September 5, 2010


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Inside the numbers of the CARS Program

August 04 2009 by David R. McGraw II

Let's try to understand these numbers, before we give another 2 billion to the CARS program.  The CARS Program is already out of their 1 billion dollars authorized through congress becuase so many people have traded in their cars to recieve their 4500.00 voucher towards a new car.

This assumes the government pays out 4500.00 for each trade in.  1 billion divided by 4500.00 = 223,000 ( rounded ) units traded in.

The most popular car purchase after through this program is the Ford Focus, the brand does not matter, but we will use the low advertised price of a Ford Focus as our base number.  2009 Ford Focus: 14k - 16k ( 2009 Ford Focus Reviews, Pictures and Prices - U.S. News Rankings and Reviews )

14,000 car price - 4500 voucher = 9,500.00 in new consumer debt financed.  Let's take that new consumer debt number, and multiple it by the number of units traded in.  223,000 = 2,118,500,000 in additional Consumer DEBT!

Now congress wants another 2 billion to fund the CARS program.  When you take the numbers, add another 2 billion worth of trade ins,  you get an additional 4,237,000,000 in consumer debt.  The total CARS result is 6,355,500,000 in additional consumer debt.  This means the government took 3 million in tax payer money to give them an additional 6 billion in consumer debt.  Now that my friend is a double edge sword.

What does this really mean for the economy?  It means the economy has an additional 6 billion in debt it has to work through it's system, and that's 6 billion dollars that would not naturally go into the market through the the next few years.  The end result of this program is a much deeper hole and climb out of what we've been trying to get out of.

Government involvement in the markets do not work, they never have, they never will.  This program is sham, and the only people who benifit is the bloated car manfactures who have a failed business model, and can not turn profits without tax payer money.

Ask yourself, wouldn't you like to run a business in which the government ensures your profits?

Posted in Subsides | Economy | Legislation | 1 comments