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Cash for clunkers ... ?


Chad
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So 100% of the parts in those cash for clunker cars are gonna end up scrapped. I'm keeping my eyes on this...

 

First they came for the smokers (tax on tobacco), And I didn’t speak up because I didn't smoke;

And then they came for the fast-food restaurants (tax on trans fat), And I didn’t speak up because I didn't eat fast food;

And then they came for the electric utilities who depend upon coal (cap-n-trade carbon tax), And I didn’t speak up because my electric utility didn't use coal;

And then... when they came for the parts for our collector cars... And by that time there was no one left to speak up

 

http://en.wikipedia.org/wiki/First_they_came...

 

 

 

 

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how do these dealers have a huge stock pile of these turned in clunkers when the program just started today? :confused0024:
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Wow, who would of thought saving some money on a new car, and scrapping an old car would destroy the fabric of or freedom, democracy, and the American way.... The horror!

Its even worse than a tax on tobacco.

 

Must be a liberal conspiracy to drive the value of scrap metal down to the ground....what are the meth heads gonna do now? Something must be done.

Contact your congressman, tell them the govenment must control and keep the value of scrap from falling. Speak up now or fast food, coal, and all car parts will be banned forever. :usa:

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I'll conceed, it's most certainly going to drive scrap value down for 4-5 months while these cars get turned in (late July through the end of October)... Sucks if you are ascrapper for sure, and I feel for those that live on scrap (like dismantelers etc.). It is a comidity after all, it's not the first time there have been up's and downs, and it won't be the last. Anyone that lives off comodities has to be prepared for this.

 

In the big picture how many busienss sectors will benifit from this? Probalby a 100:1 ratio of business that are helped vs. those that are hurt.

 

Pretty much anything we do (or don't do) has some unintended negitive consequences, such is life.

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Wow, who would of thought saving some money on a new car, and scrapping an old car would destroy the fabric of or freedom, democracy, and the American way.... The horror!

 

First of all, Consumers are not compensated for the trade-in value of their car. For example, if the resale value of their car is $1,500, then the consumer's benefit is only $2,000 -- not the full $3,500.

 

Auto Dealers Expect Consumer Confusion

Car dealers, while happy about the bill, are bracing for confusion on the part of consumers. Perhaps the biggest source of misunderstanding, say industry analysts, will be when consumers realize that they get zero dollars for the trade-in value of their old car or truck, and that the only money they get toward the purchase of a new vehicle is the government money. Since the old cars will be scrapped, they have no resale value to the dealer.

 

 

Next, this creates more bureaucracy in the federal government. Someone has to investigate the validity of each request, issue the voucher. Then someone else has to investigate the validity of each voucher, and send a check. Let's say on average that it takes 30 minutes to process each request and another 30 minutes to process each voucher -- 1 hour at $15.00/hour for 250,000 vehicles is $3.75 million. Allocating another 25% for administration (agencies, managers, websites, office equipment) and fraud, this total becomes $4.5 million. Then allocate another billion dollars (250,000 vehicles times $4,000) in voucher payments -- it is just another way to waste taxpaper money.

http://www.cashforclunkersdealers.com/

 

Next, this creates more paperwork for the dealerships themselves. The dealerships have to pay someone to process these vouchers and verify the receipt of payment. The federal government will take as long as possible before sending payment to the dealership, so the dealership has to wait for the differred payment of $3,500/$4,000. Over time, this will raise the cost of selling a new vehicle.

 

Lastly, all of this combined wasted effort by the federal government and the dealerships -- to only give the consumer the paltry benefit of only $2,000. Why not issue vouchers based upon the value of the new car? $4,000 for a $15,000 new car and $8,000 for a $30,000 new car. That makes much more sense. From a macro managerial viewpoint, this is a very inefficient way of selling a new car.

 

This doesn't even include the cost of enforcing the $15,000 fine per vehicle, if/when the dealership fails to meet all mandated requirements -- and the additional cost incurred by the dealership to insure that the trade-in vehicle is completely distroyed.

 

It wouldn't surprise me one bit, if the total cost (incurred by both federal government and dealerships) of adminstrating this whole Car Allowance Rebate System per vehicle exceeds the $2,000 benefit.

