Well DUH!!!!!!!!!!!!!!!!!!!!!
Everyone with a brain knew what would happen. Unfortunately, those controlling Washington, D.C. these days are of questionable intelligence.
What am I talking about? Obama’s ‘brilliant’ Cash-for-Clunkers program.
Now, let us not even debate whether the program was stimulative; I don’t think it was, the White House disagrees, and we both have evidence to prove otherwise. Let us leave that debate alone.
But one thing is for certain: the effect on the used car market today. According to Edmunds.com, used car prices have skyrocketed over the past year, the most since the value of the market was being monitored. On average, a used car costs 10.3% (or about $1,800) more today than a year ago.
Why?
Well, couple points from Edmunds. “So many economic factors affect automobile sales and prices. It’s believed that the program delayed purchases prior to the program and also pulled sales forward while in place,” said Joe Spina, a senior analyst for Edmunds. “The program also eliminated inventory of older vehicles that were traded and then scrapped.”
Well, duh. The answer is simple: supply and demand. The Federal government, through this program, did increase short term sales of new cars. Whether anyone bought cars that otherwise would not have is questionable, but at least is debatable. What isn’t debatable is that all of those cars scrapped…are now off the market. And thus, the market of used cars has obviously shrunk…thus decreasing supply and increasing demand.
So why should we care? Well, if you are rich or well off, you probably don’t care, in your shiny new car. But there is a large swath of the population that never buys a new car; it is estimated that almost half of the U.S. adult population only buys used cars. And stating the obvious, most of these people are in the lower middle to poor classes.
So, even assuming that Obama’s program helped stimulate some car sales, it as certainly made it harder for the poor and lower middle class in this country to afford decent transportation.
Now, if our leaders knew simple economics, they could have easily predicted this damaging result. Oh well.