Althouse: The Clunker Clunker.

July 31, 2009

The Clunker Clunker.

"Cash for Clunkers" got a lot of folks jazzed up, but it flamed out in 1 week.

Is this just some oddball quirk of a program, or should we see it as a sign that all those other programs loaded with money and big ideas are fatally ill-designed?

AND: Ha ha. Instapundit drives a clunker.

AND: "House seeks $2B more in cash-for-clunker aid." Rule of thumb: After a program goes into operation, the estimate of its cost will increase by >200%. Not fair? Why? Because it's too high or because it's too low?

226 comments:

1 – 200 of 226 Newer› Newest»

Rich B said...: Oh, no. This was an exception to the usual fine craftsmanship of the Big Hawaiian Orchid administration.; 7/31/09, 9:38 AM
Big Mike said...: or should we see it as a sign that all those other programs loaded with money and big ideas are fatally ill-designed?

Well, considering that the program to provide coupons for converter boxes also ran out of money earlier this year, I'd say that it's a sign that neither Congress nor this administration are capable of properly costing out a program.

Considering that the Secretary of the Treasury can't figure out his taxes and that the Harvard building boom pushed by administration economic consultant Larry Summers has run out of money, I'd say it's time to send all the politicians (both parties) back to remedial math.; 7/31/09, 9:38 AM
Dave said...: I can certainly see some complications stemming from the program running out of money so quickly, but I wouldn't conclude the program didn't achieve its goal.; 7/31/09, 9:39 AM
Michael Haz said...: The Clunker clinker began Monday; it's out of cash on Friday morning, well before many car dealers have submitted the paperwork for the transactions they made.

Are we out of shovel-ready clunkers already? Impossible. Or the government numbers were just a little bit off.

Of course, we'll never run out of, say, surgical anesthesia or pacemakers or tamoxifen or artificial hips or anything like that under a carefully managed government health care program.

Nope, not gonna happen. Smart people are in charge in Washington. Really smart people. Yep.; 7/31/09, 9:41 AM
Amexpat said...: Could see it as a victim of its own success.; 7/31/09, 9:41 AM
Shanna said...: Does this mean I don't have to see an ad from a car company touting this every commercial break? Awesome.; 7/31/09, 9:42 AM
Anonymous said...: If all the money is gone in a week, it means somebody STOLE IT!

Come on, people, this is a government program. No government program checks red tape and cuts check in a week!; 7/31/09, 9:43 AM
Dust Bunny Queen said...: I see it as a sign that:

Politicians don't understand the dynamics of economics or human nature.

They don't understand math.

They don't have the ability or the desire to consider the unintended consequences of their actions

They can't see beyond tomorrow's free lunch.

That we are being 'ruled' by a bunch of moron boobs who should all be put out of our misery.

You think 'cash for clunkers' spun out of control rapidly? You ain't seen nuthin' yet folks. Just wait for the health care debacle. It is easier to 'fix' or repeal a cash for clunkers program than it is to resurrect an entire industry that has been purposely destroyed.; 7/31/09, 9:44 AM
AllenS said...: I can hardly wait for the government to take over the health care industry.; 7/31/09, 9:45 AM
KCFleming said...: Behavior that is subsidized will grow, that which is taxed will shrink or die. And always to a greater degree than anticipated.

But of course government health care will unfold completely differently. Trust that, with your life.; 7/31/09, 9:51 AM
Michael Haz said...: I can hardly wait for the government to take over the health care industry.

Announcement made during the third week of government healthcare:

"Sorry folks, we're all out of money for appendectomies for the rest of this budget year. And dental care, the budget has been exceeded for dental care, so make your appointment now for next year."; 7/31/09, 9:51 AM
Jim said...: Let's see:

1) Donated "clunkers" are one of the primary fund-raising methods for a large number of charities. So this program was designed to defund those charities.

2) Those cars would have been re-sold at auction for the low-income people who can't afford to buy a brand new car. So this program was designed to deprive the poor of affordable cars.

3) The program requires that the engines of those "clunkers" to be destroyed, adding to already overloaded landfills. So this program was designed to be anti-environment.

4) As Synova pointed out a few weeks back, the carbon footprint required to produce a new car far exceeds to gas mileage differential between the "clunker" and the new car. So this program was designed to be doubly anti-environment.

5) All the dealers point out that dealing with the federal government bureaucracy and the red tape involved has been a nightmare. So this program was designed to be grossly inefficient.

6) The people in charge of the problem have no clue how much current liability the government holds for deals already done. So this program is run by incompetents.

So in about 5 minutes I can see that the program is anti-charity, anti-poor, anti-environment, inefficient and run by incompetents.

That's about 5 minutes more thought than the entirety of Congress and the Obama administration put into the program.

Why should we be at all concerned that they're trying to bum-rush an overhaul of our entire healthcare system through ASAP?

You guys are just overreacting. They're from the government, and they're here to help you.

Honest.

Why are you laughing?; 7/31/09, 9:51 AM
Einfahrt said...: Let me count the ways (this was flawed):

1) A defined benefit, promised to those who qualify, without an accurate estimate of number qulified, noumber who would take advantage, and cost of the program. (Medicare, Medicaid similar?)

2) Shifting ground rules even while the private sector tries to implement to promised program. They (private sector parties) get hung out to dry as they wait for payments on monies already paid out of their pockets, some of which may never materialize.

3) Original program intent (replace low-mileage cars with newer, higher mileage cars) both unmeasurable and failed. Failed in the sense that many were buying bigger, low mileage trucks using low mileage cars as the clunkers.

I'm looking forward to my healthcare being managed by these people!; 7/31/09, 9:52 AM
Ron said...: Yes, the same people who radically underfund a relatively tiny program know how to save money on something that will be 20% of the entire economy!; 7/31/09, 9:53 AM
Chase said...: fatally ill-designed?

Whats wrong with just "fatally designed"?; 7/31/09, 9:53 AM
Ron said...: If the mileage on these old economic programs is low, can we turn them in on bright shiny new programs?; 7/31/09, 9:56 AM
I'm Full of Soup said...: No, it proves without a doubt, stimulus program should have included a significant, uncomplicated car-buying subsidy.

You may recall the Spendulus Plan included a write-off for the sales tax you paid for a car. That was peanuts to most folks! 25% of a $3,000 sales tax bill nets you a whopping $750! Idiots.

A large rebate or subsidy to incent the consumer to go and buy a new car is what has gotten more potential buyers to the dealers but the Obama admin has f'ed that up to by limiting to a measly $1 Billion.

I am happy to say this reinforces my opinion they are uninformed idiots.; 7/31/09, 10:02 AM
Anonymous said...: You're surprised?
Essentially they established a Clunkers Banks and announced they were giving away all of its assets.
Free! Free! Free! There's a stampeded by the public to get their snouts in the trough and the Clunkers Bank runs dry.

What is it you can't understand?; 7/31/09, 10:05 AM
garage mahal said...: Insanely popular program where new cars are being sold and injecting money into an ailing economy and ailing industry = epic fail!; 7/31/09, 10:06 AM
Bissage said...: Sorry!

No time to leave a comment!

Gotta dash out and purchase that new garage door and those replacement windows before it’s too late!!!

WOOOOOOOOOSH!!!1!!!!!!!!!!!!!!

[stray bits of paper, leaves and song birds whiz by in the slipstream]; 7/31/09, 10:07 AM
Der Hahn said...: Another data point (in addition to that luxury tax on boats) to explain why static analysis never works.; 7/31/09, 10:12 AM
Ralph L said...: A local dealer put 3 old cars in a dumpster as a publicity stunt. Guess they're SOL.; 7/31/09, 10:14 AM
Jim said...: garage -

"Insanely popular program where new cars are being sold and injecting money into an ailing economy and ailing industry = epic fail!"

Inefficient, expensive, anti-environment, anti-poverty program borrowing more money from China to provide an artificial extremely temporary prop under a flailing UAW- and taxpayer-owned GM and Chrysler = epic fail

There...fixed that for you.; 7/31/09, 10:15 AM
rhhardin said...: I'm worried about the cash for old sick grandmothers program now.; 7/31/09, 10:20 AM
Jeremy said...: Ann's full of it -

CNBC:

The Obama administration announced this morning that it won't be suspending its "cash for clunkers" program.

According to some rough math, the clunkers program could bring July car sales to an annual rate of more than 12 million, which would be a 27 percent increase and the highest sales since September.

Kurt Karl, chief economist at Swiss Re in New York, said he thinks the program could even turn third-quarter GDP positive.

"That's big enough with production and sales to give a solid punch to the third quarter," Karl explained. "That would take my slightly negative [projection] and take it to the definitely positive area."; 7/31/09, 10:21 AM
Jeremy said...: Einfahrt said..."Let me count the ways (this was flawed):

Is this the "flaw" you're referring to?

According to some rough math, the clunkers program could bring July car sales to an annual rate of more than 12 million, which would be a 27 percent increase and the highest sales since September.

Kurt Karl, chief economist at Swiss Re in New York - "That's big enough with production and sales to give a solid punch to the third quarter," Karl explained. "That would take my slightly negative [projection] and take it to the definitely positive area."

DUH.; 7/31/09, 10:23 AM
I'm Full of Soup said...: Taxpayers gave what $50 Billion to GM and Chrysler?

We could just have easily done a stimulus of $5,000 per new car. I bet that would have moved 10 million cars off of the lots of American car dealer!

Win-win! Instead, we went thru the rigamarole of lending $50 Billion, bankruptcy, car czar. For what? I guess some lawyers and investment banks made a killing from it.; 7/31/09, 10:23 AM
Jeremy said...: Bitch and whine, bitch and whine, bitch and whine, bitch and whine, bitch and whine, bitch and whine, bitch and whine, bitch and whine, bitch and whine, bitch and whine, bitch and whine, bitch and whine, bitch and whine, bitch and whine, bitch and whine, bitch and whine, bitch and whine, bitch and whine...

Even as the "facts" counter the bitching and whining.; 7/31/09, 10:25 AM
Jeremy said...: AJ Lynch - Can I assume you don't understand the long term prospects of getting cars that get very poor mileage off the road...while replacing them with those that do?

Ever consider thinking before you post a comment?

And why are you continuing to bitch and whine when the actual facts illustrate just how successful the program is?

As in: According to some rough math, the clunkers program could bring July car sales to an annual rate of more than 12 million, which would be a 27 percent increase and the highest sales since September.; 7/31/09, 10:28 AM
Anonymous said...: It's FREE money. How can anybody bitch or whine? They should double it to $10,000 nay, triple it to $15,000. Just imagine the prosperity it will generate.; 7/31/09, 10:29 AM
bearing said...: I don't understand why this is being billed as a "failure." Whether it was a good idea or not -- and there are reasons to have opposed this from the beginning --

Hasn't it done exactly what it was supposed to? One billion dollars was spent to encourage people to trade in old cars and buy new ones. They did. So the program succeeded. Right?

