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Junkyards Dogged
Tim Wheeler has a good story in the Baltimore Sun about the ways Cash for Clunkers is affecting the salvage business. Here's an excerpt:
Bill Miller, owner of Redmonds Auto Parts in Pasadena, says he's buying clunkers, though it leaves him with a bad taste.
Besides having to forgo reselling the vehicles or their engines, Miller says he is unable to guarantee to buyers that the automatic transmissions from clunkers work. His people can't start the engines as they normally do to test the transmissions, he says, and the frozen motor even complicates removing the equipment.
Plus, Miller complains, the government's requirement that all "clunkers" be crushed and shredded within six months means he can't keep the hulks around as long as he sometimes does in case someone wants a hard-to-find part.
"Don't take it out on our industry," he says. "We're bottom feeders."
Even so, though the clunkers won't be worth as much to him, he figures he'll still make $200 or $300 per vehicle if his four area salvage yards get the 500 or so trade-ins that he expects to acquire from dealers....
It's really the principle of the federal program that gripes Miller.
"I think it's disgusting we're dumping all this money into a dying industry," he says. The "cash for clunkers" program boosts three industries that got into trouble of their own making, he argued - car makers, banks and insurance companies.
The article also gives a government spokesman a chance to try out the phrase "It's a free market."
|8.6.09 @ 11:40AM|#
"I think it's disgusting we're dumping all this money into a
dying industry," he says. The "cash for clunkers" program boosts
three industries that got into trouble of their own making, he
argued - car makers, banks and insurance companies."{
This post makes a nice contrast to the Gail Collins post below it.
Some guy who owns a junkyard in Maryland has more common sense than
the editorial page editor of the New York Times. Our country is
really broken.
Car makers, banks & insurance |8.6.09 @ 11:42AM|#
"Don't take it out on our industry. We're bottom feeders."
Spoonman|8.6.09 @ 11:44AM|#
John, is that really a surprise? He has to make money by serving customers every day.
kilroy|8.6.09 @ 11:46AM|#
The law says dealers must pay customers the estimated salvage value of their trade-ins, and dealers get to keep $50 for processing the car. The typical vehicle is worth only about $200 when recycled for its steel, junkyard operators say. So if a vehicle sells for more than that at auction, who's pocketing the difference, they ask.
"It's a free market," responds Rae Tyson, spokesman for the National Highway Traffic Safety Administration, which runs "cash for clunkers." "The dealer in the course of making a sale is negotiating a salvage value of the [customer's old] car. It's up to the dealer to recoup as much of that as possible."
WTF?
|8.6.09 @ 11:51AM|#
The saying, "All of us together are stupider than any of us individually" was never so true as applied to the Congress of the United States.
mark|8.6.09 @ 11:52AM|#
I freaking wish someone would filibuster this thing. This program needs to die.
Jesse Walker|8.6.09 @ 11:52AM|#
WTF?
I said he was trying out the phrase. I didn't say he knew what it
meant.
kilroy|8.6.09 @ 11:53AM|#
OT:
I'm seeing this over on Google News:
Jobless claims drop 38000 to 550000
How long can you be on unemployment before they don't cut you a
check any more? At one point I seem to recall it was 26-weeks but I
also think I remember some social program that doubled that.
I'd imagine a good number of the claims that aren't happening are
the result of that check opportunity expiring. Do they adjust for
those numbers or is this just politics?
Tomcat1066|8.6.09 @ 11:55AM|#
What's sad is that my 8 year old son can use the phrase
correctly. I guess that makes him over qualified for Obama's
administration.
At least this Miller guy seems to have a real grasp on what's what
with this stupid program. I argue that while they claim it's roots
are environmental, it's really just a smokescreen to pump yet
another stimulus up our collective asses.
kilroy|8.6.09 @ 11:56AM|#
Yeah, I got your sarcasm Jesse. I just couldn't resist the juxtaposition. After reading through the billion post healthcare thread yesterday it's obvious that some people who read these blogs don't get it.
|8.6.09 @ 11:59AM|#
We're going to become wealthier by destroying operating
machines. Brilliant! This program just sparked a Eureka!
moment.
The guys who make production machinery are also hurting this
recession. Lets pay factories to destroy theirs. If we destroy all
of the obsolete and energy inefficient production machinery, we'll
all become fucking millionaires by building everything from the
ground up. Right?
|8.6.09 @ 11:59AM|#
kilroy-
I think those are "initial" claims in that report; people who have
recently lost their jobs, and are filing for unemployment.
