I only see one problem with cash for clunkers

[TwixVoy]

The argument about good clunkers being destroyed is a good point, but I think there will still be a good supply of them out there for the poor.

The biggest problem I see is that the people who have the clunkers are not in debt for that car. Likely many (dare I say most) of the people using this program are getting IN DEBT in order to get a new car they otherwise may not have gotten so in debt for.... and I think debt is one of the things people should absolutely be avoiding right now.

I wish there would have been some requirement that they can finance a max of 50% or something. Other than that it's a good program.

[madokie]

1. bull pussy

what you propose sounds like it would be a hand out to the well to do if you ask me. Debt in itself is not bad. Getting the clunkers off the hiway is good. Selling new cars so the workers can make new cars is good. Stimulating the economy as this is doing is good. I fail to see a downside at all. nothing personal ok

[TwixVoy]

3. Debt is not bad?

When people are still losing jobs, banks are needing bail outs because people can't pay the debt they currently have, and we are in debt both at the government and personal level you see nothing wrong with debt?

[madokie]

6. No, I don't have a problem with debt.

I make debt then I pay. I doubt that many of the cash for clunkers buyers are the ones who you are referencing either. so there :-)

[TwixVoy]

7. Let me guess....

If you add up all of your assets and all of your debt you have a negative number don't you? (thus a negative net worth)

[madokie]

9. Boy you're way out there aren't you

we barely owe any money at all, actually. And thats only because we choose too not because we have too.

[TwixVoy]

10. Then why have debt?

If you have more assets than debt it would be foolish to "make debt" and pay interest on it.

Therefore your liquid assets are likely less than your debt. In other words, you have a negative net worth. Which is exactly what the banks want from you.

[wininboy]

To enable one to invest money

and I don't necesarily mean the stock market. They might want to invest in a home, or a car, or any other thing that will help them produce income.

[TwixVoy]

19. LOL ROFL

So let me get this straight... where THE HELL are you going to find a rate of return these days that is ABOVE the APR on your loan?

This is like me taking a $10,000 cash advance out of my credit card at 25% APR, then moving it over to a CD that earns 3% APR and saying I have "invested" it and am making income.

ALL loans in the country today are going to have a higher APR than non-*extremely* high risk "investments".

[madokie]

23. Hey wake up

Not everyone is in your shoes. Not everyone does things as you apparently do. k I mean what the fuck over??? I can get money from our bank for a, well thats none of your business, actually I'd hate for your head to explode all over my monitor if I was to tell you. :hi:

[wininboy]

27. I's think that TV doesn't have a clue

but I've seen this act before

[madokie]

20. No we do not have a negative net worth

and yes I pay some interest but when the collateral is secured the interest charged isn't much. At some point in life I may or we may need to have debt and when or if we do we will be better off for having done everything just like we are doing it. sorry I call bullpussy on your whole idea here. nothing personal at all just calling shit shit when I see it. Your having a problem with debt does not make it so for others. k

[TwixVoy]

22. Enjoy your debt

It will eat you alive... book mark this post. Come the currency crisis at the end of the year (which will be the REAL economic crisis) your debt will consume you. I will be here to pull up the post when you come crying about it.

[madokie]

24. You're nutts

sound like a repuke talking here. wtf

[TwixVoy]

25. Yes I am nuts

Again, enjoy financing every aspect of your life. Just wait until December my friend....

[hfojvt]

17. as the driver of a 1993 Ford Tempo

I wonder if some of the supposed 'clunkers' which are being destroyed are not better than the car I am still (rarely) driving.

You don't create wealth by destroying something useful, except in the capitalist system that requires massive waste in order to keep everybody working at the jobs they mostly hate.

Otherwise, you are certainly correct about the debt. It's generally inevitable for people buying cars and houses, I even got a loan to buy my used car (and 3% was not a bad rate either (mostly because I was sorta borrowing my own money)). If people are already over-levraged, then it's not a good idea, but generally people who are over-leveraged don't get financing.

Then again, my credit union did have six or seven cars that they repoed.

[kirby]

2. Well, they needed a new car...

While not in debt, their older clunker was costing them more in gas and in repair costs.

The problem is that our economy is based on consumption. The only way to kickstart it is to give an incentive to consume. Any other model would take a major restructuring of our country. My guess is that when the borrowed chinese money runs out, we will eventually have to make that switch.

[abumbyanyothername]

18. I have a plan to spur consumption

give everyone consumption credits. Just give them away.

Do it on the basis of socially redeemable activity if you like. But pass them out.

While you are at it . . . make them non-transferrable (i.e., you can't give them to anyone else, other than an authorized distribution station) and make them non-durable (i.e., they expire after a month or a year or whatever).