As far as I can tell, the main mistake here is that they obviously could have offered less money per voucher, and still encouraged plenty of trade-ins.; 7/31/09, 10:34 AM
Jim said...: AJ -

"We could just have easily done a stimulus of $5,000 per new car."

Better yet, we could have provided an even bigger stimulus by simply cutting taxes on all Americans rather than rewarding people for taking on even more debt in the middle of a national debt crisis.

Of course that would have taken common sense, something this administration and Congress are noticeably short on.; 7/31/09, 10:35 AM
Jeremy said...: Jim - "Better yet, we could have provided an even bigger stimulus by simply cutting taxes on all Americans rather than rewarding people for taking on even more debt in the middle of a national debt crisis."

Obama has cut taxes on every American making less than $250,000.

Try reading a newspaper or a book before posting bullshit, right wing talking points.

The "clunker" program is working and you, and others here just can't stand to admit it.

Gutless wing nuts.; 7/31/09, 10:38 AM
Jeremy said...: bearing said..."I don't understand why this is being billed as a "failure." Whether it was a good idea or not -- and there are reasons to have opposed this from the beginning."

People with brains and those who actually read before posting comments don't consider it a "failure."

You're on a site where 95% of the people hate Obama so much, that no matter what he or his administration does, no matter how successful...they're going to represent it as some kind of failure.

They also all voted for Bush...twice...and think he was a fantastic President.; 7/31/09, 10:40 AM
Dust Bunny Queen said...: I don't understand why this is being billed as a "failure."

The 'failure' is that the government had zero idea of the consequences of the program. Severely underestimated the consumer reaction and response. Because the government had zero idea of what could happen, the entire program ran out of money and the dealers haven't even been reimbursed for the $4500 they are out of pocket.

Try to imagine this is the government in charge of health care now.

Imagine that they have run out of money to provide medicine and services half way through the year. Because Congress doesn't have enough fingers and toes to add things up they have badly underestimated the demand for services or the numbers of people who will sign up for the government provided health insurance option.

The doctors and hospitals haven't been reimbursed or paid for their services so they cut way back. The health care industry begins severely rationing or completely stops certain treatments and medicines.

Because the government can't even run a used car business, what in God's name gives us any hope that they can take care of all of our health care.; 7/31/09, 10:43 AM
I'm Full of Soup said...: Jeremy I am not in the mood for your crap today.

I said the Spendulus should have include $50 Billion or so to incent people to buy cars which would help to stimulate one of our biggest sectors (the auto industry). But instead the Obama admin was shortsighted and dumb so it chose the direct loan / bamkruptcy route.

What do you not understand about that??; 7/31/09, 10:45 AM
PJ said...: Can I assume you don't understand the long term prospects of getting cars that get very poor mileage off the road...while replacing them with those that do?

Ever consider thinking before you post a comment?

OK, that was hilarious.

Could see it as a victim of its own success.

"Catastrophic success" is so 2003.; 7/31/09, 10:49 AM
garage mahal said...: Shit, 1 billion dollars is 9 billion dollars less than was literally lost, vanished, in Iraq, and 11 billion less than we spend there in one month. But we all know serious economists believe billions spent on infrastructure and health care in Iraq is the best way to stimulate our economy at home.; 7/31/09, 10:49 AM
Brian O'Connell said...: I don't often criticize Dems from the left, but it happens.

The main problem with the program is that it's a middle class subsidy. Very few poor people buy cars new. The government ought not be in the business of subsidizing people who can afford new cars already.

Add regressive taxes to this, and I have to wonder where the Dems stand on tax policy- or if they even have one. We already have regressive alcohol and tobacco taxes. The beloved Social Security is regressive. Lots of Dems support state lotteries, which are de facto regressive taxes. Here in Ohio, the Dem governor is pushing electronic slots- which are even more so.

Then there's the new stuff on the horizon- cap & trade, soda taxes, fat taxes, all of which are expected to be regressive.

I think subsidies for the relatively well-off and regressive taxes are both immoral. Yes, a lot of this can be put on Reps too.; 7/31/09, 10:52 AM
I'm Full of Soup said...: Brian:

The car subsidy can work to keep middle class people working. Do you oppose that?

You think social security is regressive? How can you say that when it is an exceptionally bad investment for 100% of us especially those who croak before age 65?; 7/31/09, 10:56 AM
I'm Full of Soup said...: Obamanation:

Don't forget to throw in some free swimming lessons for the yacht buyers.; 7/31/09, 10:57 AM
Paddy O said...: Pretty simple, I think.

Clearly Congress is using census data from 1900, and basing their programs on the population of that year. Everything works out great when there are 76,212,168 people in the country, especially with all that revenue coming into the government. I blame the Y2K bug.

Fortunately, there's another census next year so we'll see some radically checks on these kinds of programs once the updated numbers come in. They'll start to take account of the fact there are a whole, whole lot of people in this country willing to take other people's money from the government.

I still need my clunker, so couldn't take advantage of this one week special offer ("call in the next 15 minutes and we'll throw in a digital converter box for free!").

I did get the converter box at the beginning of the year, and I sure appreciate everyone pitching in so I could get one for only $10. Now I have about 11 different digital PBS channels to choose from! And all free for me!; 7/31/09, 11:00 AM
Methadras said...: Some could say that government didn't give this program enough money to fail.; 7/31/09, 11:00 AM
Jeremy said...: What is it the majority here do not understand about long term goals?

Every time somebody trades in or gets rid of a "clunker" that garners poor mileage, replacing it with one that gets good mileage, we move along the road to energy independence and become less reliant upon the Mideast oil assholes.

Are people here saying we should keep handing over money to the Saudis and others...opposed to initiating programs such as this?

I constantly hear the local wing nut pack cheering on the drilling for oil anywhere and everywhere, yet here's a program that is obviously working, and you still complain.

Every program or idea doesn't lead to the expected or hoped for results, but unless we take a shot...we stay right where we are.; 7/31/09, 11:00 AM
Jim said...: DBQ -

"Imagine that they have run out of money to provide medicine and services half way through the year."

You don't have to imagine it. It happens every year with the national health care system the federal government runs for Native Americans.

There's a reason they say:

Don't get sick after June.; 7/31/09, 11:00 AM
garage mahal said...: Investment bankers, insurance companies and big oil clearly could have spent this money better.; 7/31/09, 11:01 AM
Jeremy said...: Paddy O. / AJ - Every program isn't for e-v-e-r-y-b-o-d-y.

Some can and will take advantage, some won't.; 7/31/09, 11:02 AM
Automatic_Wing said...: The problem with subsidy programs like this one is that it doesn't create new demand, it just shifts demand from the future to the present. We've just gotten 2010 or 2011 buyers to buy a car this year instead...nothing has really been accomplished.; 7/31/09, 11:04 AM
Jim said...: garage -

"Investment bankers, insurance companies and big oil clearly could have spent this money better."

But nearly as well as American citizens could have if we had just given them all tax cuts so they could decide for themselves how best to use it.

Since you're all for the most efficient use of the money, I'm assuming you'll be writing your congressmen and president immediately to express your desire for across the board tax cuts.; 7/31/09, 11:05 AM
Jeremy said...: ObamaNation - Ahhh, and yet another right wing twit rears his or her ugly, uneducated head.

Keep it up.

The next time a Republican sees the White House it will be a cold day in hell.

And here's another news flash that will tell you how insane the GOP has become:

Less than half of Republicans believe that Barack Obama was born in the United States of America, a new public opinion poll finds.

*And you can bet your ass the administration and every Democrat loves hearing it.; 7/31/09, 11:06 AM
Jeremy said...: Oh, and I forgot to add:

Ninety-three percent of Democrats say the president was born in the United States, as do 83 percent of independents.

GFL in 2012; 7/31/09, 11:06 AM
ObamaNation said...: Jeremy -- how about this: President Obama could give us all a voucher for $40,000 that we could use toward the purchase of a wind turbine, or solar cells on the roof of our house, and we on the coasts would finally be energy-independent of those asshole Midwestern coal states in flyover country?

I'm with you -- I just don't know how these wingnuts don't understand how much energy is saved by crushing and melting down every car on the road and replacing each one with a newly manufactured model that gets, say, 10mpg better fuel economy.

Do the math, people!; 7/31/09, 11:07 AM
Anonymous said...: Investment bankers, insurance companies and big oil clearly could have spent this money better.

Althouse Commenters - take note! In a failed attempt at sarcasm, garage speaks the truth for the first time. Credit wher credit's due, even if it was unintentional.; 7/31/09, 11:07 AM
Jim said...: Maguro -

"We've just gotten 2010 or 2011 buyers to buy a car this year instead...nothing has really been accomplished."

It's the same kind of accounting gimmicks that California and other states are using to "balance" their budgets. They just borrowed money from next year to pay this year's bills.

So in exchange for the short-term numbers not looking quite so bad, they're just dragging out how the pain over a longer and longer period of time instead.

Oh yeah...and we get to pay interest to the Chinese for the privilege while we're at it.

That's pure genius. Really.; 7/31/09, 11:07 AM
Jeremy said...: Maguro said..."The problem with subsidy programs like this one is that it doesn't create new demand, it just shifts demand from the future to the present."

You left out the part about getting clunkers off the road, less dependence on oil and pumping money into the economy.

You don't read much, do you?; 7/31/09, 11:08 AM
ObamaNation said...: Garage -- and don't forget Big Tonsil.; 7/31/09, 11:09 AM
Sprezzatura said...: "Investment bankers, insurance companies and big oil clearly could have spent this money better."

Don't forget the birthers. They could use some funding to help suss out the truth about BHO's birth in Kenya.

Jim is on record as being opposed to stimulus that stimulates today. It makes no sense to have a stimulus that stimulates. Much better to not stop the downward spiral of job loss and spending cuts and job loss and spending cuts and....

Stupid government can't figure this out, but Jim can.; 7/31/09, 11:12 AM
Jeremy said...: By the way, for those of you who know how to buy stock:

You could have bought yourself a bunch of Ford in March for less than $2.00...and today it's at $7.90. (I bought stock and Call Options as soon as Ford turned down any government dough...and have turned a tremendous profit...thought you'd enjoy knowing that.)

No sense in letting profits get in the way of a good ol' bitch and whine fest.; 7/31/09, 11:13 AM
Jeremy said...: 1jpb said..."Stupid government can't figure this out, but Jim can."

Jim has the brains of a titmouse.; 7/31/09, 11:14 AM
Original Mike said...: I'm worried about the cash for old sick grandmothers program now.

Bring out your dead!; 7/31/09, 11:15 AM
ObamaNation said...: Here's a glaring inconsistency in Rethuglican thinking: They're all for giving people free money, in the form of tax cuts; but then if you give them free money in this form, so that it actually motivates people to perform desired behaviors, they're dead-set against it.

