well, it is slightly verifiable. did prices go up and did sales slump after the program was over?

9/19/2010 9:36:13 PM

We can skip both of those and go right to the source

http://apps.itd.idaho.gov/apps/MediaManagerViewer/NewsClipping/Story.aspx?ID=43711&Type=NewsClipping

Quote :

" DETROIT - General Motors Co. is rehiring 2,400 workers at three plants that are boosting production and absorbing work lost in an unprecedented round of closings announced before the automaker's bankruptcy filing. ... Last month, GM announced it was adding 60,000 cars and trucks to its third- and fourth-quarter production schedule and reinstated 1,350 laid-off workers because of higher sales from the federal "cash for clunkers" program. "This is another step to get more cars and trucks to market to enable us to maximize utilization and meet customer needs as the market continues to recover," said Tim Lee, GM's vice president of manufacturing and labor relations. GM will rehire 800 workers for a third shift at the Delta Township plant near Lansing. The plant, which produces the Buick Enclave, GMC Acadia and Saturn Outlook crossover vehicles, will absorb production of the Chevrolet Traverse crossover from a plant in Spring Hill, Tenn. "

9/19/2010 9:57:25 PM

that tells us nothing

9/19/2010 10:13:38 PM

Quote :

"Yes, the economists say, auto jobs did improve during that time, but it's unclear whether that was from the car industry bailout or from Cash for Clunkers, according to Time magazine."

http://curiouscapitalist.blogs.time.com/2010/09/14/was-cash-for-clunkers-a-clunker/

9/19/2010 10:47:48 PM

Quote :

"This is one hell of an assumption is it not?"

Then what is your explanation as to how the government dumps a vast sum of money into new car sales, and yet statistics show it had very little overall effect on sales?

9/19/2010 10:58:14 PM

I haven't taken the time to develop my own explanation. But, it appears you haven't either.

9/20/2010 6:51:49 AM

No, I said what I think happened. Given the statistics that the effect on total car sales was negligible, what else could have happened but what I said happened? They made more cars, but they were stolen by space aliens?

9/20/2010 9:39:33 AM

I heard some economist guy say the Cash for Clunkers program would have only made sense if it had run for 2-3 years. #unsourcedsoapboxposts

9/20/2010 9:41:55 AM

I would have bought a car during cash for clunkers but I was 1 mpg off the maximum. totally gay. so im just going to drive it until it becomes more expensive to repair than buy a new one. At which point I'll probably buy another used car. But theres no fuckin way i'd buy a GM.

So yes, cash for clunkers may have inflated new car sales for a small period of time, but this was subtracted from future new and used car sales. So i guess if it did anything of benefit to automakers it replaced some used car sales with new car sales.

The entire industry is bullshit though. Vertical integration means when part of the stack fails the whole thing falls. No sympathy here.

9/20/2010 9:48:45 AM

I did C4C and can honestly say it prompted me to buy a car I wouldn't have bought otherwise.

$11,600 Honda Civic EX ftw! I'm a little bit surprised I haven't sold it for a profit and bought something a little more sporting, but I'm actually enjoying the car quite a bit.

9/20/2010 3:36:46 PM

This idea was prejudice from the beginning against people like my parents who actually bought decent cars on gas to begin with.

9/20/2010 6:03:10 PM

Quote :

"that tells us nothing"

Time for someone to stop commenting on things he knows nothing of.

Quote :

"They made more cars, but they were stolen by space aliens?"

You didn't make any mention of inventory levels before or after the program. It's just as likely they mis-forecasted demand, ramped inventory (evidence by the rehiring and restarting of shifts), and now have a backlog of vehicles waiting to be marked down. There are various other scenarios that could be in play (such as increasing sales in China) that you simply didn't consider. Why?

I continue to be entertained at your ability to apply a very solid understanding of economics in the most haphazard and simplistic way possible.

9/20/2010 9:09:55 PM

Quote :

"Time for someone to stop commenting on things he knows nothing of."

yep, you really should shut up.

9/20/2010 9:50:16 PM

So, let me clarify. The evidence that we all seem to agree on is that cfc had no medium term impact on car sales. I offered a theory as to how this happened when the government gave away so much money. You don't like my theory because I failed to mention China, but at the same time will offer no theory of your own?

Sounds great. Doesn't change the evidence. cfc was stupid and should not be repeated.

9/20/2010 11:51:38 PM

Quote :

"cfc was stupid and should not be repeated."

I don't disagree. But you're even more obtuse than I thought if you can't see the information I've provided is a more plausible explanation than the tripe you offered up.

9/21/2010 6:55:52 AM

You offered no explanation beyond "I haven't taken the time to develop my own explanation"

9/21/2010 8:46:34 AM

Are you trolling here or what? At the risk of a gross waste of time, we'll go back to the beginning.

You: I suspect the trick was that manufacturers did not expand production in response.

Completely baseless with no supporting evidence.

You cont: As such, all the stimulus buying did was eat into inventories and bid up prices.
As such hell. A conclusion based on a pulled out of the hat premise. Certainly, this is valid!