[customerserviceguy]

4. I'm sure that credit standards have been tightened

and that only those who can truly afford the payments are offered loans to buy the cars. On the other hand, this is free money for those who can truly afford to take on new debt, they're not exactly the "down and out" of the current recession.

[TwixVoy]

5. You lose site of the fact we just lost again over 300K jobs last month

I doubt those 300K people were expecting to be in that count if they had just bought a car.

Technically if you need to finance something you can't afford it.

But that point aside, just because you can afford the PAYMENTS when you are out of a job all of a sudden that quickly changes.

[madokie]

8. No technically that is not true

who can buy a new car or who can buy a new home with cash? Like I said I say bull pussy on this whole premise

[TwixVoy]

14. A home is different

(well, with the exception of a few years leading up to the housing bubble)

A home is a home. Owning it gives you financial strength, and it is an asset that APPRECIATES with time in a normal economic situation.

A car is a hole in your pocket and is exactly the opposite. It continues to lose value EVERY DAY with out exception. Especially a new one. Rather your car costs 50K or 3K - as long as it serves its primary purpose of transporation why go for the 50K if you have to finance it?

Getting your self in to debt for a vehicle when cheaper alternatives are available is extremely foolish.

Unlike you I can afford to buy a new car should I choose. CASH. Would I do that though? Hell no. The fact that I drive a "clunker" and always have enabled me to save that money rather than send it to the bank every month in the form of a payment.

I voluntarily quit my job several months ago. (as I posted about on DU) I was able to take it easy and casually look for work for MONTHS. I could have remained jobless for a couple years and been fine. Why? Because I have no debt and I have a hell of a lot of savings in foreign mutual funds, CDs, and (in worst case scenario) my retirement accounts. My home is paid for. I bought a home many times less than what I could have "financed" at the time.

You think it is smart to trade that for a car payment? Good luck with that. We are headed for a currency crisis likely by the end of this year. The dollar has dropped to the 70 range.... and when it goes under that cash will be king my friend. Anyone in debt is going to lose everything.

[MadHound]

11. I think that you've lost sight of that job loss figure also

Especially since the cash for clunkers program actually creates jobs, not just at the dealership, but at junk yards, recycling centers, steel mills, all up and down that economic chain.

[customerserviceguy]

30. There are still a LOT of people

who are financially secure, even if their 401K's are down a bit from 2007. That's probably why the job loss figures are slowing, there are some people that are so damned connected, that the only way they'll lose their jobs is in a complete and utter meltdown.

We've pretty much shed the jobs of the people who their bosses considered 'expendable'.

[Uzybone]

12. Well I doubt many people are getting in $15K debt just to save $4500

People are dumb but I don't think they are that dumb.

Why would someone who doesn't have a car payment decide to burden themselves with one?

[TwixVoy]

16. Good question

for your answer simply read the posts of our friend above who thinks doing so is a good idea.

[madokie]

28. Wow

you are so full of it. Would that friend you're refering to be me I wonder? Cause if it is you're projecting what you think on to what I said. For the most part when I say something I mean exactly what I say, there is never any reading between the lines to get at what I meant, ever. As I said to begin with this is all bullhocky, the premise you use is of no good so what good can come of anything following that, I ask.

[abumbyanyothername]

13. Debt is really the seed of all evil in our society.

It is one reason why corporate America sells college education so hard core. They want those young people indebted out of the gate.

Otherwise, they might all join together and protest the military-industrial complex or something.

In debt for college. In debt for a car. In debt for a house. Have to have a job to have health care.

How dare you speak out for what is right if it runs against corporate interests?

[TommyPaine]

15. If only autos were more recyclable...

Then people could sell their used autos to be recycled into new products, automotive and otherwise, and keep the cash from that sale.

[MadHound]

21. Actually cars are pretty damn recyclable.

The steel and aluminum can be scavenged, recycled and made into new products. Various parts off the car can be scavenged and used on other cars. The plastic is, in general, recyclable, as is the glass and copper. Even a lot of the electronics can be recycled in one form or another. About the only thing that can't be recycled is the upholstery.

And the great thing, all these cars to be recycled creates jobs.

[jpak]

26. LOL!!!111 EVERYONE goes into debt when they buy a new car - good times or bad

Very very few people pay cash for the full price of a new car - the vast majority take out an 'auto loan'.

...and the folks who get those loans today are good credit risks...

[taught_me_patience]

29. There are many other problems too

1) The people who did not buy a "clunker" don't get anything
2) It has driven up the retail price of new cars (not good for those who don't have a "clunker" to trade in)
3) It'll drive up the price of parts for those who decided to keep their clunkers
4) 1 mpg improvement for trucks does nothing for the environment is a giveaway to domestic auto makers
5) VERY VERY expensive way to make a minute dent in smog. (This program is not about the environment anyway)
6) Probably benefits rich people more than poor