Oh, and they always want to give people free money with tax cuts so that the money is only in the hands of people who earn it, instead of people who deserve it more.

Imagine if, instead of using this money in this clunker program, the government had instead given it back to people with tax cuts. How would the government have been able to control how it was spent? Those ignorant hillbillies would have blown it all on cigarettes, malt liquor, and gas-guzzling pickup trucks.; 7/31/09, 11:15 AM
Pastafarian said...: And Jeremy -- you could have purchased some GM stock at the same time and for about the same price, and today you'd have some colorful paper with which to wipe your ass.

Your point?; 7/31/09, 11:17 AM
Jim said...: 1jpb -

"Jim is on record as being opposed to stimulus that stimulates today."

Actually, I'm on record as supporting stimulus that stimulates today - like tax cuts.

As opposed to stimulus programs like the Democrats passed that are nothing but ill-disguised pork projects designed for redistributionist ends.

But thanks for giving me the opportunity to clear up how little you understand economics.; 7/31/09, 11:18 AM
Jeremy said...: ObamaNation - I own a business that's directly related to saving energy, but you're not going to sell any of the local wing nuts on anything of the kind.

A few months ago, when news of the government recommending people consider making sure their roofs were "white," opposed to the standard gray or even black...because it reflects a tremendous amount of heat and cuts down on the roof's deterioration...the locals went through the...roof?

They were flabbergasted that anyone anywhere (especially Obama) would suggest such a thing.

They consider it their God given right to use up as much energy as possible...and fuck the future.

Today we have the "clunker" bitch and whine fest at full throttle...never taking the time to consider the long term goals or possibilities.

They just can't get over the fact that Obama won and they...lost.; 7/31/09, 11:20 AM
Larry J said...: According to some rough math, the clunkers program could bring July car sales to an annual rate of more than 12 million, which would be a 27 percent increase and the highest sales since September.

Let's see, how do I begin. Jeremy, that annual rate can only be sustained so long as the government keeps pumping more subsidizes into the "cash for clunkers" program. If the subsidizes stop the sales will decrease. It's as simple as that. The Democrats gave away a billion dollars of borrowed money to create the subsidy and blew through the money, so now they're reportedly rushing to add another $2 billion of borrowed money to the program. How long with that last, another 2 weeks? What happens then, will we expand the program by another $20 billion or so of borrowed money to make it to the end of the year?

Try looking at reality instead of posting insipid crap about wingnuts and you won't come across as such an epic moron.; 7/31/09, 11:20 AM
Jeremy said...: Jim said..."Actually, I'm on record as supporting stimulus that stimulates today - like tax cuts."

Jim...that's the same thing we've been hearing for the past 8 fucking years.

Reagan started it and we were immediately buried in debt, resulting in his raising taxes at least 4 times before he was gone. (Of course HIS kind of taxes were the really fun ones that impacted the middle-class, but not so much the wealthy.)

Find some new material...and here's a suggestion: READ something before posting.; 7/31/09, 11:23 AM
Jeremy said...: Larry - The program has been in effect for a fucking week.

YOU already know...for sure...that it will be an abject failure?

Based on what?

The head of your dick?

As for this inane comment: "The Democrats gave away a billion dollars of borrowed money to create the subsidy and blew through the money..."

The ONLY reason any of this is going on is because your hero G.W. left Obama holding the bag on a huge worldwide economic mess.

Take a look back to when G.W. took office and see where the economy, the deficit and the debt stood...and then take a look at what Obama inherited.

You're just another right wing suck-ass.; 7/31/09, 11:26 AM
ObamaNation said...: Jeremy -- you'd think that these drooling half-wit Rethuglicans would be smart enough to do the math themselves, and come to realize that installing a white roof on their home is worth the money.

It's a simple calculation -- just take the anticipated annual savings and multiply by number of years that the roof will be in service, and compare this to the up-front cost of the new roof (with interest).

Why would all these supposedly thrifty conservatives shoot themselves in the foot like this? Even their businesses rarely have white roofs.

I suspect that they do this on purpose -- they probably want to piss off Mother Gaia as much as possible, and cause a rise in ocean levels to flood the liberal coasts. And they're even willing to lose money to do it.; 7/31/09, 11:28 AM
Rich B said...: Jeremy's gullible-

"Ann's full of it -

CNBC:

The Obama administration announced this morning that it won't be suspending its "cash for clunkers" program.

According to some rough math, the clunkers program could bring July car sales to an annual rate of more than 12 million, which would be a 27 percent increase and the highest sales since September.

Kurt Karl, chief economist at Swiss Re in New York, said he thinks the program could even turn third-quarter GDP positive.

"That's big enough with production and sales to give a solid punch to the third quarter," Karl explained. "That would take my slightly negative [projection] and take it to the definitely positive area."

$1 billion divided by $4,500 yields 222,222 clunkers traded in. Assume that each customer puts another $20,000 to buy a new car. Gets you a rise of 29% to get to a million for the month. So far so good. The customers kick in another $4.4 billion. But wait - how many of those were planning to buy anyway (those were clunkers, weren't they)? And what happens next month? And where are they going to get the $20,000 - from the mattress or borrowing it? And how far does the $4.4 billion go in our $14 TN economy?

I do have some magic beans to sell you. Something tells me that you might be interested.

BTW - it seems that you are Lucky Old Sun. I guess the prescription ran out.; 7/31/09, 11:28 AM
Jim said...: Larry J -

"Jeremy, that annual rate can only be sustained so long as the government keeps pumping more subsidizes into the "cash for clunkers" program. "

It also presupposes that there is sufficient pent-up demand to sustain that level of purchasing over a full year.

It also presupposes that all of those people will be able to make all of their loan payments on time without any defaults or other financial problems which will only exacerbate the current debt crisis.

It also presupposes that it is even desirable to provide short-term support for an industry with long-term structural deficiencies which are being masked by artificial government supports rather than incentivizing industry adaptation and rationalization.; 7/31/09, 11:29 AM
KCFleming said...: Surely, the multiplier effect must be true.

If we take $5000 in taxes from the group (mostly the rich, thankfully), and give it to one middle income person, the downstream effect is greater than one, meaning $1 dollar spent will generate more than one dollar in economic growth!

It's like magic; a real perpetual motion machine!

Clearly, we should not be spending $1B a week on this cash for clunkers deal, but $1B a minute!!
All of our wildest dreams will come true!!!; 7/31/09, 11:29 AM
Jim said...: Rich B -

"I do have some magic beans to sell you. Something tells me that you might be interested."

He has extra money lying around since he and his heroes have just completed the sale of the golden egg which has always been the driver of economic success in this country. Capitalism.; 7/31/09, 11:31 AM
ObamaNation said...: This much is certain: We can't trust these idiots to spend their own money. They'd spend it all on lottery tickets, monster truck ralleys, and NRA memberships.

We need more programs like this one -- to direct spending in the right directions.

In fact, I'm not sure why I even typed "their own money" up there. What right do they have to money, just because "the man" signs a pay check over to them every week? It's OUR money, and we'll allow them to keep what we think they need.; 7/31/09, 11:33 AM
AllenS said...: Dear Bark Obama,

I had my tonsils removed a long time ago. I didn't get a dime for them. Could I have some money now, for, you know, like tonsil stimulus money? $25,000 would be like totally cool.

Your friend,
AllenS; 7/31/09, 11:35 AM
Brian O'Connell said...: AJ Lynch: The car subsidy can work to keep middle class people working. Do you oppose that?

Ends justify the means? I'm against business and consumer subsidies generally. They distort the market and usually have not-so-good unintended consquences.

You think social security is regressive? How can you say that when it is an exceptionally bad investment for 100% of us especially those who croak before age 65?

Well you just mentioned one way that it's regressive. Poor people tend not to live as long as others, so they tend to collect less in SS payouts. And of course paying in is capped. A millionaire pays in a smaller percentage of his income than someone earning minimum wage.; 7/31/09, 11:36 AM
Jim said...: Brian -

"I'm against business and consumer subsidies generally. They distort the market and usually have not-so-good unintended consquences."

There's something upon which you and I can definitely agree.; 7/31/09, 11:41 AM
ObamaNation said...: Pogo, your economic illiteracy is alarming.

Consider the following thought experiment: Imagine if income taxes were 100% for everyone. (Ah, someday...Someday.)

Now suppose that President Obama, in his munificence, grants us all 100,000 Obamabucks for the purchase of a new private jet. We'd all go out and buy a Gulfstream, and that company would have to employ something like 500,000 people, each making about 100,000 Obamabucks per year, and paying all of that money back into the government, who would then grant it back out for various other approved purposes. Obviously, this would be self-sustaining; and we'd all have wind turbines over our new houses with a Gulfstream in the driveway and a yacht at the marina.

Dur.; 7/31/09, 11:41 AM
Jim said...: ObamaNation -

"In fact, I'm not sure why I even typed "their own money" up there."

It's because you've obviously been corrupted by Murdoch and his all-powerful media empire which overwhelms and drowns out all other voices with the incredibly small percentage of the overall market that his properties command.

You need to do penance by looping a collection of the latest Keith Olbermann rants on your TV until you have been sufficiently re-educated in redistributionist ideology.; 7/31/09, 11:44 AM
ObamaNation said...: Brian and Jim -- I've always suspected that you were both virulent racists in the pocket of Big Tonsil, and this just confirms it.

Why don't you two just phallate each other and get it over with? Your agreement makes me sick.; 7/31/09, 11:44 AM
Dust Bunny Queen said...: You could have bought yourself a bunch of Ford in March for less than $2.00...and today it's at $7.90.

Loser. I bought at 1.50 and so did many of my clients. And BAC at $3.50.

:-D; 7/31/09, 11:45 AM
KCFleming said...: Now I understand.

If I take from Peter and give it to Paul (something which Peter heartily favors, BTW, and anyways Paul is a rich fuck who can go screw), suddenly Peter and Paul are better off! The economy grows and grows in a neverending spiral to heaven on earth.

It's incredible.
The most wonderful thing ever created.

Obama should be Pope Of The World.; 7/31/09, 11:47 AM
AllenS said...: After we get done stealing all of the oil from Iraq, are we going to go after their tonsils?; 7/31/09, 11:48 AM
Jim said...: ObamaNation -

"Obviously, this would be self-sustaining; and we'd all have wind turbines over our new houses with a Gulfstream in the driveway and a yacht at the marina."

Except that residents of Martha's Vineyard would be exempt from having to look at those ugly old wind turbines....They spoil the view of the Cape, you know?

Maybe they can be given their own personal mini-reactor. Hmmm...then they wouldn't have anywhere to store the cupful of waste those reactos would produce. Can't have that either...