Edited by indy_85stariones
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First of all, Consumers are not compensated for the trade-in value of their car. For example, if the resale value of their car is $1,500, then the consumer's benefit is only $2,000 -- not the full $3,500.

 

 

 

 

Next, this creates more bureaucracy in the federal government. Someone has to investigate the validity of each request, issue the voucher. Then someone else has to investigate the validity of each voucher, and send a check. Let's say on average that it takes 30 minutes to process each request and another 30 minutes to process each voucher -- 1 hour at $15.00/hour for 250,000 vehicles is $3.75 million. Allocating another 25% for administration (agencies, managers, websites, office equipment) and fraud, this total becomes $4.5 million. Then allocate another billion dollars (250,000 vehicles times $4,000) in voucher payments -- it is just another way to waste taxpaper money.

http://www.cashforclunkersdealers.com/

 

Next, this creates more paperwork for the dealerships themselves. The dealerships have to pay someone to process these vouchers and verify the receipt of payment. The federal government will take as long as possible before sending payment to the dealership, so the dealership has to wait for the differred payment of $3,500/$4,000. Over time, this will raise the cost of selling a new vehicle.

 

Lastly, all of this combined wasted effort by the federal government and the dealerships -- to only give the consumer the paltry benefit of only $2,000. Why not issue vouchers based upon the value of the new car? $4,000 for a $15,000 new car and $8,000 for a $30,000 new car. That makes much more sense. From a macro managerial viewpoint, this is a very inefficient way of selling a new car.

 

This doesn't even include the cost of enforcing the $15,000 fine per vehicle, if/when the dealership fails to meet all mandated requirements -- and the additional cost incurred by the dealership to insure that the trade-in vehicle is completely distroyed.

 

It wouldn't surprise me one bit, if the total cost (incurred by both federal government and dealerships) of adminstrating this whole Car Allowance Rebate System per vehicle exceeds the $2,000 benefit.

 

The potential benifit is $4500, $3500 is for those that don't exceed certain program requirements (which I suspect most will strive to meet). I think most that have an actual clunker that qualifies would be happy to trade their car in for $4500 (or $3500) with no haggling and no need to "private party" sell it (which is a huge headache in itself). We all know a $1500 car is worth $500 as a trade in at deal time. That $1500 car has a potenial consumer benifit of $3000 more than it is worth via the voucher, or they can do the normal trade in at dealer price and take $1000 less than it is worth (just $500). That is a potential gain of $4000 using the same exact car. It's all in how you look at it ;)

 

If the cost to admister the program is $4.5 million, then that is 0.45% of the program. How much does it cost to process and do paperwork on a trade in for resale in a normal transaction? It's probalby a wash. I'm sure most dealrs will be glad to just crush the damn car rather than try to re-sell it. It's a clunker afterall, right ;).

 

Say you trade in a $700 car and get $4500, you have a benifit of $3800, that is a lot more than your $2000 ;) imagine if you trade in a car with $0 resale value (yah, they do exist)...

 

I don't see how processing a rebate would cost more than $2000 per car. $100 maybe... You think the dealer will allow it to cost that much to administer? they are in the business to make $$ (unlike the governemnt) they will stream line it as much as possible so as to maximize profits.

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A big chunk of it's gonna depend on what the dealers do. I'd bet they jump the prices of the new car accordingly take advantage of the program, while trying to still make it seem more like you're getting a deal. Take off the value of the voucher and you're still saving some cash, but they're getting the added bonus from big bro. UNLESS there's a freeze put on vehicle prices for the duration of the program.

 

I see it here in retail, and my mom's a big sucker for it. Like when she bought her camera. Said she got it on sale at the mall for some $300. In reality she got a $200 camera that'd been marked up, then marked down a bit.

 

So what will dealers add to the purchase price to pad the deal to their advantage? Anything they can.

 

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So what will dealers add to the purchase price to pad the deal to their advantage? Anything they can.

 

That is specificaly prohibited, you don't think customers will turn in offenders to the fed?

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That is specificaly prohibited, you don't think customers will turn in offenders to the fed?

