Wednesday, August 19, 2009

Cash For Clunkers Crashing on Its On Success

Cash For Clunkers is great for those who take advantage of it. Who would not want a $3500-$4500 discount on a new car? I know a number of people who have taken advantage of it. In our discussion about it, they feel a little guilty of taking advantage of it because they know that it is a false subsidy.

All of us in the room that have not taken advantage of the cash for clunkers program are helping those that have taken advantage of it.

The money for it does not exist. It was never budgeted. The only way the government can pay for it is to print more money.

But like most things the government does, they are incapable of managing a fast paced economic program.

The paperwork is immense for the buyer and the dealer. The dealer is getting the shaft right now because it is not getting reimbursed in a reasonable time from the federal government.

Dealers are beginning to pull out of the program because they are not getting their money back. The government seems to have no understanding of working capital management; i.e., cash flow. Dealers can only float this money for so long before they need to come up with the cash to cover the expense.

And you want to be my health care insurer and provider...

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