I get it, they can have solar panels. Except that there isn't enough year-round sunshine in Massachussetts. OK..not solar panels then.

Aha! I have it, they can employ illegal aliens to run in government-approved, ergonomically-designed treadmills to power their 20,000 square foot mansions.

Provided, of course, those illegal immigrants aren't allowed in their exclusive communities. The treadmills would have to be located somewhere else because, as we all know, liberal elitists are all empowering the brown people. As long as they don't actually have to see them. And what's more empowering then employing them to provide power?

Problem solved!; 7/31/09, 11:49 AM
Jeremy said...: Bunny - You're lying through what few teeth you left in your tiny head.; 7/31/09, 11:50 AM
Jeremy said...: Jim - "I get it, they can have solar panels. Except that there isn't enough year-round sunshine in Massachussetts. OK..not solar panels then."

This idiot thinks solar panels aren't being sold and installed in Massachusetts...because they don't have enough "sunshine."

Can you say...dense?; 7/31/09, 11:53 AM
ObamaNation said...: Pogo, for a moment I thought that you'd come around to my way of thinking, but now I see it's just sarcasm.

As if President Obama would ever sully himself with anything so Christianist as the Papacy.

I think what you're failing to understand is this: That money that we used to pay Paul didn't come from Peter; it came from increasing our debt. So it's not like it's real money.

And not only that, but our debt would be much lower had we not invaded Iraq in an illegal war for oil prosecuted by Cheney and Halliburton.; 7/31/09, 11:53 AM
Jim said...: ObamaNation -

"I've always suspected that you were both virulent racists in the pocket of Big Tonsil, and this just confirms it."

Curse you! I was trying to keep my associations with Big Tonsil on the DL so I didn't have to report the favorable treatment I received from them on my federally-mandated lobbyist forms.

Now I'm going to have to get a job in the Obama administration so that all of my legal problems will be summarily swept under the rug and I can have the opportunity to pay years of back taxes without penalties or interest.

And I was just starting to enjoy the benefits of the private sector too. Oh well. I hear they have a great selection of private health plans to choose from.; 7/31/09, 11:54 AM
Jeremy said...: Brian - "I'm against business and consumer subsidies generally."

Pass that along to the farmers.; 7/31/09, 11:54 AM
X said...: Jeremy, you seen like a marxist retard. Perhaps you can explain why a Mazda RX8 is a clunker.; 7/31/09, 11:54 AM
KCFleming said...: OK, Obama should be Czar of the World.; 7/31/09, 11:55 AM
Jim said...: ObamaNation -

"That money that we used to pay Paul didn't come from Peter; it came from increasing our debt. So it's not like it's real money."

And after all, what's a few extra zeros in front of the decimal point between friends anyway? I think it's long past time that we all sat down for a collective beer/photo-op for a "teachable moment" which cannot be discussed due to a self-imposed gag order between gentlemen.

I hear you're a Bud Light guy....; 7/31/09, 11:57 AM
KCFleming said...: Well, mebbe not, given what happened to the last Czar.

Maybe he'd like to Supreme Leader instead.

He can say shit like Thus is it spoken! and Make it so! and Cletus, you toothless wanker! My slippers! Now.; 7/31/09, 11:58 AM
Jim said...: Comrade X -

"Perhaps you can explain why a Mazda RX8 is a clunker."

Because it doesn't come with pre-installed solar panels, and it doesn't run on magic pixie dust.

Next question?; 7/31/09, 11:58 AM
Jeremy said...: Comrade X said..."Jeremy, you seen like a marxist retard. Perhaps you can explain why a Mazda RX8 is a clunker."

Yeah, when out of ideas or reasonable thought, throw out the inane "Marxist" bullshit. (Marxists had a "clunker" program?)

As to your question: What year is it? What kind of mileage does it get?

These are the questions you need to answer at plenty of sites that lay out the parameters.

Why not take a shot at reading something before posting?; 7/31/09, 11:59 AM
ObamaNation said...: Jim -- just one problem with your treadmill scheme: The greenhouse gases that those dusky types produce, what with their diets of refried beans and such.

What we need is a new Apollo, a new Manhatten Project, aimed at the development of a new energy technology that produces electricity directly from our deep and abiding love of Mother Gaia. If we could just harvest all that positive energy (maybe with crystals and such), the electrical potential between that and all the negative energy in the middle of the country would be in the terravolt range.; 7/31/09, 11:59 AM
Dave said...: It is fair to question the premise of the cash for clunkers program, but I see nothing that failed and further see no connection to health care.

In this instance, the government isn't trying to run any business (nor are they in health care, but that's another topic). They're merely attempting to stimulate demand in the auto sector. By all accounts, they've done so. Nor did they promise anyone with a clunker could participate. This was always a first-come, first-served program.; 7/31/09, 11:59 AM
Jeremy said...: Jim - Did you know that the sun sometimes shines in Massachusetts...and there are hundreds of solar panel companies?

DUH.; 7/31/09, 12:01 PM
Jeremy said...: Dave - You've somehow stumbled onto the wrong site.

Beware: Unless you take you logic, facts and straight forward arguments elsewhere...you are in for a rough ride.; 7/31/09, 12:02 PM
ObamaNation said...: Jeremy -- these Republicans are so stupid, they can't even add or subtract. Evidence: Just look at the typical house in New England -- not a single solar panel on it.

Free energy just raining down from the sun all day, and they're too stupid to even harvest it. Morons.; 7/31/09, 12:04 PM
KCFleming said...: Marxists had a "clunker" program?

Yes, Cuba.; 7/31/09, 12:05 PM
ObamaNation said...: Dave -- I agree. Why not use this sort of program to stimulate all of the other sectors of the economy? One voucher for a wind turbine, one for solar panels; all the things that we want the sheeple to spend money on.

As Jim pointed out above, in a rare moment of lucidity: What's another zero added to the end of the debt? Zero is nothing, zilch, nada.; 7/31/09, 12:08 PM
I'm Full of Soup said...: Brian:

How do you know poor people die at a younger age?

Is "poor people" a lifelong classification? Or are some people first poor then they get rich and vice versa?

Being poor or rich is not one's permanent condition or destiny. You are confused about that.

As to soc sec cap, the benefits are based on what you pay in which is based on what you earned. How is that regressive?; 7/31/09, 12:09 PM
KCFleming said...: "but I see nothing that failed and further see no connection to health care."

Yup, no connection at all.
Completely unrelated issues.
All is well.
Flowers are blooming and zeroes are added.

No worries, Dave.; 7/31/09, 12:11 PM
The Dude said...: Not to worry - the gubmit just voted to spend 2 billion more dollars they don't have to buy cars - so rest easy, comrades, your utopia is still on the way.; 7/31/09, 12:12 PM
Brian O'Connell said...: Jeremy: Pass that along to the farmers.

I'm against that too! We subsidize various agribusiness to the tune of billions every year. Money out of out pockets. This increases food costs. Money out of out pockets. Then we have to prop up the poor who can't afford these prices with food stamps. Money out of out pockets. What's not to love?

The clunker program reminds me of the ethanol subsidy actually. Let's spend tax money on something that will make us feel good- and it's good for mother earth too! It's all faith-based.; 7/31/09, 12:13 PM
garage mahal said...: Easily the dumbest thread ever. On any blog.; 7/31/09, 12:13 PM
Jeremy said...: The National Automobile Dealers Association - Bailey Wood:

“Two hundred and fifty thousand vehicles in four weeks?” Mr. Wood said. “One word comes out of my mouth: Wow.”

The program had two goals: aiding the ailing car industry and improving fuel economy of the vehicles on the road.

Cars submitted under the program were to be junked. They had to be less than 25 years old and have a fuel economy, as rated by the window sticker, of 18 miles a gallon or less.

The size of the rebate depended on the fuel economy of the replacement vehicle. Consumers were also supposed to receive the scrap value of their trade-ins.

We need more "failing programs" like this.; 7/31/09, 12:14 PM
Dave said...: Pogo, that's not an argument.; 7/31/09, 12:14 PM
Jim said...: AJ -

"Being poor or rich is not one's permanent condition or destiny. You are confused about that."

You're stuck in "old thinking" about a pre-Obama world. In Obama's world, the ultra-rich will be able to stay ultra-rich while pretenders like entrepreneurs will be sufficiently crushed by disincentives and marginal tax rates are kept far away from the Manhattan cocktail parties the ultra-rich are so terribly fond of.

Also, all the brown people will exist in perpetual servitude with the bread and circuses of welfare checks and reality shows.

You really need to get up to date with the latest social theory. You're obviously still buying into the idea of merit and hard work getting you somewhere in life. That's the kind of "bitter clinginess" that the Obama administration has dedicated itself to ridding this country of.; 7/31/09, 12:15 PM
Synova said...: "Loser. I bought at 1.50 and so did many of my clients. And BAC at $3.50."

:-D

DBQ, if I ever have any money, may I please be your client too?; 7/31/09, 12:17 PM
Jim said...: brian -

"The clunker program reminds me of the ethanol subsidy actually. Let's spend tax money on something that will make us feel good- and it's good for mother earth too! It's all faith-based."

And don't forget that the ethanol subsidies raise food prices by redirecting vast amounts of acreage that would otherwise have been dedicated to growing food crops. But hey, what's a few extra cents on every ear of corn or grain of wheat to a poor person when there are hearty backslaps to be had by all at the agri-conglomerates shareholder meetings and at the board meetings of the environmentals who can all be self-righteously proud of their achievements driving up those food prices for a negligible impact on petroleum usage.; 7/31/09, 12:20 PM
Jim said...: ObamaNation -

"Just look at the typical house in New England -- not a single solar panel on it."

Those cowards are just mad that solar panels don't work so great when they're covered in snow for so many months out of the year. If they really cared about energy conservation, they would just wait until the snow melted before they selfishly started using electricity again. They've got coats to keep warm during the winter months...whiny babies.

Obama said we were all going to have sacrifice, and those bastards just refuse to do their part.; 7/31/09, 12:24 PM
Synova said...: "The clunker program reminds me of the ethanol subsidy actually. Let's spend tax money on something that will make us feel good- and it's good for mother earth too! It's all faith-based."

Except that "faith-based" is usually reserved for things that we don't have factual repudiation of.

Ethanol is amazing, actually. We can just call it "ethanol math" to encompass the concept.

With ethanol math we can use imported diesel to grow corn which must be irrigated and is heavily dependent on chemical fertilizers, herbicides, fungicides and insecticides, not to mention "genetic engineering", and then convert the corn to ethanol which is somehow "green" despite the fact that it is every bit as much a carbon based fuel as petroleum and must be burned to power our cars.

