segment get through the summer.
Has anyone followed the money? I mean could it be that Cerberus has significant investments in various media outlets? Or Cerberus's executives sit on other media corporation boards?
Personally I was all for the owners of Cerberus and all its businesses having to pay off the debts of Chrysler, BEFORE receiving 1 tax $. Cerberus mismanaged Chrysler ran them far into debt, screwed the workers and suppliers, and walked away from the table washing their hands of it. Though legal, it was about as ethical as Bernie Madoff.
Getting back to your overall question ... the government should not be involved in deciding which businesses or industries thrive. When that happens that then strenghtens the motivation to hire more lobbyists, and creating the quasi-legal influencing that is prevalent in DC. The problem many people have with the government is that IT IS FOR SALE, with the wealthy having more access to the politicians, and getting a "fairer" return.
We need to eliminate lobbying, and come up with laws that strictly separate business and government. There should be no such thing as Dan Quayle leaving politics, heading Cerberus, and then Cerberus getting large bailouts from his former political-cronies, while Cerberus's lobbyists are holding parties for Congress and their spouses at some resort.
The government would not allow it in the 1980s, nor in the 90s, nor now. The policies to PREVENT it have changed, and the reasons for the auto industry's distress have changed, that is *true*, but the essential motive is the same as it's been for 30 years--the D3 are too big to fail--it would be a horrendous disaster for the country.
So really there is no sense for us to think otherwise or to become intoxicated by some anarchist delusion. In *time* the government may allow the evolution of the auto industry to something else, but there's too much at stake politically to allow a sudden collapse (which would have occurred, no doubt in my mind---all 3 of the D3, gone in 6 months tops, broken up, sold, dissolved, whatever).
It still does not change the facts. 90% of the stimulus allocated is going into NON job creating entities. Expansion of welfare. More unemployment for many that means no good reason to look for a job in earnest. I have a couple nephews in that mode. Making nearly as much on unemployment as they could at a job. $400 per week is good money when you are sponging off mom and dad. Driving new cars so they did not need C4C.
Not really. I have fought the madness since I was in High School. Campaigned for the other Barry, Goldwater my first opportunity to vote. I was raised in a very, very poor Republican family. We did not believe in welfare when the only food on the table came from people in our church. I think welfare is a big part of our problem in the USA. You don't work, you don't eat is a good way to live. I had no problem getting a job even during the years Carter nearly destroyed our country. When you are willing to go where the work is it is available. Sitting on a couch watching the stupid TV is not where you will find a job. So I do realize we are in the USSA. And we have FDR to thank for it.
myth (poof). :P
Cerberus Chief Takes Stock
Why 'Cash for Clunkers' works