 

I dont, just because theyre allowed to get away with it. If the demand is great enough theyll markup whatever models they see as having the greatest profit. Think of recent high-interest models that were selling way over the msrp. VW New Beetle, Chrysler PT Cruiser,and their 300C/Charger twins, the Toyota Prius STILL has a waiting list and people are happy to pay a premium over sticker for them in some markets,even the Plymouth Prowler when it came out I remember seeing the sticker at $74k, over 2x what the msrp was.Noone seems to complain about price gouging there, like the fuel industry. And remember thats all msrp is- manufacturers SUGGESTED retail price. Its a market driven business thats especially sensitive to supply and demand

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that wouldnt be a good move though, maybey 5% of all new car buyers will actualy qualify (because most are trading in a car worth more than $4500, or it's MGP is above 18). Do you think the dealers will raise prices to chase that 5% of the market, pushing away the other 95% ?
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Yeah its a buyers market. Dealers really really need to move inventory... at the same time they are always gonna try to get as much as they can, but the ball is in the consumers court. And its up to the consumer to make sure they are getting the best deal.

 

This is gonna move vehicles off the lot and benefit dealers and consumers.

 

If you want to complain about government spending how about that 700 billion that wallstreet got with no strings attached and people still cant get a loan.

Plus 8.8 BILLION was lost and unaccounted for in Iraq...not to mention the millions that Haliburton over charged the US tax payer while moving to Dubai to avoid taxes and prosecution.

 

People have to pick their battles... but going off the rail for for a trade-in credit for an old car seems petty.

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Yah, with regard to the "buyers market" probalby 3/4 of all new cars on the market qualify for the rebate (22+ MPG), this is not at all like the prowler or insight with limited production and/or no copetition, those are both niche cars.

 

Those cars that qualify are mostly mainstream cars, and many of the niche cars happen to fall into the same category. To capatilize on this, the dealer woudl have to mark up 3/4 of all their cars, what will that do to sales? In a buyers market, the dealer down the street will just sell them at normal price and get all that added volume for free thanks to the huge draw of the rebate.

 

The rebate was designed in part to get potential buyers "off the fence", a lot of potential borrowers are leery, and this is hopefuly going to motivate them to buy now, not later. It may not sell a lot more cars in the long run, but it will sell them sooner rather than later and generate a lot of new car orders at the factory.

 

If a rebate goes down on a $30,000 average price car, and they expect to sell 250,000 cars though this program, that is $7,500,000,000.00 in new sales over 4 months, that's going to help the economy atleast a little.

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that wouldnt be a good move though, maybey 5% of all new car buyers will actualy qualify (because most are trading in a car worth more than $4500, or it's MGP is above 18). Do you think the dealers will raise prices to chase that 5% of the market, pushing away the other 95% ?

 

Yes, most new car buyers are folks that routinely trade-in their vehicles every 2-5 years -- hence their vehicles will be worth more than $4,500.

 

Yes, this Car Allowance Rebate program works great for those folks who earn enough money to afford a new car.

 

 

But take a look at the folks who own vehicles that are worth less than $1,500 -- they are the ones that cannot afford to take on the payments for a new car. They are the ones seeking to purchase a newer used car that gets better gas mileage than the one they already own.

 

Once again, we have another federal government program that discriminates against lower wage earners (or encourages them to be financially irresponsible and purchase a new vehicle outside of their budgets)

 

Why not open up the program to anyone who purchases a vehicle (new or used) that gets 3-5 mpg better than the vehicle they already own (using EPA estimates when new on both vehicles)?

 

Then, everyone can participate. The folks who trade-in their $1,500 vehicles would purchase used vehicles in the $10,000 - $30,000 price range. This new demand for $10,000 - $30,000 vehicles would encourage folks to trade-in their current $10,000 - $30,000 vehicles at their local friendly new car dealership. In order to replenish their used car inventory, dealerships would allow more money for trade-in.

 

 

Regardless, all of this runs against the grain of the basic Conservative viewpoint that the federal government has no right to influence folks and their buying decisions...