Kinda sorta the same sort of "math" that lets us imagine that manufacturing a new vehicle that gets a little bit better gas mileage has less of an impact on the environment and energy consumption than an already manufactured, existing vehicle.; 7/31/09, 12:26 PM
I'm Full of Soup said...: Jim:

Yeah you are right. I forgot once more. I will report immediately to re-education camp. They serve the best gruel there. Heh.; 7/31/09, 12:26 PM
Dust Bunny Queen said...: Dave said: but I see nothing that failed and further see no connection to health care.

So you don't see failure in SIGNIFICANTLY under funding, under estimating the demands of a program that then requires you to go back and dig up more money to finish the program? The failure to devise and adequately fund a program isn't failure to you?

There is a saying in my industry
"Failing to plan is planning to fail"

Also planning poorly is just the same as guaranteeing failure.

The Underpants Gnomes could have come up with a better plan than the cash for clunkers.

Cash for clunkers = epic fail.

If you can't see that...come be my client and I'll charge you $250 an hour to make a shitty financial plan for you that will guarantee you don't have enough money to accomplish your goals and leave you way short of retirement. No problem.; 7/31/09, 12:29 PM
Anonymous said...: They're merely attempting to stimulate demand in the auto sector.

But did it and if so, by how much?

Yes, sales this month are up, but as others have pointed out, some of that demand has simply been moved forward, i.e. someone planning to buy a new car by the end of the year buys a new car today because of the clunker program.

Their demand for a new car already existed, but the incentive motivated them to buy earlier than originally planned.

No doubt some of the demand is new, also no doubt that some of the demand was simply moved into July when it would have occurred in another month.

When the cash runs out, sales will drop back to a naturally depressed level until the overall economy improves. In short, the economic benefits are minimal, but it is helping auto companies clear out their bloated inventories.

As for making our country more energy independent, there are approximately 250 million registered vehicles of all types in the US, and the $1 billion clunker program is good for about 222,000 new vehicles, which represents .000888 percent of all vehicles.

In other words, nary a dent will be made in our national oil demand.

Put another way, it is a symbolic move on the energy/environmental front, nothing more. It is neither good nor bad, just irrelevant.; 7/31/09, 12:30 PM
Jim said...: Synova -

"We can just call it "ethanol math" to encompass the concept."

Evidently you haven't heard that Congress has passed a bill which is currently awaiting Obama's signature which officially repeals the laws of supply and demand as well as changing accounting rules so that the cost of inputs are no longer included in the price of outputs?

It's bound to be a huge jobs creation bill. I can't believe it isn't being covered by the media.

Damned Murdoch. I'll bet he's the one responsible.; 7/31/09, 12:31 PM
KCFleming said...: Dave, Obama and Congress' cash for clunkers claptrap is based on an old economic fallacy called "The Broke Window Fallacy" (the economic, not the crime discussion).

The great Henry Hazlitt explains it all here.

The primary error is being blind to what is not seen, as first explained by Bastiat more than 150 years ago. (That Which is Seen, and That Which is Not Seen)

Hazlitt:
"But what mainly took place was a diversion of demand to these particular products from others. The people of Europe built more new houses than otherwise because they had to. But when they built more houses they had just that much less manpower and productive capacity left over for everything else. When they bought houses they had just that much less purchasing power for something else. Wherever business was increased in one direction, it was (except insofar as productive energies were stimulated by a sense of want and urgency) correspondingly reduced in another."

...He adds that we should not be diverted "from recognizing the basic truth that the wanton destruction of anything of real value is always a net loss, a misfortune, or a disaster, and whatever the offsetting considerations in a particular instance, can never be, on net balance, a boon or a blessing."

The destruction of cars in order to stimulate buying new ones, at a subsidy, is a the broken window fallacy in action.; 7/31/09, 12:32 PM
I'm Full of Soup said...: Cash for clunkers should have had a deadline date not a units sold or dollar cap.

IMO, it was a fairly good & straightforward idea that was f'ed up by tree-huggers and the Obama admin and Congress.

So what else if new?; 7/31/09, 12:32 PM
Dave said...: "So you don't see failure in SIGNIFICANTLY under funding, under estimating the demands of a program that then requires you to go back and dig up more money to finish the program"

I disagree with this assessment. Saying that the program was significantly underfunded implies that the goal of the program is to provide this incentive for anyone and everyone who asks for it. That is not the case. The White House is willing to provide more money for it because it is having a positive effect on the auto industry.

I could apply your logic to things like the wars in Iraq and Afghanistan. Those cost estimates were entirely wrong at the outset and Congress continually needs to appropriate more money for them. But I wouldn't, on the basis of those facts alone, conclude that the wars were failures.; 7/31/09, 12:37 PM
Jim said...: Dogwood -

"In other words, nary a dent will be made in our national oil demand."

If you're going to insist on doing actual math, then I'm afraid that you may be banned from future discussions on this topic.

All numbers have been replaced by unicorn horns and all arithmetic operators such as + and - have hereby rendered obselete by the introduction of rainbow magic.

You are therefore commanded by Obama's Math Czar to express all future calculations in terms of the amount of rainbox magic required to achieve a sufficient supply of unicorn horns.

Any deviation from this will be severely punished by withholding your monthly allowance of slightly-used Skittles which you had been previously promised under the terms of the Recovery Act of 2009.

Consider yourself duly warned.; 7/31/09, 12:37 PM
Anonymous said...: The House just approved an additional $2 billion, which will provide subsidies for a total of 666,000 vehicles, or about .002664 percent of all registered vehicles in the US.

Assuming, of course, that 666,000 people take advantage of the program.; 7/31/09, 12:39 PM
Anonymous said...: Consider yourself duly warned.

Yes sir! Sorry sir! Won't happen again sir!; 7/31/09, 12:41 PM
Dave said...: "Yes, sales this month are up, but as others have pointed out, some of that demand has simply been moved forward, i.e. someone planning to buy a new car by the end of the year buys a new car today because of the clunker program."

This might be so, but auto dealers can't book sales based on anticipation.

"In short, the economic benefits are minimal, but it is helping auto companies clear out their bloated inventories."

I would agree that the stimulus is likely to be short-lived, but inventory reduction is a major thing in a recession. Recessions are essentially inventory corrections. Businesses won't expand production until they clear their inventory backlog. It is one of the promising figures in the GDP report out this morning. Private non-farm inventories have dropped sharply over the past three quarters. This represents a drag on current GDP, but bodes well for future output.; 7/31/09, 12:42 PM
KCFleming said...: Dave, you're missing the point.

They guessed wrong. The money got used up much faster than they anticipated. One can reasonably conclude from this that federal health spending will suffer a similar fate. That is, they will guess wrong, just as they did with Medicare, and massively so.

And you're welcome to count spending devalued dollars on the broken windows fallacy as a net boon to carmakers and dealers, but you cannot argue that benefit extends any further.

In fact, as i have pointed out, it is inevitable the net effect is negative to the USA.; 7/31/09, 12:42 PM
KCFleming said...: Recessions are essentially inventory corrections.

This is moronic in the extreme, especially when trying to apply it tour depression, which is based on too much debt, not too much unsold stuff. The car sales rates of 3-5 years ago is gone for decades or longer.; 7/31/09, 12:44 PM
garage mahal said...: Pogo always the complete glass empty kinda guy. So uplifting.; 7/31/09, 12:50 PM
Jim said...: Dave -

"Private non-farm inventories have dropped sharply over the past three quarters. This represents a drag on current GDP, but bodes well for future output."

Only if you assume that those inventory reductions are temporary as they have been in previous recessions.

More likely that those inventory reductions were a result of adjusting to a "new normal" resulting from consumers re-adjusting their lifestyles downward.

Polling is consistently showing that consumers have absolutely zero intention of returning to their previous spending levels - due in large part to the lack of easy money from the overinflation of their home values.; 7/31/09, 12:50 PM
Anonymous said...: This might be so, but auto dealers can't book sales based on anticipation.

True, but these specific sales can't be labeled "new demand" because the demand was already there.

Also, because the incentive created an unnatural demand to buy today, it will suppress sales in the future.

A similar phenomenon happened a couple years ago when the auto companies offered 0 percent financing & employee pricing to move cars.

They created some new demand, but they also cannibalized future sales. So cash flow increased substantially for a month or two, then crashed after the incentives stopped.

These types of incentives don't provide much in the way of significant economic benefits.

Recessions are essentially inventory corrections.

In a way, yes. This recession is correcting an excess supply of debt.; 7/31/09, 12:52 PM
KCFleming said...: 'Pogo always the complete glass empty kinda guy. So uplifting.'

A good glass of red wine in front of me will usually be completely empty.; 7/31/09, 12:54 PM
Jim said...: pogo -

"The car sales rates of 3-5 years ago is gone for decades or longer."

In a very real sense, the auto industry is a victim of its own success. By consistently improving the overall quality of vehicles, they run much longer and require less maintenance over the life of the vehicle than they used to.

This means that people can hold on to them longer, and the marginal benefits they get from trading in their old car on a new one which isn't significantly better has been decreasing over the last decade or so.

That's why there's such growth overseas: they don't yet own the higher quality automobiles. But in another decade or two, they will run into the same difficulties that our domestic sales are currently experiencing.

If we didn't have government subsidies distorting the marketplace, automakers would be able to begin the inevitable rationalizing of their manufacturing capacity in earnest. But there's no incentive to do so as long as the government keeps printing ever-more expensive dollars to artifically inflate domestic demand.; 7/31/09, 12:55 PM
Dave said...: "They guessed wrong. The money got used up much faster than they anticipated."

That, the White House would argue, is a good thing. The program was designed to stimulate auto sales. It worked. They understimated the demand? That's a good problem to have in this instance. I would imagine that the White House (and the auto dealers) are quite happy to have this problem.; 7/31/09, 12:55 PM
Jeremy said...: Pogo said..."A good glass of red wine in front of me will usually be completely empty."

Much like your pointy little head.; 7/31/09, 12:57 PM
KCFleming said...: "I would imagine that the White House (and the auto dealers) are quite happy to have this problem."

Then you -and the WH- refuse to see 'that which is not seen'.

Dangerous morons.; 7/31/09, 12:57 PM
Big Mike said...: According to some rough math...

Yup, when they run out of money for a program after one week I can safely assume that all their math is pretty "rough."

Now pay attention, all you politicians (you, too, Jeremy):

1 + 1 = 2
2 - 1 = 1
1 + 2 = 3
3 - 1 = 2
3 - 2 = 1

(to be continued); 7/31/09, 12:58 PM
KCFleming said...: Jeremymissed his date with Mr. Delany.

**sads**; 7/31/09, 12:58 PM
Dust Bunny Queen said...: "They guessed wrong. The money got used up much faster than they anticipated."

That, the White House would argue, is a good thing. The program was designed to stimulate auto sales. It worked. They understimated the demand? That's a good problem to have in this instance

So then ...dave...how good of a thing is that going to be when the Government 'mis-underestimates' the amount of money needed and the demand for health care services and they run out in the middle of the year?