You: driving customers away once the stimulus was over
You later: Given the statistics that the effect on total car sales was negligible

Negligible? If customers were being driven away due to higher prices then the effect would be NEGATIVE. No, the credit probably pulled in folks that wouldn't have otherwise bought (just maybe not yet) in addition to those that were buying anyway. The demand pulled forward but the overall intermediate term trend remained. This is if we only include the US market and this is before we analyze what inventory levels and prices were before and after the program. Demand isn't the only factor in pricing, yet it seems to be the only thing you focused on.


Me: [link showing car companies hired in response to C4C]

What do you think happened? Was it a grand conspiracy by the central planner to funnel taxpayer dollars through to union employees without them actually doing any work? Did the automakers pay part of the proceeds from the giveaway to wages and sat on the rest, or perhaps bought treasuries, MBS? Of course not, they did what everyone else has been doing in the past year (sans banks) and believed in the recovery and began an inventory rebuild. The ISM bears this out. Car sales in China continue to grow.

I offered this explanation already, you apparently willfully ignored it or are simply trolling with the best of them.

[Edited on September 21, 2010 at 10:02 AM. Reason : p]

9/21/2010 9:42:18 AM

Hi, Chance.

9/21/2010 9:59:07 AM

^ LOL!

9/21/2010 10:03:31 AM

Remember what we are talking about. We are trying to explain this:


Economics dictates that when you subsidize something people buy more of it. Even if you only subsidize it for a little while. But here is an odd case where the laws of economics did not apply. Nearly every car sold under the subsidy was off-set by a non-sale later on. We have anecdotal evidence that many people that would not have bought a car, did so thanks to the subsidy. As such, for every person that did, there must have been someone that was going to buy a car, but because of the subsidy chose not to.

I gave a theory. Dealers raised prices with the promise of subsidized customers eager to buy, driving those that were ineligible for the subsidy away in equal numbers to those buying only because they were eligible. I still have yet to hear a theory from you. Your sole point seems to be that GM increased production. No explanation as to why GM increased production of cars but did not manage to increase their sales of cars.

9/21/2010 12:51:44 PM

Quote :

"We have anecdotal evidence that many people that would not have bought a car, did so thanks to the subsidy."

Many? Do we?

Quote :

"As such, for every person that did, there must have been someone that was going to buy a car, but because of the subsidy chose not to."

The chart you just posted doesn't bear this out. Reports don't bear this out. Studies generally say people who were going to buy a car eventually did so earlier when the free money was handed out. Demand was pulled forward, inventory was cleared, and in the lull after it rebuilt. We don't know if dealers raised prices in the short term the perfect amount such that they could lower them after the program in such a way that the demand during the program and in the lull after the program was perfectly offset. That's quite the feat for automakers who we can agree should have been extinguished from business.

Regardless, the original contention point was this

Quote :

"I suspect the trick was that manufacturers did not expand production in response."

And we know that automakers hired back laid off and furloughed workers. We can assume production was stepped up in response.

Quote :

"No explanation as to why GM increased production of cars but did not manage to increase their sales of cars."

So maybe they didn't "expand", whatever your definition means of it means. Cars can sit at plants and on lots (and in shipping and receiving channels) for a long time and in various numbers.

The bottom line is, you have nothing more than a half baked theory they increased prices. Thats it.

9/21/2010 5:40:37 PM

Quote :

"And we know that automakers hired back laid off and furloughed workers. "

yes, but to tie that to C4C is also a major assumption. Remember, GM emerged from bankruptcy in July. That they then rehired workers in September should not be a huge shock.

9/21/2010 6:57:52 PM

Quote :

"Last month, GM announced it was adding 60,000 cars and trucks to its third- and fourth-quarter production schedule and reinstated 1,350 laid-off workers because of higher sales from the federal "cash for clunkers" program."

Guess they lied




[Edited on September 21, 2010 at 7:22 PM. Reason : a]

9/21/2010 7:17:29 PM

Quote :

"The bottom line is, you have nothing more than a half baked theory they increased prices."

Hence the "I suspect" I started the sentence with. For God's sake, you sure made a lot out of pointing out my wild speculation was a wild speculation, especially when I myself called it such at the start of the same damn sentence.

And color me shocked that a government run corporation was eager to make government policy seem wise.

9/21/2010 8:01:38 PM

No, it seems very often you post your theory based on basic economics and then become pigheaded when you are challenged. Your last post comes across fairly blasé yet this earlier in the page you were very certain of your theory

Quote :

"Given the statistics that the effect on total car sales was negligible, what else could have happened but what I said happened? "

"Derp de derp, I know from my reading of econ that subsidies make people by more of stuff...so umm, I bet GM didn't increase production (why do I bet that, fuck if I know?...hey, im ignoring that link you just posted saying GM rehired and increased production because of C4C) and since that means demand is now greater than supply...well hell, prices went up!!! herple derp".

9/21/2010 9:16:40 PM