But, it IS a benefit to car dealers, the consumer who gets a deal and is in need of car anyways, the car manufacturers who are getting positive cash flow and clearing out old inventory, and the auto suppliers who will start getting increased business when the car manufacturers need to start producing to get their inventory back where it should be.

Two sides to every story.

One thing that I don’t want people to lose sight of is…

> They spent 1 Billion..what did they actually “make” on this deal?

No, WE had x billions spent out of coffers that we have no say over… those coffers are filled out of our pockets, but emptied at congress’ behest.

Who benefits?

a) first off, the person who doesn’t see that part of the money is coming from their own pocket — or doesn’t care, as long as MOST of the money is coming from someone else’s pockets
and, has a clunker-enough of a car
and, can afford to buy a new car.

This is pulling money from someone else’s paycheck as an incentive to “you” to go (deeper) into debt.

Who doesn’t?

1) the poor shmoe who still doesn’t have good enough credit to get a car… but look on the bright side, after you get through paying off your neighbors’ houses (from default), you can start paying off bailed-defaulted-car loans.

2) the conscientious green guy — who already scrimped and saved to replace his carbon breather with an overly-expensive hybrid… he’s still paying it off, and from the manufacturing perspective, the whole process is upside-down… 20-30 years for a pay-off? Puh-LEAZE! Anyway, he’s doubly-off… even if he wanted to trade it in, it gets WAY to good of gas milage.

3) the guy whose car is not crappy enough. That’s ok, he probably also doesn’t need to be taking on new debt. But that won’t stop him from paying for someone else’s…

4) anybody who could really use a CHEAP, USED car… gov’t regs require that the traded “clunker” be rendered inoperable — destroyed, essentially. Instead of giving cars to the Kidney Foundation or some charity to be checked out and tuned up and whatnot, and given to some other poor shmoe to is really down on their luck — something to hopefully give them a leg up, the gov’t wants them trashed.

What’s the ROI if the gov’t is spending money that doesn’t exist and expects YOU to pay the bill?

This is pure magic… wave a wand, make up money, spend it on made up stuff, and pretend that Americans can pay it off. Heck, why not just write a fictional check from us to the government and declare the budget has been balanced, and the deficit is paid off?

It’s just crazy enough, it might work!

The reason it doesn’t include used cars is of course because that wouldn’t be as “stimulative.” From a perspective of getting inefficient cars off the road, the capacity to buy a used car with the money would have been a better idea. From the perspective of trying to achieve that while “stimulating” the economy, having people buy new cars makes more sense. I don’t necessarily think that it should have been implemented that way, but the reasoning is pretty clear.
Brad´s last blog ..Some Thoughts on “Dollar Cost Averaging”

An increase in consumer confidence! That’s pretty valuable.

And when the car industry was expecting to do 10 million cars this year, a 250,000 car boost in one week is pretty huge!

MLR