Is that going to be a good thing. Or just..."oops my bad" on the part of Congress. Sorry Dave, that bypass you needed....schedule it next year. Bummer Mrs. Dave that treatment for breast cancer and the drugs....all out.

If the Government...CAN'T EVEN RUN A USED CAR OPERATION PROPERLY. How in the HELL are they going to run medical care.

They aren't going to be able to...and you know it and I know it and everyone knows it.; 7/31/09, 1:00 PM
Big Mike said...: Of course Jeremy will merely point out that I am whining because my 9 year old car gets gas mileage that is too good to qualify for the program. If only I had purchased a gas hog. :-(; 7/31/09, 1:00 PM
Jim said...: Big Mike -

See my post above about the replacement of arithmetic operators with rainbow magic.

You are hereby fined the equivalent of one month's supply of slightly-used Skittles.

Don't let it happen again.; 7/31/09, 1:01 PM
Dave said...: "This is moronic in the extreme, especially when trying to apply it tour depression, which is based on too much debt, not too much unsold stuff. The car sales rates of 3-5 years ago is gone for decades or longer."

While consumption levels might level off for some time, that doesn't negate the fact that businesses still need to correct their inventory levels.

And while I certainly hope that the American household is deleveraging, as Jim notes, I'm not convinced just yet that this is a long-term trend (polls tend to be fickle).; 7/31/09, 1:01 PM
Freeman Hunt said...: By Congressional logic, the government should buy up ALL the cars in Obama's Kingdom and make ALL of us get new ones. Wow! There's economic growth! We'd all be richer!; 7/31/09, 1:02 PM
Jeremy said...: For Jimmy the dolt and his fellow morons:

Massachusetts - State to launch $68m solar panel program

Governor Deval Patrick's administration is launching a $68 million program today to increase the number of solar electric panels on Massachusetts homes, businesses, and schools by 600 percent over the next four years.
more stories like this

Patrick's plan, which does not involve new taxes or fees, seeks to greatly simplify the process for people and businesses to get funding for promoting green power, including solar.

The plan includes special incentives for buying Massachusetts-made solar panels and extra aid targeted at lower-income homeowners.

New state rules will be able to get the equivalent of mail-in rebates covering as much as half to two-thirds of what they spent installing solar panels.

A typical home solar system producing 2,500 watts of electricity, about one-third to one-half the electricity an average homeowner would otherwise buy from a utility, could save enough on their electric bills to pay off the net cost of solar panels within five to eight years, then reap thousands of dollars in savings after that.

"This program will give us a world-class solar market right here in Massachusetts."

The equivalent of increasing the number of homes in Massachusetts powered by solar energy from roughly 3,000 now to 20,000 in 2012 and to 190,000 in a decade.; 7/31/09, 1:02 PM
Jim said...: dbq -

"If the Government...CAN'T EVEN RUN A USED CAR OPERATION PROPERLY."

There have been a lot of comparisons of Obama and his Democratic majority to used car salesmen.

It turns out that comparison was unfair....to used car salesmen.; 7/31/09, 1:02 PM
Dave said...: "If the Government...CAN'T EVEN RUN A USED CAR OPERATION PROPERLY."

They are not trying to run a used car operation. They are trying to stimluate the car industry. And, according to their metrics, they did.; 7/31/09, 1:04 PM
Jim said...: Dave -

"I'm not convinced just yet that this is a long-term trend (polls tend to be fickle)."

Then where do you suppose that the American consumer will find the money to finance his previously high-flyign lifestyle now that trillions of dollars of unrealized equity gains have evaporated with the bursting of the housing bubble.

That money would have to come from somewhere, and we're also going to have to find money to pay off all these magical subsidies before we can spend money on new stuff too.

I fail to see any realistic justification for a belief that inventories can, or should, return anywhere near previous levels.

Where's the money?; 7/31/09, 1:06 PM
Jeremy said...: Big Mike said..."Of course Jeremy will merely point out that I am whining because my 9 year old car gets gas mileage that is too good to qualify for the program. If only I had purchased a gas hog."

I didn't set the rules, dipstick.

There are cars on the road that are older than yours that also get very good mileage and don't qualify.

The central premise of the program isn't to help out the Big Mike's of the world, it's to lower our dependence on foreign oil and to boost the auto industry.

Why can't you understand that...and why don't you want America to become more energy independent??

Other than just living to bitch and whine about anything Obama...even if it helps America?; 7/31/09, 1:06 PM
Anonymous said...: How's that progressive solar energy thing working for Deval Patrick.

Here's how popular it is.

"A Boston Globe poll released over the weekend showed Patrick with a sagging favorability rating: Thirty-six percent had a favorable opinion of him, compared with 52 percent who had an unfavorable view.

The poll also showed him running in a statistical dead heat with his rivals, a challenge given that Baker is still not widely known, while Mihos garnered only 7 percent of the general election vote in the 2006 governor’s race."; 7/31/09, 1:10 PM
Jeremy said...: "CAN'T EVEN RUN A USED CAR OPERATION PROPERLY"

Are you people this dense or are you running low on meds?

We have a program that is sooooooooo successful, they're giving it another shot in the arm...and all you hear from the local wing nuts is how HORRIBLE it is.

What a bunch of crybabies.; 7/31/09, 1:10 PM
Cedarford said...: 4) As Synova pointed out a few weeks back, the carbon footprint required to produce a new car far exceeds to gas mileage differential between the "clunker" and the new car. So this program was designed to be doubly anti-environment.

That is one of those long-debunked Right-wing talking points.

Pity the clunker program is far less efficient at jobs creation than rebuilding or repairing, say, the 280,000 structurally deficient bridges in the USA, or providing stimulus to kick-start oil & gas drilling, or cutting Chinese high tech and agricultural imports into the US.

But it is better than sending it to ACORN to "organize voters". Or spending stimulus money to rescue the fat bonuses of multimillionaire Jewish and WASP investment bankers on Wall Street who nearly wrecked our financial system.; 7/31/09, 1:11 PM
Jeremy said...: LarsPorsena - I realize you're not that bright (no pun intended), but what does a politician's approval rating have to do with the effectiveness or implementation of solar energy?

Are you actually saying the man might not wing an election because of solar panels?

Good lord...you get dumber by the minute.; 7/31/09, 1:12 PM
Jeremy said...: "win"; 7/31/09, 1:13 PM
Jeremy said...: Cedar - The clunker program is just that.

It has little if anything to do with the immediate creation of jobs or anything else you mention.; 7/31/09, 1:14 PM
Jeremy said...: Dust Bunny Queen - What is it YOU don't understand about programs being even more successful than anticipated?

Are you saying you wish it had failed...so we wouldn't have to continue?

Try giving credit where credit is due for a change, opposed to the usual wing nut song and dance.; 7/31/09, 1:16 PM
Jim said...: Lars -

"How's that progressive solar energy thing working for Deval Patrick."

What are the odds that they will find enough people willing to shell out enough money for inefficient solar panels to actually achieve the goals set forth?

When people are barely scraping enough money together to buy food and fully 1/3 of all mortgages are currently "under water," how many homeowners are going to double down on stupid by adding solar panels to a home already worth less than the amount they owe on it?

Patrick's disapproval numbers are largely a result of unfulfilled previous promises on programs which he has either introduced or enlarged. The poll results show that a majority of the citizens of Massachusetts are smart enough to realize that his ego is writing checks that their decreasing tax dollars are simply going to be unable to cash.

You can just go ahead and add this program to the list of Patrick's previous failures too.; 7/31/09, 1:19 PM
Dave said...: "That money would have to come from somewhere, and we're also going to have to find money to pay off all these magical subsidies before we can spend money on new stuff too.

I fail to see any realistic justification for a belief that inventories can, or should, return anywhere near previous levels.

Where's the money?"

It isn't inventories that need to return to previous levels, but output and consumption. As of 2Q 09real personal consumption is off about 2% from its peak of 4Q 07. That's certainly significant, but not in anyway impossible to overcome.; 7/31/09, 1:20 PM
Dust Bunny Queen said...: What is it YOU don't understand about programs being even more successful than anticipated?

What is it that YOU don't understand about programs costing much more than anticipated or more than budgeted?

Right......it is soooooo successful that they are going to go back into the taxpayers pockets for even MORE MORE MORE money.

/sarcasm just in case you are as dense as I suspect.; 7/31/09, 1:21 PM
I'm Full of Soup said...: Dave:

I disagree. The program was prmarily conceived by lunatic treehuggers who were most interested in saving the cursed earth.

They don't give a frig about car salesmen, mechanics, car dealers or car companies.; 7/31/09, 1:23 PM
Anonymous said...: @jim:

"...When people are barely scraping enough money together to buy food and fully 1/3 of all mortgages are currently "under water," how many homeowners are going to double down on stupid by adding solar panels to a home already worth less than the amount they owe on it?"

I know but I couldn't resist piling on.; 7/31/09, 1:24 PM
KCFleming said...: "That's certainly significant, but not in anyway impossible to overcome."

Nah, no problem.

Well, except mebbe when you figure in 500,00 new layoffs every month.; 7/31/09, 1:25 PM
Dust Bunny Queen said...: What are the odds that they will find enough people willing to shell out enough money for inefficient solar panels to actually achieve the goals set forth?

When people are barely scraping enough money together to buy food and fully 1/3 of all mortgages are currently "under water," how many homeowners are going to double down on stupid by adding solar panels to a home already worth less than the amount they owe on it?

Not to mention that the return on investment in solar panels versus the reduction of utility bills just doesn't pencil out in most people's life spans. Same issue with those stupid Prius vehicles. The cost savings in gasoline to offset the additional cost of the vehicle, would take longer than the functional life of the car. Stupid investment.

In addition as the consumption of company generated electricity decreases the utility companies are allowed to counter that decrease by rate increases, creating a net sum zero savings for the schmucks who bought the solar panels.; 7/31/09, 1:26 PM
KCFleming said...: And Dave, why should we continue to spend (devalued) money on the Broken Windows fallacy?; 7/31/09, 1:26 PM
garage mahal said...: Why should we continue the "If we just give fabulously rich people MORE MONEY it will miraculously rain down on us serfs" fallacy? It's proven it doesn't work.; 7/31/09, 1:29 PM
Jim said...: Dave -

"It isn't inventories that need to return to previous levels, but output and consumption."

You didn't answer my question. In order to resume previous levels of consumption, people are going to have to return to previous levels of wealth. Trillions of dollars in wealth just evaporated over the last couple of years.

Unless you know of some secret hiding hole in which American consumers are going to be able to magically find those trillions of dollars of wealth in addition to now being forced to pay off an extra trillion dollars of debt because of the "stimulus" as well as however much extra Obama's other boondoggles are ultimately going to cost, there's absolutely no way that consumption can possibly return to previous levels.

