The federal government is offering YOU $4500 to take your older, working, and (hopefully!!) paid off vehicle to trade in for a brand-spankin' NEW vehicle that may save you a bit on gas but will depreciate significantly within the first two years of ownership and, like most Americans, put you into more debt if you don't pay for it in cash.
Has Congress forgotten so quickly about what happens when you make it really easy for anyone to buy something on credit? Do the words 'recession' and 'housing market' ring any bells?
I'm predicting that within the next 6 to 12 months, we are going to see a huge uptick in the number of repossessed vehicles as a direct result of this program. The only real winners in all of this are automakers and the car dealers (if they actually receive payment from the federal government).
Our government is sending Americans the WRONG message. We should not be encouraging people to go further into debt on an asset that does nothing but depreciate just to add a few miles to the gallon.
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Just curious...
ReplyDeleteWhen events prove you dead wrong, how big will your mea culpa be????
Creed: If you would provide more context to your objection, I would be more than happy to have a much less snarky discussion with you.
ReplyDeleteYou are claiming that there are going to be a bunch of car repos in six months to a year. I didn't make you say it.
ReplyDeleteYou don't have anything to back it up, but threw it out there anyway. So, I think the snarkiness started in your end of the pool.
But, from a quick look on Google I had seen that the number of repos had slowed down according to Experian. My questions are, what yardstick are you willing to use to test this prediction and if you are proven wrong, what will you do then? I don't think that is "snarky."
Why are you so opposed to my prediction of a bunch of car repos? If there is an underlying reason for your hostility, please share that.
ReplyDeleteMy prediction is based on economic reasoning based on the fact that the U.S. government created an artificially lower cost of purchasing a newer car. This has shifted the demand for new vehicles outward by enabling people that normally would not have purchased a new car to do so now. By enabling consumers to get into that better (meaning, more expensive) car, because they may now be able to afford more financing, I am predicting that more Americans than normal will take on more debt
than they can manage and thus be unable to sustain making the payments that they previously did not have.
We probably won’t know for a few years how all of the factors that resulted in the crash of the housing market were interrelated. But I think we can say that the members of Congress who pushed for the
opening of the housing market to sub-prime borrowers were short-sighted, and they are acting with the same short-sightedness with the Cash for Clunkers program.