Comments on: CRASH for Clunkers http://www.fundmasteryblog.com/2009/10/01/crash-for-clunkers/ Mutual Funds, Investing, Retirement, Economy, Personal Finance Mon, 15 Mar 2010 18:39:02 +0000 http://wordpress.org/?v=2.3.1 By: Mark A. Sadowski http://www.fundmasteryblog.com/2009/10/01/crash-for-clunkers/#comment-3598 Mark A. Sadowski Sat, 03 Oct 2009 23:57:51 +0000 http://www.fundmasteryblog.com/2009/10/01/crash-for-clunkers/#comment-3598 Kurt, As you know I had a strong negative opinion of C4C. I think this experience poses a lesson for any future discretionary fiscal stimlulus (hopefully it will not be needed in my lifetime). Stimulus should avoid excessive reliance on temporary investment or consumption incentives. This includes the first time homebuyers credit (we will soon see the fallout from that), and the various other business and individual tax incentives that were included in ARRA. They merely shift such consumption or investment forward in time. In the short run the best stimuli seem to be state transfers (despite the moral hazard problem), extended unemployment benefits, food stamps and payroll/unemployment benefits tax cuts. And if the zero interest rate policy lasts a sufficiently long period (as it appears it will be in our case) infrastructure is always the way to go as it does not substitute for private consumption or investment. Kurt,
As you know I had a strong negative opinion of C4C. I think this experience poses a lesson for any future discretionary fiscal stimlulus (hopefully it will not be needed in my lifetime). Stimulus should avoid excessive reliance on temporary investment or consumption incentives. This includes the first time homebuyers credit (we will soon see the fallout from that), and the various other business and individual tax incentives that were included in ARRA. They merely shift such consumption or investment forward in time.

In the short run the best stimuli seem to be state transfers (despite the moral hazard problem), extended unemployment benefits, food stamps and payroll/unemployment benefits tax cuts. And if the zero interest rate policy lasts a sufficiently long period (as it appears it will be in our case) infrastructure is always the way to go as it does not substitute for private consumption or investment.

]]> By: Kurt Brouwer http://www.fundmasteryblog.com/2009/10/01/crash-for-clunkers/#comment-3587 Kurt Brouwer Fri, 02 Oct 2009 20:36:29 +0000 http://www.fundmasteryblog.com/2009/10/01/crash-for-clunkers/#comment-3587 Karen -- Thanks for your kind words. If you have any specifics on how C4C has affected your group, I would be happy to post them as an update to this post or another one. Karen — Thanks for your kind words. If you have any specifics on how C4C has affected your group, I would be happy to post them as an update to this post or another one.

]]> By: Cars4Charities http://www.fundmasteryblog.com/2009/10/01/crash-for-clunkers/#comment-3586 Cars4Charities Fri, 02 Oct 2009 15:02:00 +0000 http://www.fundmasteryblog.com/2009/10/01/crash-for-clunkers/#comment-3586 Very good article. The sad part of cash for clunkers is that many of its negatives would have been avoided if the politician had listened to the car donation charities. We asked that the c4c cars go to us instead of being destroyed. Cars in poor shape would be scrapped as is our custom anyway. However, those car in good shape (and there were many) would be repaired if needed and either sold or given to the needy. This would have prevent the rise in used car prices we are currently experiencing. In addition, car donation charities, auto repair shops and needy families would have benefited by cash for clunkers instead of taking a huge hit! Very good article. The sad part of cash for clunkers is that many of its negatives would have been avoided if the politician had listened to the car donation charities. We asked that the c4c cars go to us instead of being destroyed. Cars in poor shape would be scrapped as is our custom anyway. However, those car in good shape (and there were many) would be repaired if needed and either sold or given to the needy. This would have prevent the rise in used car prices we are currently experiencing. In addition, car donation charities, auto repair shops and needy families would have benefited by cash for clunkers instead of taking a huge hit!

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