That level of consumption is gone. Bye bye. Adios. See ya later. It's not coming back.

If you're basing your economic assumptions on the unsupportable theory that it will, then you might as well be using unicorn horns and rainbow magic for all the relationship to reality that it has.; 7/31/09, 1:30 PM
Big Mike said...: Why can't you understand that...and why don't you want America to become more energy independent??

Well, actually I do want America to be more energy independent -- which is why I want to see the United States figure out an environmentally safe way to exploit our oil shale, why I want to see off-shore drilling, and why I want to see more nuclear power.

Meanwhile "Cash for Clunkers" will make only the tiniest of differences in our overall energy posture. Maybe 1 one-hundredth of a percent? Probably less.

I was really only teasing when I said you needed to join the politicians and start over with 1 + 1 = 2, but now I'm starting to wonder ...; 7/31/09, 1:31 PM
Rich B said...: Jeremy-

Fully 1/3 or mortgages under water? Can't you get anything right?

"20% of homeowners 'underwater'
Study finds more than 20% of U.S. homeowners - about 20 million residences - owe more than their homes are worth.

NEW YORK (CNNMoney.com) -- More than 20% of American homeowners owe more on their mortgage debt than they can sell their homes for, according to an industry report released Wednesday.

The real estate Web site Zillow.com reported that 21.8% of all U.S. homes, representing more than 20 million residences, were in a "negative equity" or "underwater" position after prices dropped more than 14% nationally in the year ended March 31.

"A combination of falling prices and low down payments has left many borrowers underwater," said Stan Humphries, Zillow's vice president in charge of data and analytics. "In some markets, more than half of all homes are in negative equity."
..........
Some dispute: Not all industry insiders back these findings.

"Zillow's negative equity estimates strike me as a little high," said Richard DeKaser, a real sate analyst and founder of Woodley Park Research in Washington D.C. He pointed out that other estimates of negative equity from Moody's Economy.com, for example, and First American (FAF, Fortune 500) CoreLogic, have not been that elevated.

The last CoreLogic report was for data through the end of 2008 and it estimated that 8.3 million homes were underwater.

Moody's Economy.com chief economist Mark Zandi estimated that 14.8 million were underwater at the end of March.

You don't have a lot of credibility. You do have a lot of comments, I'll give you that. Quantity, but not quality.; 7/31/09, 1:32 PM
Jim said...: garage -

"Why should we continue the "If we just give fabulously rich people MORE MONEY it will miraculously rain down on us serfs" fallacy? "

You give youself away with your formulation that we are, in any way, "giving" rich people money - unless, of course, you're talking about the personal enrichment of Obama administration members.

Letting people keep their own money isn't "giving them" anything. It isn't your money. It never was. The fact that you even think it might be should be cause for you to re-think your entire worldview. You aren't entitled to a damned thing you didn't earn yourself. That you don't understand this is your own personal failure, not anyone else's.; 7/31/09, 1:33 PM
Dave said...: "And Dave, why should we continue to spend (devalued) money on the Broken Windows fallacy?"

I never said we should. I'm merely arguing that it is incorrect to classify this as a failure simply because the program was overwhelmingly popular with car buyers (and dealers and manufacturers).; 7/31/09, 1:36 PM
Joe said...: Let me wager right now that in a relatively short period of time we're going to find out that this program is loaded with fraud. Among other things, we'll find out that car dealers resold the clunkers, that they often had no actual clunkers and so forth.; 7/31/09, 1:37 PM
Caroline said...: "these Republicans are so stupid, they can't even add or subtract. Evidence: Just look at the typical house in New England -- not a single solar panel on it."

A typical house in New England probably has a Democrat living in it. You may want to rethink that particular line of reasoning.

The reality is that solar panels in northern climes often did not generate enough output to justify the installation costs. Unless the person planned to live in the house for a very long time. Newer, more efficient models may change that.

"that a majority of the citizens of Massachusetts are smart enough"

Smart enough? Massachusetts? I live in MA now. These people were too dumb to vote to get rid of the state income tax in 2008. The majority believed it when they were told that keeping the state income tax would prevent other tax increases. Of course, we now still have the income tax, AND the tolls and sales taxes have increased.

Smart enough for ya? (I couldn't resist the dig on my new home state.); 7/31/09, 1:39 PM
Jim said...: Rich B -

"Study finds more than 20% of U.S. homeowners - about 20 million residences - owe more than their homes are worth."

You're talking about apples and oranges here. I said 1/3 of homes with mortgages were "under water" not 1/3 of all homes.

The article you cite is talking about the universe of all homes - including those on which there is no mortgage because it either never had one or has been paid off at some point in the past.

Those homes are typically owned by older Americans who have either lived in their homes for more than 30 years or who had sufficient equity from the sale of a previous home that they were either able to buy their homes for cash or had relatively small mortgages they have since paid off.

1/3 of all mortgage holders being under water is a serious future risk to the economy. There is absolutely zero incentive for those homeowners to continue making payments on those homes, and the phenomenon of homeowners simply walking away from those mortgages is a very real and ongoing damper on both the real estate market and the economy as a whole.; 7/31/09, 1:40 PM
Jim said...: Just Lurking -

"Smart enough for ya? (I couldn't resist the dig on my new home state.)"

I never claimed they were objectively smart, just smart enough to see not to buy into any more of Patrick's BS.

Given that the rest of your post is equally true about the voting intelligence of Massachussetts residents, that tells exactly what level of willful ignorance is required to believe anything else he has to say about solar panels.; 7/31/09, 1:43 PM
Dave said...: "In order to resume previous levels of consumption, people are going to have to return to previous levels of wealth. Trillions of dollars in wealth just evaporated over the last couple of years."

People won't need to return to previous levels of wealth, just previous levels of income. Households need to be able to service the debt that they have.

Personal consumption may not reach the % of GDP that it did earlier this decade (I think it was near 70%), but it will grow and it will contribute positively to GDP, perhaps as soon as next quarter.; 7/31/09, 1:43 PM
mrs whatsit said...: A library in my area recently spent $83,000 to install solar panels on its roof. The library's representatives are crowing about how this expenditure -- almost all of it, of course, from state tax dollars -- will cut their $4,000 annual electric bill in half.

There's little danger that THEY will lose their slightly used Skittles!; 7/31/09, 1:49 PM
Anonymous said...: Jeremy,

The problem with solar is the hideously expensive cost in building a system capable of generating a decent amount of electricity.

At this point, the only way to get a large number of homeowners to adopt the technology is to offer huge government subsidies. Without the subsidies, the payback periods are just too long to make it worthwhile.

For those unfamiliar with the costs, here are some numbers from a solar system calculator. You can play along here.

------------

Calculator Results:

State: Massachusetts

Peak hours of sunshine: 3.95 per day (annual average)

Monthly Electric Bill: $100

Monthly Electric Usage: Approx. 950 kw

Replacing 50% of electricity w/solar panels will require a 4 kw system.

Avg price: $32,000 or $8 per watt (subsidies not deducted)

Final Analysis:

Your savings per month are $47
Your old power bill is $100.
Your new power bill is $53

You would approximately save $569 per year.

This equals an increase in your property of approximately $8532

It will take approximately 20 years to make profit.

This takes into account federal rebates, property value increase and inflation of electricity prices at 5.4% anually.

Due to inflation, by the end of the solar panel payback time, your yearly savings would be $1628

Similarly, the value added to your property by year 20 would be $24427

Massachuset has many other local rebates available that you may be eligible for.These could further reduce the price of your solar panel system.

Your solar contribution is equal to saving 18696 pounds of CO2 every year.

This is 93 tons in ten years. It is equivalent to planting 390 trees.

------------

Given these types of results, it is pretty obvious why government has to provide incentives that practically give away these systems to homeowners, they simply are not economically viable as standalone products.; 7/31/09, 1:51 PM
Jim said...: Dave -

"People won't need to return to previous levels of wealth, just previous levels of income. Households need to be able to service the debt that they have."

Wrong. Much of that consumption was financed on the back of the now non-existent equity in their homes.

In order for consumption to return to previous levels:

1) Incomes must rise to previous levels
2) Consumers must return to the lifestyles they previously led
3) They must have the credit/equity to finance those lifestyles.

Since we know that the credit/equity situation has likely changed for at least the next decade or so before another housing bubble could possibly begin to inflate, the alternative is that incomes must rise so significantly above previous levels that they no longer need to finance those lifestyles using debt. I don't know of a single economist who is projecting that kind of astronomic rise in income levels even 5 years out from today.

In addition to requiring an astronomical increase in income which absolutely no one is projected as either likely or realistically possible, consumers must also decide that they would be wise to resume their previous levels of consumption. It's not enough for incomes to rise, there must also be a fundamental re-alignment of consumption patterns for which there is absolutely zero evidence of occurring.

In fact, the longer this economic malaise continues, the more likely it is that consumption patterns will be permanently altered a la what happened to survivors of the Great Depression which created a generation of savers rather than consumers.

What you're talking about occurring is something which not one person I'm aware of even considers within the realm of possibility. So on what realistic basis are you forming your assumptions that consumption will return to previous levels?; 7/31/09, 1:56 PM
Rialby said...: How much money do you think those dealers (already hurting due to the recession) spent to get people into their stores to take advantage of what they thought was a fully backed government program? As someone else said, now they're SOL. How many of them were formerly independent voters who voted for BHO?; 7/31/09, 1:57 PM
Anonymous said...: A library in my area recently spent $83,000 to install solar panels on its roof. The library's representatives are crowing about how this expenditure -- almost all of it, of course, from state tax dollars -- will cut their $4,000 annual electric bill in half.

Wow, a 41.5 year payback period provided they spend $0 on maintenance, repairs or upgrades.

Maybe they should spend some money on calculators.; 7/31/09, 1:57 PM
Jim said...: mrs whatsit -

"There's little danger that THEY will lose their slightly used Skittles!"

For their outstanding levels of rainbow magical thinking, each of the librarians was awarded an extra ration of slightly-used Skittles.

I hope they will serve as an example to you all of what is possible if we are willing to work together to produce as many unicorn horns as possible.; 7/31/09, 2:00 PM
Rich B said...: Jim-

I agree with your point, but don't necessarily agree with Zilow's conclusion. According to the other surveys, the rate is much lower. Also, the percentage of mortgage holders with late payments is running around 12% from what I can tell. I suspect that many of those under water are just underwater and thus have incentives to keep paying (besides self respect and integrity).; 7/31/09, 2:01 PM
Rialby said...: "Wow, a 41.5 year payback period provided they spend $0 on maintenance, repairs or upgrades."

