Cash for Clunkers boom for scrap business ......... for China

Cash for Clunkers scrap going to China.
Sales of scrap metal to China have surged, with effects that are ricocheting across the American economy. Prices are soaring not just for scrap, but for metals in general. After years of surpluses that forced many steel makers into bankruptcy, supplies are so tight that contractors told a Congressional hearing in Washington this week that they sometimes cannot obtain supplies at any price, reports the NY Times today............

A Chinese-born scrap metal buyer,Mr. Pan has a business, called Universal Scrap Metals, that ships about 500 containers a month to China filled with battered pipes, fine metal shavings, doorknobs, jumbles of wire, crumpled cars and all other manner of flotsam.

Mr. Pan... said that Americans should be a little more appreciative of the benefits of China's scrap purchases. After all, he argued, they keep some junk that could never be used in the United States from ending up in American landfills.

"We do something good for America," he said. "We do something good for China."

I bet that is just what the Colonialists said after they took over a country

Another unintended consequence of Clunker Car Deal

According to the Financial Times......The popular US cash-for-clunkers programme may be drawing money from other consumer purchases and could also undermine future car sales, US economists have warned.

“It’s a nice success, but there’s a macroeconomic risk going forward,” said Joseph Brusuelas of Moody’s Economy.com. “[In] the first quarter of 2010, the stimulus will begin to wither, and consumption which would have otherwise occurred next year will have occurred in the second half of 2009.”

See my previous posts

Is Cars For Clunkers subsidizing foreign car purchases?(UPDATE)

A new level of stupidity. "Let's Destroy a Perfectly Good Car ! ! ! ! "

They can't run a $1Billion dollar car program, and they want to run 1/6th of our economy>

Is Cars For Clunkers subsidizing foreign car purchases?(UPDATE)

Transportation Secretary Ray LaHood promotes the fact that the Ford Focus so far is at the top of the list of new cars purchased under the program.(UPDATE: Toyota #1. See story here)

But the limited information released so far shows most buyers are not picking Ford, Chrysler or General Motors vehicles, and six of the top 10 vehicles purchased are Honda, Toyota and Hyundai.

The Obama administration is refusing to quickly release government records on its "cash-for-clunkers" rebate program that would substantiate — or undercut — White House claims of the program's success.
Maybe the Clunker program should have been limited to Government Motors and Chrysler.
See the story here

Never mind all the other reasons why this is a dumb program.

A new level of stupidity. "Let's Destroy a Perfectly Good Car ! ! ! ! "

I said it before...........
See previous post here.

They can't run a $1Billion dollar car program, and they want to run 1/6th of our economy>

AP reports the the House rushed Friday to pump $2 billion into a popular cash-for-clunkers program running near empty, with a leading Democrat saying "consumers have spoken with their wallets."
They couldn't run that properly or figure out the demand for for "free money". How are they going to run Obamacare?

The government hasn't thought about the consequences of their actions.
Used car prices are going to rise. The Clunker program will cause these cars to be destroyed. Well if you destroy used cars, that will deminish the supply. Limit the supply, and you increase prices.

Car Part Prices are going to rise. I don't know how many people have ever got rid of a car by selling it to a salvage yard, but I have. I bought a 1970 Plymouth Valiant for $25. It had 190,000 miles on it. I bought 4 tires and some engine parts from a salvage yard for $200. I drove it for about 6 months, 10,000 miles. I got a full time job , bought a new car and sold the Valiant to salvage yard for $100. The car cost me 70 cents a day plus gas and insurance.They dismantled it and sold many of the parts. Everyone was happy. Well the salvage yard wouldn't get my Valiant today. The dealership would get it, and I would get $4500. No parts to recycle. Again supply and demand.

Charities will lose out. Have you ever donated a car to a charity? Again, I have. I gave a car worth $2100 on the books to a charity. I got a right off worth about $700, goodwill and the knowledge that I was helping out children. Well will people donate their car for a $700 dollar value, or trade it in for $4500?

Prices paid on autos will increase. A person knows they can afford to pay $500 a month for their car payment after putting down $2000. That is a $21700 car, out the door, with a $19700 loan at 4%. Well if you give the customer $4500, they are going to afford a $26700 vehicle. A Car salesman is not going to let that money go. They are going to figure out how to get that cash into the dealership and into his commission check.

Hypothetically, if the program becomes so popular that every taxpayer in the country buys a car with that $4500, Then every taxpayer is actually buying a car with a loan from themselves. They get to pay it back with their own taxes. The way it stands, the taxpayer is subsidizing other peoples auto purchase. Instead of Cash for Clunkers, we should just call it the Clunker program.