Cash for Clunker's Nonsense

Among the many things I don’t understand, here is the latest.

Cash For Clunkers ran through a BILLION DOLLARS in a WEEK!!!!

Doing the math, if every clunker got the full $4,500, then last week US auto Dealers sold almost a quarter of a million cars. 222,222.22 to be exact. Assuming we have a population of 228 million adults, that is one new car for one out of every 1026 of us.

And Congress is ready to vote another 2 billion to the program. Again assuming every clunker gets the $4500, that will be another 444,444 card sold, for a grand total of 666,666 (a somewhat appropriate number I think) new cars in a month, provided the pace holds up, or one new car sold or leased for one out of 342 adults in the USA., an almost a two -thirds of 2008 ‘Big 3” passenger car production, by my estimated figures.

Wikipedia (http://en.wikipedia.org/wiki/Automotive_industry_in_the_United_States )(yeah, not reliable source, but Hell, blogs aren’t exactly peer reviewed publications, now are they?) says that in 2008 a little over 8.6 million motor vehicles were produced in the United States. They have the figures by manufacturer for 2005, but not later. The motor vehicle numbers include heavy trucks and buses, as well as light trucks and passenger cars. In 2005 5.2 million passenger cars were manufactured in the US, a little under half (2.3 million) by the “Big 3”. American automakers used to lead the world, and now we can’t even win in our own country. Unbelievable. But, I digress.

Assuming the split between trucks and passenger cars remains the same, in 2008 US manufactures built 3, 775,500 cars, of which the “Big 3” may have built around 1 million.

If we use a figure of $3500 (the minimum rebate) we have almost 286,000 cars per billion dollars; over 857,000 new cars in a month. One adult in every 266 will have purchased a new car and dumped their clunker.

Yep; the cars are flying off the lots. Will we continue to sell new cars at this pace after Cash for Clunkers is gone? Or do you think the demand has met its peak, and anybody who planned on a new car sometime in the next 12 months has just bought one?

Gotta take advantage of that FREE MONEY, right?

Here’s my point; remember Y2K? Anybody in the computer biz will recall the fat times of 1999. And the lean times of 2000- 2002. Congress has just Y2Ked the automobile industry. Fat times for August; lean times until these cars become clunkers themselves.

And here is the worst part.

Congress and Obama did it all with borrowed money.

That FREE MONEY is really going to be very, very costly.