On 3 Aug 2009, at 12:05, Ryan Simpkins wrote:
A bunch of the SAs at work started doing some back of the napkin calculations around the "Cash for Clunkers" program. As SAs we often deal with very similar calculations. For example, we often ask: "How much money will we save over x time if we get rid of old busted technology in favor of the new hotness?" Improvements to technology typically come with a cost and benefit. What arethe costs and benefits here?
I think that this program is a load of crap. It's amazing how short- sighted it is. Sure, it generates sales today, but what about tomorrow? Where is the money going to come from to pay back all these dealers (our country is already trillions in debt)? Once the excitement is over, how are the dealers going to make it through the next several months when people are no longer buying cars? One of the reasons that the auto industry is hurting so bad right now is because they started offering zero interest loans which caused people to rush to buy cars, leaving a void in the present. Cash for clunkers is going to do the same thing again. If we increase the over all MPG, less taxes will be coming in from gasoline sales, leaving even less money to pay of this subsidized joke. And, if we're buying less gas, the price of gas is going to go up again, hurting the economy even more. This thing doesn't make one bit of sense, beginning to end.
If the point of this program is to stimulate the economy, then why the ludicrous requirement that the cars have to be totaled? Wouldn't we have more jobs and more sales if the dealers could turn around and resell the cars? If the cars being turned in really were junk, then there might be some merit, but it is a joke for the government to be overpaying for cars (by thousands) and then junking them.
If the point is to help the environment, it doesn't make sense either. New cars to replace the "junkers" are only required to get 18 MPG or better. How is improving gas mileage by a few miles going to make any difference? Shouldn't the requirement be that the new car get 40 MPG or better? Most cars that meet the requirements are probably paid off. Why are we encouraging people that have hopefully paid-off, perfectly good cars to junk them and then go into debt for a new one? Shouldn't we be encouraging people to be saving some money? I don't see how saving a couple miles per gallon outweighs junking millions of vehicles and using resources to build new cars to replace ones that still have life left in them.
There's a company in Provo that can rig up a Hummer to get 100 MPG. Why isn't the government giving money to them instead of GM who hasn't improved the MPG of their vehicles more than 5 - 10 in the past thirty years?
smime.p7s
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