 

That is, raise taxes on cigarettes (like the tax increase effective last April 1st)

That is, create taxes on foods that contain trans fat (http://money.howstuffworks.com/fat-tax.htm)

That is, create taxes on the use of coal (like the Waxman-Markey climate bill)

 

If "Louswheel01" says that he works in the used auto parts industry and says that it is a BAD idea...

Then chances are that this is a bad idea when done over a long period of time.

 

If numerous business analysts have studied this federal govenment program and say that it is a BAD idea...

Then chances are that this is a bad idea when done over a long period of time.

 

 

 

 

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Yes, most new car buyers are folks that routinely trade-in their vehicles every 2-5 years -- hence their vehicles will be worth more than $4,500.

 

Yes, this Car Allowance Rebate program works great for those folks who earn enough money to afford a new car.

 

 

But take a look at the folks who own vehicles that are worth less than $1,500 -- they are the ones that cannot afford to take on the payments for a new car. They are the ones seeking to purchase a newer used car that gets better gas mileage than the one they already own.

 

Once again, we have another federal government program that discriminates against lower wage earners (or encourages them to be financially irresponsible and purchase a new vehicle outside of their budgets)

 

Why not open up the program to anyone who purchases a vehicle (new or used) that gets 3-5 mpg better than the vehicle they already own (using EPA estimates when new on both vehicles)?

 

Then, everyone can participate. The folks who trade-in their $1,500 vehicles would purchase used vehicles in the $10,000 - $30,000 price range. This new demand for $10,000 - $30,000 vehicles would encourage folks to trade-in their current $10,000 - $30,000 vehicles at their local friendly new car dealership. In order to replenish their used car inventory, dealerships would allow more money for trade-in.

 

 

Regardless, all of this runs against the grain of the basic Conservative viewpoint that the federal government has no right to influence folks and their buying decisions...

 

That is, raise taxes on cigarettes (like the tax increase effective last April 1st)

That is, create taxes on foods that contain trans fat (http://money.howstuffworks.com/fat-tax.htm)

That is, create taxes on the use of coal (like the Waxman-Markey climate bill)

 

If "Louswheel01" says that he works in the used auto parts industry and says that it is a BAD idea...

Then chances are that this is a bad idea when done over a long period of time.

 

If numerous business analysts have studied this federal govenment program and say that it is a BAD idea...

Then chances are that this is a bad idea when done over a long period of time.

 

you have some good points, but some of what you warn about happening isn't in this bill. It only lasts 4 months, that isn't going to "change the industry", but it likely will change some peoples lives in the short term.

 

I like the ideal of the universal rebate, but that isn't what was chhosen. Like I said before, if I had a say in it, this wouldn't have become law, but here it is, like it or not.

 

It does not only benift your narrow demographic either, my wife and I are both college educated and we both make way more than the median income, have excelent credit, lots of disposable income for a new car payment, and we own cars that qualify for this program. We can more than afford a new car, we have just gotten used to no car payments as we have owned all our cars for the last 4 years. Our newest car (excluding my business 2005 cargo van) is 11 years old.

 

 

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most new car buyers are folks that routinely trade-in their vehicles every 2-5 years -- hence their vehicles will be worth more than $4,500.
There are many first time new car buyers every year who do not have a newer car to trade in.

 

 

But take a look at the folks who own vehicles that are worth less than $1,500 -- they are the ones that cannot afford to take on the payments for a new car. They are the ones seeking to purchase a newer used car that gets better gas mileage than the one they already own.
Just because some one has been driving a 91 explorer with 250k for over ten years (me) does not mean they cannot afford a new car payment.

 

 

Once again, we have another federal government program that discriminates against lower wage earners (or encourages them to be financially irresponsible and purchase a new vehicle outside of their budgets)
Lower wage earners aren't going to be buying new cars any way. Thats like saying rebates on new TV's is discriminating against people who are not buying a new TV.

 

Why not open up the program to anyone who purchases a vehicle (new or used)
Why? the point is to move new cars off the lot to help the dealers and manufacturers, while getting rid of less fuel efficient vehicles. Besides for all the reasons you are against it, you should really be against opening it up to "anyone".

