I’m no economist, but this seems pretty clear.
The 3 billion dollar “Cash for Clunkers” program is going to kill my dreams of owning an $1100 pickup truck to take trash to the dump or haul things I don’t want on the back seat of my car.
You either get $4,500 or $3,500 for your horrible excuse for a truck or car. These horrible excuses have their engines frozen and are crushed down at the crushing place, never to be driven again.
(at an average of $4000 a car, it some to about 750,000 vehicles no longer in the market place)
Now, if you have a beat-up pick up truck worth $500, you are going to go trade it in for the big payday and NOT sell it to a redneck-wanna-be like me. Or, you’ll offer to sell it to me for $3000 or something close to what the government is offering. So nasty good-for-nothing pick up truck prices will soar. And my 1980 Renault Le Car would now be worth 80 times more than what I sold it for in 1988. I knew I should have kept it.
Meanwhile, scrap metal prices are going to drop like a rock. And where do you put 750,000 crushed cars anyway?
Think of all the 8-track and cassette car stereos that will be eliminated forever from the face of the earth….
With no cheap cars left, poor people won’t be able to buy cheap cars. So…they’ll borrow more than they can afford for a car (since there will be NO cheap alternative) and we’ll be right back where we started with the housing deal.
