Why stimulate people to spend?
By Daniel at 4 August, 2009, 11:18 am
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First, getting people to spend money they don’t have is a bad thing no matter what [for the reason above]. People are already living in debt and government still stimulate people to spend? ‘cash for clunkers’
Second, unemployment is still expected to rise through next year…how many of those that purchased a new vehicle will lose their job over the next year? Of those, how many will not only lose their new vehicle because they can no longer make the car payment but will also lose their home because they can’t make their mortgage payment? At this point, that ‘old clunker’, which was most likely paid off and could get them from point A to point B, will be sorely missed.
Third, who’s paying for this ridiculous ‘cash for clunker’ rebate? You and I and every tax-paying American! So, the money continues to be transferred from taxpayer to auto industry! Just because they don’t call it a ‘bailout’ doesn’t mean it isn’t.
Fourth, this ‘rebate program’ doesn’t save anything. I trade in my ‘clunker’ for a new car (top-of-the-line Ford Focus = $18,500 - $4,500 + taxes/fees = $15,000 out-the-door with 0-down and 5-yr, 100% financing) and what do I get:
* I go from debt-free to $15K debt-ridden or from being ‘in debt’ to ‘$15K more in debt’,
* my auto insurance costs increases 50-100%,
* my costs to repair and maintain increases 50-100%,
* I save $400-$1000 a year on gas with the new vehicle (or so they say) but that may not come close to covering what I pay in interest: $15K @ 5 yrs @ 8% = $3248.75 in interest vs $2000-5000 in gas savings,
* with unemployment expected to continue through next year, if I lose my job I lose my new vehicle vs keeping my paid-off ‘clunker’,
* I could save the $304.15/month car payment in case I lose my job or I could use it to pay down my [credit card] debt,
* the $4500 tax rebate/credit the government is giving me to buy a new car is really coming out of my own pocket and is further subsidizing the auto industry bailout,
* in the long run, getting an additional 4-10 mpg doesn’t really get us off of dependency on oil, it simply prolongs it. So long as we have no viable alternative to gas, we will depend on oil until there is no more,
* in the long run, driving more fuel-efficient vehicles (although beneficial) really won’t help the environment because those of us driving these more efficient vehicles will tend to drive more,
Finally, why do we need to ’stimulate’ people to spend, especially on things they really don’t need like that 3rd or 4th LCD TV, that 3rd [new] vehicle, that 8th or 9th pair of shoes, that 4000 sq. ft. house for a family of 4, etc., etc., etc. Instead of stimulating people to spend, how about stimulating people to [continue to] save, pay off their debt, live within their means, and teach their children money management.
Dlee.
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