Some things also to consider:
* The life expectancy of a solar panel is 20-40 years depending on weather, quality and other factors
* The efficiency of solar panels declines over time so hopefully someone figured that into their calculations
* Panels have to be regularly cleaned with lots of water which, last time I checked, is a limited resource and can be costly.; 7/31/09, 2:12 PM
bearbee said...: Cash for Clunkers.....is this the TARP program?; 7/31/09, 2:12 PM
Jim said...: Rich B -

"I suspect that many of those under water are just underwater and thus have incentives to keep paying (besides self respect and integrity)."

Certainly there are incentives, but there are also disincentives. If even a fraction of those who are currently late on their mortgages or those who are underwater and simply walk away from a bad investment eventually default, then that represents a significant future drag on the economy for many years to come.

If even half of them did so, our economic system would likely collapse in on itself due to bank failures overwhelming the Fed's ability to print money fast enough - let alone the other economic ramifications.

But I'm not even saying half will. Even that would be an extreme. If even 10% did, which is likely a low-end estimate, you're talking about repeating the entire cycle from the peak of the market until today all over again.

Cut that fraction even smaller, and you're still talking about economic forces that will pummel an already weakened economy and set it back a year or more from our current position.

The risks out there are larger than most people realize, and we are still very much in danger of even greater economic difficulties. As it is, even if we can put a halt to the reckless spending of the Democratic Party, we have many years ahead to climb out from the damage that has already been done.

The first step is taking the shovel out of their hands, so they can stop digging us in deeper.; 7/31/09, 2:13 PM
Jim said...: Rialby -

You are not exhibiting state-approved levels of rainbow magical thinking. You're trying to undermine our unicorn horn production efforts, and for that you will be fined 1 month's slightly-used Skittles ration.; 7/31/09, 2:15 PM
BJM said...: Nissan is hitting the clunker rebate hard in the SF Bay Area TV market. I wonder how many rebates went to Japanese car dealers vs American?

Japanese and Korean small cars dominate in our area, most of the American iron you see are PT Cruisers, Lincoln Town cars, Caddies, pickups and SUVs and there's plenty of those, even in Berkeley.; 7/31/09, 2:17 PM
Anonymous said...: Jim,

I have filed an official complaint with the Unicorn Division regarding your use of the word "produce" in several recent blog comments.

Such a word implies work, a bourgeois concept I find quite offensive. Your eagerness for us to "produce" unicorn horns is the worst type of patriarchal hegemonic thinking I have ever encountered in the last 24 hours.

Slightly-used Skittles be damned, I want justice and I...shall....have....it!

Thanks,

Dogwood

P.S. Send me a case of new, unmarked, unscuffed Skittles and I'll forget the whole thing.

P.P.S. Please delete this comment as soon as you read it, I don't want my compatriots to know I am selling them out. Thanks.; 7/31/09, 2:27 PM
Anonymous said...: I wonder how many rebates went to Japanese car dealers vs American?

Will be interesting to find out. Hopefully the feds will release the data once the program is finished.; 7/31/09, 2:33 PM
BJM said...: Garage, maybe you missed this item on CNN earlier this month?

BAGHDAD, Iraq (CNN) -- Iraq awarded a lucrative oil contract to BP and China National Petroleum Corp., government spokesman Ali al-Dabbagh said Wednesday, while rejecting other companies' offers for other oil fields.

The joint BP-CNPC bid was for the al-Rumeila oil field, one of the largest in the world. The energy companies are expected to increase production at the oil field by 50 percent, to 285,000 barrels a day, for a service charge of $2 for each additional barrel produced, al-Dabbagh said in a statement.

The US will refine much of BP's production for our doemstic use, but the windfall profits will accrue in the UK, not US.; 7/31/09, 2:51 PM
Dave said...: "What you're talking about occurring is something which not one person I'm aware of even considers within the realm of possibility. So on what realistic basis are you forming your assumptions that consumption will return to previous levels?"

Do you think consumption is going to continue to fall each and every quarter for the next several years? How many years? How many quarters?

There are figures available on mortgage equity cashouts (I forget at the moment which economist produces these figures, but they're based on the Fed's Flow of Funds). What those figures show is that at even the peak, equity extraction as a % of GDP wasn't as great as many people assume. Consumption will grow. If I had to guess, it would be sooner rather than later.

It won't have to be financed by house prices, but by income.; 7/31/09, 2:59 PM
Jim said...: Dear Mr. Dogwood -

As the duly authorized Rainbow Magic and Unicorn Horn Czar I am exempt from all laws and regulations which apply to all you little people outside of the Obama administration. I believe you will find my immunity under the "Geithner Exception" section of the appropriate authorizing legislation which is approximately 2,500 pages in length and which no one has yet read although it has been passed by both houses of Congress and was signed into law by President Obama at 11:58PM on a Friday evening after all the news organizations had already turned in for the evening.

However, I will forward your complaint to one Mr. Eric Holder, where I assure you that it will receive at least as much attention as Black Panther voter intimidation and inappropriate firing/forced resignations of multiple Inspectors General.

I hope this answers your concerns, and understand that I am fully committed to conducting the most open and transparent Rainbow Magic and Unicorn Horn administration ever in the history of ever.

Sincerely,
Your Loyal Public Servant (and card-carrying SEIU member),
Jim

P.S. LOLOL on your comment; 7/31/09, 3:08 PM
Ralph L said...: but the windfall profits will accrue in the UK, not US.
What, no oil for blood?

If the Clunker program is really successful, the price of used cars will increase for the poor people who buy them. They get to take the bus.

The calculation of Social Security benefits is radically skewed toward lower income contributors. Not necessarily a bad thing, but it really is a welfare program disguised as retirement savings.; 7/31/09, 3:08 PM
Jim said...: dave -

"Do you think consumption is going to continue to fall each and every quarter for the next several years? "

I don't have to assume even a single quarter's further decline in consumption levels for my assertion to be true, although it is likely to continue to decline over the near future.

For your assertion that consumption will return to previous levels to be true however, consumption must not just resume but skyrocket - even as the equity position of most homeowners continues to decline as does personal income. I am simply asking on what basis you believe that be even possible let alone likely.; 7/31/09, 3:10 PM
Anonymous said...: (and card-carrying SEIU member)

Is it true SEIU members get extra Skittle rations?

Thinking about joining cuz this "speak truth to power" thing isn't working out.; 7/31/09, 3:22 PM
Jim said...: Dogwood -

"Is it true SEIU members get extra Skittle rations?"

Not only are all SEIU members entitled to extra rations as part of their collective bargaining agreement which was duly negotiated with other SEIU members in even higher positions of authority and is therefore not subject to any complaints of conflict of interest whatsoever, whenever someone is found in violation of any magical rainbow thinking regulations those fines are collected by the government and then re-distributed in the form of completely unused Skittles as a bonus to all dues-paying members..

'Speaking truth to power' would, for example, be an example of the type of flagrant violation of rainbow magical thinking regulations which - if discovered by any SEIU brownshirts...I mean...diligent public servants, of course, would result in the payment of such an unused Skittle bonus.

We look forward to your enrollment in our ranks and remember our motto:

One trillion here...one trillion there...pretty soon you're talking about you're talking about a whole lot of Skittles and somebody has to be in charge of confiscating them. Why not us?; 7/31/09, 3:41 PM
Jeremy said...: Dogwood said..."Jeremy, The problem with solar is the hideously expensive cost in building a system capable of generating a decent amount of electricity."

Then don't install solar panels on your home, and maybe you can paint the roof black.

That should help out.

Did you include rebates via the energy companies in your calculations?

I live in an area that solar is thriving and I've yet to hear a complaint from any homeowners or commercial buyers relating to not being able to "generate" enough electricity.; 7/31/09, 4:03 PM
Synova said...: That "black roof" thing was bothering me and then I remembered why.

It was because the whole thing wasn't about saving power and cooling your house, it was about reflecting more solar radiation back into space and cooling the planet.

I recall a couple of people on "winger" blogs explaining that this wasn't as silly as it sounded, quite... along with the proposal to color our roads lighter colors than tar black... but most very large roofs are already the color of pale pea gravel, aren't they?

If you have good insulation the color of your roof doesn't matter a whole lot to your direct heating or cooling bills. (If the snow doesn't melt off in the winter, you're probably good.); 7/31/09, 4:13 PM
Jeremy said...: Synova said..."It was because the whole thing wasn't about saving power and cooling your house, it was about reflecting more solar radiation back into space and cooling the planet."

No, you idiot...it is most certainly NOT just related to what you post. It's also related to saving energy and also protecting roofs from deterioration.

You actually think people throughout Florida, Arizona, New Mexico, Nevada, California and other states have been coating their roofs and using light colored elastomeric and TPO products for decades...and don't save massive amounts of money on energy?

A "Cool Roof" can lower utility bills by up to 50% in some cases and reduce maintenance considerably.

Why not read up on the subject before posting such ridiculous drivel?; 7/31/09, 4:22 PM
Jeremy said...: Synova - Paint your roof black and see how it effects your utility bills.

For that matter, wear all black to the beach or take a stroll into the desert and see if it feels any hotter that if you wear white.

Duh.; 7/31/09, 4:23 PM
Synova said...: Wow, Jeremy.

The reason light roofs were in the *news*, is that Chu (I believe) was advocating light roofs and roads, in order to cool the outside as much or more as cooling the inside.

People were making fun of the notion that we could cool the earth by increasing the albedo of the surface of the earth enough to make a difference by making all of our roofs white.

I even said that in *that* conversation people much smarter than you but inclined to an opposite political view (but I repeat myself) had pointed out that it might not be as silly as it sounded.

You are so entirely invested in feeling proud of yourself for tossing your little turds around that I expect you to continue to claim that people, somewhere, have black roofs.

Have you ever in your life seen a *black* roof?; 7/31/09, 4:36 PM
Jeremy said...: Exxon shelled out--$14.9 million over the last six months.

As Bloomberg points out, that's a solid 23% more than the $12.1 million clean energy companies spent all told.

Altogether, oil and gas companies spent $82.2 million on Washington lobbyists, dwarfing the wind, solar, and biofuel companies that nonetheless spent more than ever before. From Bloomberg:; 7/31/09, 4:44 PM
Anonymous said...: Did you include rebates via the energy companies in your calculations?

If you had read the comment then you would know that those calculations don't include massive government subsidies.

The purpose of that post was to demonstrate that solar is only feasible with massive government subsidies, otherwise, it is not economically viable given current technology.

And to generate enough electricity to make a difference, the investment has to be huge, i.e. $32,000 to generate 50% of a typical household's electrical needs. And that cost varies state to state.

As for white roofs vs. black roofs, it depends on where you live. White roofs in the south and southwest make a lot of sense. However, the benefits of white roofs are not as apparent in the snowy north because the energy savings gained in summer can be offset by the additional heating expenses in winter.

Different climates require different building techniques.; 7/31/09, 4:45 PM