 

 

Regardless, all of this runs against the grain of the basic Conservative viewpoint that the federal government has no right to influence folks and their buying decisions...
Except when it benefits conservative business owners and CEO's who bank roll campaigns and then help write legislation that that will make them a huge return in their "investment". As long as the average person gets no benefits, conservatives are happy. Like making it illegal for seniors to buy drugs in canada. I'm sure that had no influence on consumers buying decisions...or big pharma's profits....

 

 

If numerous business analysts have studied this federal government program and say that it is a BAD idea...

Then chances are that this is a bad idea when done over a long period of time.

I realy doubt the dealers, or manufactures, or consumers believe that. Perhaps all those peticular analysts have a "basic Conservative viewpoint" and feel that the federal government has no right to influence folks and their buying decisions. If thats the case then I sure there are 1000's of programs those same "analysts" think are a BAD idea, like public schools and what not.

 

 

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you have some good points, but some of what you warn about happening isn't in this bill. It only lasts 4 months, that isn't going to "change the industry", but it likely will change some peoples lives in the short term.

 

And what proof do you have that the program will end in 4 months? None. A lot of bills like this one get extended and expanded. Look at the New Homebuyers credit. When it was enacted in 2008 it was a $7500 interest-free loan that you had to pay back over time. Now in 2009 it's an $8000 grant that you don't pay back. If the CARS program is even slightly successful congress will be pressured to make it even bigger and sweeter after Nov.

 

BTW, I spent about 15min on CL and found a few "beat up and crappy" cars that all qualify to be crushed. I'd hate to see anyone get stuck with any of these cars when they could be driving a new Hyundai Accent.

 

http://philadelphia.craigslist.org/ctd/1250630141.html

 

http://philadelphia.craigslist.org/ctd/1250647037.html

 

http://philadelphia.craigslist.org/ctd/1250615053.html

 

http://philadelphia.craigslist.org/cto/1250883040.html

 

http://philadelphia.craigslist.org/ctd/1250876146.html

 

http://philadelphia.craigslist.org/cto/1251078893.html

 

http://philadelphia.craigslist.org/ctd/1251034314.html

 

http://philadelphia.craigslist.org/ctd/1250999756.html

 

http://philadelphia.craigslist.org/cto/1250746968.html

 

http://philadelphia.craigslist.org/cto/1250918751.html

 

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That is BS dude, The bill specificaly states the program ends November 1st 2009, or when the $1billion is all spent, which ever comes first. It's right on the federal site, and in the fine print too. You might want to read it before you call people out.

 

© Program Specifications-

(1) LIMITATIONS-

(A) GENERAL PERIOD OF ELIGIBILITY- A voucher issued

under the Program shall be used only in connection with

the purchase or qualifying lease of new fuel efficient

automobiles that occur between July 1, 2009 and

November 1, 2009.

 

http://www.cars.gov/files/CARS-Law.pdf on page 2

 

(j) Appropriation- There is hereby appropriated to the Secretary of

Transportation $1,000,000,000, of which up to $50,000,000 is

available for administration, to remain available until expended to

carry out this section.

 

http://www.cars.gov/files/CARS-Law.pdf on page 8

 

 

 

I'd consider that proof ;) Just follow any of those links I've provided.

 

When you are 62 years old with a fixed income, a new Accent looks a lot better than a beatup 87 S-10 with 225,000 miles that smokes like a steam engine, big holes in the seats, has a rattle can paint job, burns a quart of oil every fill up, and has manual steering that is too hard to opperate. To some, that accent is a huge step up in life.

 

Sure, they may choose to extend it, but there is no proof that that they will.

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Chad you ignorance is showing. Do some homework before you call BS.

 

Do us a favor and google "bill reauthorizing" and tell us what you find.

 

 

 

BTW, here is one destined for the crusher:

 

I own a 1988 Dodge Raider 2.6L, auto, LSD, Goodyear Wrangler M/T LT245 75 16 tires. It gets about 15 mpg, road noise at highway speeds is unbearable. This vehicle replaced two Jeep YJ Wranglers. The Raider is superior to my Jeeps off-road. I believe you will be happy enough, not thrilled to death mind you, but content.