I am ambivalent (at best) about perpetually extending unemployment
benefits, but at least it puts money in the hands of individuals,
who may then spend it as they see fit.
Elemenope|8.6.09 @ 12:00PM|#
John, is that really a surprise? He has to make money by
serving customers every day.
Last time I checked, the NYT was printed and sold every day.
Spoonman|8.6.09 @ 12:03PM|#
Last time I checked, the NYT was printed and sold every day.
Yes, but it's orbiting bankruptcy.
|8.6.09 @ 12:15PM|#
Hey, computer sales are way down, too. Maybe we should auction some more Treasuries, in order to pay everybody a thousand bucks to take a 10 pound sledge to their Dells and Apples! We'll all be rich!!!!!
robc|8.6.09 @ 12:20PM|#
Cash for Clunkers is actually hurting some people in financial
crisis who are trying to improve their situation.
The government subsidy obviously affects the market for clunkers.
Clunkers are what Dave Ramsey, for example, recommends people to
drive while getting out of debt. He often advises people to sell
their overpriced/deeply in debt car and drive a $1000 clunker for a
while.
Its harder to find a $1k clunker if the government is buying them
up and crushing them.
Warty|8.6.09 @ 12:21PM|#
Now to Matt's subject at hand: cash for clunkers. It has flaws. But my support for it rested on the one issue Matt doesn't mention: short-term stimulus. I can see a role for government in a steep and spiraling depression to spend money to prevent the thing getting worse. And the more immediate and targeted the program the better. The C4C program has indeed provided a boost to the auto industry, and has led to modest gains in fuel efficiency. These things do benefit everyone. Not much; but a little. And when government does something right, in an atypical circumstance, I see no ideological or visceral reason to oppose it.
Seriously, fuck Andrew Sullivan.
robc|8.6.09 @ 12:22PM|#
Fuck short-term stimulus.
It does no good. We have medium to long term financial problems,
the short term doesnt matter at all.
Warty|8.6.09 @ 12:26PM|#
Here you go, robc. It's too dumb to deserve a hotlink.
http://andrewsullivan.theatlantic.com/the_daily_dish/2009/08/two-augusts-in-elkhart.html#more
|8.6.09 @ 12:27PM|#
Over the weekend, I was reading a NYT piece about this boondoggle; there was a quote from a dealer who said, basically, "A lot of the cars we're getting shouldn't be put in this program, and destroyed. But we take them."
|8.6.09 @ 12:31PM|#
Here's another factor to consider: people who are trading in their "clunkers" often own them outright or have a much reduced loan against them. Most people buying new cars with the C4C money will be taking out a loan for the new car. So this program is also increasing debt for the people using it, even if they may be able to handle that debt. If the economy keeps going in the shitter, maybe a bunch of these people won't be able to pay their car loans and we can have a car loan crisis just like the mortgage crisis! Yay!
|8.6.09 @ 12:36PM|#
Does the program even look at Blue Book value or how many
repairs over the previous year or two were required to keep the
clunker running? I mean, don't get me wrong, I oppose the whole
thing in principle, but it would have at least made a semblence of
sense if it only accepted clunkers that cost more to maintain in a
year or two than the total value of the car in it's current
state.
Since Schumer had his slimey hand in this, I'm sure zero sense was
involved in any draft of the bill. If there was any, surely it was
stripped PDQ.
|8.6.09 @ 12:38PM|#
These people have total distain for the market and seem to want every one to live as they think is best.Once the get more control of health care they will try to control your diet too.I'm glad I'll be dead in a year or so.
|8.6.09 @ 12:38PM|#
A few people are also beginning to notice the possibility that these auto sales (and the loans to pay for them) will displace other retail spending, and further depress consumption.
Sixtus|8.6.09 @ 12:41PM|#
This program helps the rich and hurts the poor. The poor person who wanted to buy a cheap, used car is now competing with the government for that car. If you want to use the term, 'free market' here, what is really happening is that the government is artificially increasing demand thereby reducing the supply, causing the price of the 'cheap' used car to go up - which hurts the poor. Meanwhile the government is encouraging bad-behavior in the sense that the average person cannot afford to buy a new car, so instead they finance it... Put something on credit that you want but cannot afford today. Isnt that part of what got us in to this mess to begin with? (I'm thinking Fannie/Freddie loosening credit to make home loans easier to get...rinse, repeat, new industry)
The Krugman Follies|8.6.09 @ 12:50PM|#
Most people buying new cars with the C4C money will be
taking out a loan for the new car. So this program is also
increasing debt for the people using it, even if they may be able
to handle that debt.
But that is a GOOD thing. What is killing our economy is all of the
people refusing to stimulate aggregate demand and save instead. The
more we skim off of the savings rate, the better off we will
be.
Invisible Finger|8.6.09 @ 12:51PM|#
So this program is also increasing debt for the people using
it, even if they may be able to handle that debt.
That's the whole point of the stimulus. It isn't about helping the
individual get his economic house in order, it's about helping
insolvent companies by taking money from individuals.
This from the same outfit that wants you to believe its health care
ideas are all about helping the individual. Maybe they are...for
now.
Abdul|8.6.09 @ 12:51PM|#
It's funny that the junkyard owner has a better grasp on the economic implications of Obama's polisy then Harvard Law guy.
|8.6.09 @ 12:57PM|#
Sullivan is the epitome of the well educated moron. Even if you think Keynes is The Messiah, you have to be an imbecile of absolutely titanic proportions to think that borrowing money to pay people to wreck well functioning automobiles is an effective way of boosting economic activity. Has the vast majority of the population completely lost their minds? Don't answer that!
|8.6.09 @ 1:00PM|#
Will Allen,
The whole program is literally the broken windows paradox on
wheels. No, the whole country hasn't lost their minds, just the
entire political and elite media class. The fact that someone who
is either too stupid or too committed to Obama to understand how
bad of an idea this is is allowed to have a platform on an
alledgedly serious magazine like the Atlantic is just pitiful.
|8.6.09 @ 1:09PM|#
Just for that you're not in the gang anymore.
But you were never in the gang. The gang is me, Mac and
Charlie.
|8.6.09 @ 1:13PM|#
The guys who make production machinery are also hurting this
recession. Lets pay factories to destroy theirs.
Think of the education jobs we'd create if we put everyone with
college degrees in death camps.
Sixtus|8.6.09 @ 1:20PM|#
I am curious to see too the so-called environmental impact when this is all done. Factor in energy used to create the new cars, the energy used to destroy the old cars, the average use of the new car against the average use of the old one (anecdotally I have noticed people tend to drive thier new cars more frequently than they did thier old offsetting any gas savings from efficiency - at least over the initial short term). Then factor in the amount of 'carbon offset' that could have been purchased by the government and the consumer for spending more than he would have otherwise from the snake oil salesman Al Gore. Factor all of that against the average milage saved and I wonder what the +/- so-called 'Carbon-footprint' actually is. I suspect it's quite negative.
|8.6.09 @ 1:21PM|#
But you were never in the gang. The gang is me, Mac and
Charlie.
You're the useless chick?
JD|8.6.09 @ 1:51PM|#
Germany, which has a similar program, is reporting that as many
as 10% of cars traded in under the program may have been "diverted"
instead of being destroyed:
http://news.bbc.co.uk/2/hi/europe/8188267.stm
Because, gee, nobody could have foreseen THAT possibility.
|8.6.09 @ 1:53PM|#
Warty, you joined a gang made up of guys from
Tron?
Naga, the original formulation was I'm the looks, NutraSweet is the
brains,, Dagny's the useless chick, and you're the wildcard. I
don't know if we ever decided who the muscle is.
Warty|8.6.09 @ 2:00PM|#
I'm the muscle on my rec-league soccer team. I pointlessly hurt people all over the place. You see all this man? You coulda had it, but now you can't, bitch.
Chicken Bones of Justice|8.6.09 @ 5:08PM|#
Given the hit this will have on the poor,
And given that the poor are disproportionately non-white,
I gotta ask - why does Obama hate people of color?
triangleman|8.6.09 @ 7:21PM|#
why does Obama hate people of color?
Are you kidding me? He's from Chicago.
Ebeneezer Scrooge|8.7.09 @ 4:47AM|#
John,
No, the whole country hasn't lost their minds, just the entire
political and elite media class.
In fact the politicians haven't lost their minds. They're just
doing what democracy gives them incentive to do.
If you're a politician, the best you can hope for is lots of hot
"issues", with lots of lobbies standing on both sides of the fence.
Those lobbies will both give you things in the hope of getting you
to vote in their favor.
So now you can sell your favor to the highest bidder.
For politicians, the highest bidders are always-always special
interest groups. The more of them you can get to bickering with
each other, the easier your life becomes.
Long live democracy. Or at least long enough for it to drive the
nation bankrupt.
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