 

That said, I am going to part with my Raider in the governments "Clunkers for cash" program; going to trade it in and receive a credit of $4,500.00 towards a new vehicle (which has yet to be determined) for my wife. I will get three times the value of the Raider by trading it in. Before it goes, I will remove the roof rack, brush guard, Warm M8000 winch, built in jumper cables, Bushmaster fender flares and sell them seperately, either here or on e-Bay. If I can replace the parts, I would also sell the black steel wheels with Goodyears, the Old Man Emu rear leaf springs and all four shocks, the Starion alternator. A trade must be running and driveable when it is turned in for a new car on this program.

 

http://216.77.188.54/coDataImages/p/Groups/15/15729/folders/211037/1619683raider7.JPG

 

http://www.4x4wire.com/forums/showflat.php...;Number=1164800

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bill reauthorizing is a hypothetical scenerio. Untill it's reauthorized, it's over november 1st 2009, or when the $$ is all spent. I'd wager to say more bills have not been reauthorized than were. that is not ignorance ...

 

So there will be one less raider, so what? Do you get this bent out of shape when they turn good quests into drag-only cars? Or when a really nice sports car of any make is turned into a drifter? these are both paths to the scrap heap, or at the very least they are taken off the road forever. It's the owners choice, right? That raider owner chooses to turn the car in for something new, and he gets some extera $$$$ for it from the fed. What if he sold it to a kid that tore it up and scraped it in 3 weeks? that is just as much a waste but the owner only gets $1500 for it.

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Top right pic, I see a stick shifter, not an automatic gear selector.

 

I Use the federal website, since the fed is administering the program, they will use their own figures. Using your ford link with the 6 speed I came up with the same figures though.

 

http://www.fueleconomy.gov/feg/calculatorC...=1&id=15653

 

V-8 6 speed gets 19 MPG...

 

V-6 5 speed gets 21 MPG

 

I provided a link to the federal site on page 3, but here it is again:

 

http://www.fueleconomy.gov/feg/calculatorSelectYear.jsp

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how do these dealers have a huge stock pile of these turned in clunkers when the program just started today? :confused0024:

 

 

I can't tell you how. Maybe they got "pre-orders" or something. Or maybe like this where the manufacturers are prepaying the dealers until they get fed money, http://www.latimes.com/business/la-fi-hyun...0,3373323.story

 

But the fact is, dealers are already calling the autodismantlers and junkyards to see how much money they can get for these "cash for clunker" cars. Most dismantlers are expecting the flood of these throw away cars. No one I've talked to in the industry is willing to pay to take these things off the hands of the dealers because there is no benefit for autodismantlers, the cars have to be junked.

 

By the way, if you consider a 98 Yukon Denali, a 99 Lincoln Town Car or Lincon Navigator, or 99 Dodge Durango or 97 Toyota Landcruisers to be "junkers", then let me open your eyes and tell you all those vehicles are extremely popular and used parts for those are in high demand. But according to "cash for clunkers progra" all those cars are "clunkers". These cars in non operable condition or in poor condition are purchased by auto dismantlers from private individuals and from auctions, the parts are recycled and we make a living from it. But now consumers will figure they can get $4500 bucks for their 99 Denali that smokes like a train instead of $1000 from a junk yard/ dismantler. You see who begins to lose and eventually it ends up that the consumer loses as well as these parts are gonna get junked, period.

 

Then there's the other side. The guys you would think would have the biggest grin on their face (the metal recyclers) don't have a big grin on their face. Why? you would ask. Well it's simple. They are expecting to get flooded with these cars in the near future and hence flooding the metal recycling industry and driving the price of metal down, causing a domino effect that will effect their regular customers that make their livelyhood collecting and scrapping junk metal. If there market is flooded with "cash for clunker" cars, the price of metal drops, causing the usual customers to get discourage from the low prices, causing a slow down in metal recycling from that private sector and so on.

 

Politicians like to apply a "magic wand" answer to real problems. But they often think little of the consequences, all they really care about is getting their face in the papers and in the news. Ultimately, notiriaty get's you re-elected. I was a communications and political consultant before becoming a business owner of an auto dismantler. I've been there, so don't tell me I'm talking out of my arse.

 

 

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