Gov'mt spending ie: Cash 4 Clunkers

As some of you know I am a Finance Manager at a Ford dealership, now we just started rolling the Cash 4 Clunkers program yesterday and today ....

Now after completing some of the deals and finishing up the paperwork all I could think of was this e-mail that Doc sent me a couple of weeks ago....3

Subject: Government Spending

<TT>It is the month of August, a resort town sits next to the shores of a </TT><TT>lake. It is raining, and the little town looks totally deserted.</TT>
<TT>Times are tough and everybody is in debt, and everybody lives on credit.</TT>

<TT>Suddenly, a rich tourist comes to town.</TT>
<TT>He enters the only hotel, lays a $100 dollar bill on the reception </TT><TT>counter, and goes to inspect the rooms upstairs in order to pick </TT><TT>one for the week.</TT>

<TT>The hotel proprietor takes the $100 dollar bill and runs to pay his </TT><TT>debt to the butcher.</TT>

<TT>The butcher takes the $100 dollar bill, and runs to pay his debt to </TT><TT>the pig farmer.</TT>

<TT>The pig farmer takes the $100 dollar bill, and runs to pay his debt to </TT><TT>the supplier of his feed and fuel.</TT>

<TT>The supplier of feed and fuel takes the $100 dollar bill and runs to </TT><TT>pay his debt to the town's prostitute that in these hard times, gave </TT><TT>her "services" on credit.</TT>

<TT>The hooker runs to the hotel, and pays off her debt with the $100 </TT><TT>dollar bill to the hotel proprietor to pay for the rooms that she </TT><TT>rented when she brought her clients there.</TT>

<TT>The hotel proprietor then lays the $100 dollar bill back on the </TT><TT>counter so that the rich tourist will not suspect anything.</TT>

<TT>At that moment, the rich tourist comes down after inspecting the </TT><TT>rooms, and takes his $100 dollar bill, after saying that he did not </TT><TT>like any of the rooms, and leaves town.</TT>

<TT>No one earned anything. However, the whole town is now without debt, </TT><TT>and looks to the future with a lot of optimism .</TT>

<TT>And that, ladies and gentlemen, is how the United States Government </TT><TT>is doing business today.</TT>

Put a whole new prespective on this program..... :soapbox:

Maybe I'm missing the point, but doesn't that leave the hotel proprietor out $100?

Wow.

That's is pretty frightening, and pretty accurate.

Quote:

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Originally Posted by holli4pirating

Maybe I'm missing the point, but doesn't that leave the hotel proprietor out $100?

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Actualy, that IS the point in a way.

Nobody actually paid anything off to anyone else. Paper was shuffled, a big show was made, and in the end, nothing had changed.


Right now, the government is borrowing money from the people to bail the people out of debt. It makes absolutely no sense in the long term.

In fact, it's makes as much financial sense and Glen's story.

Quote:

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Originally Posted by holli4pirating

Maybe I'm missing the point, but doesn't that leave the hotel proprietor out $100?

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Not really he paid off the debt to the Butcher.... right?????

But yeah that isn't the point ....

We're going to have to rename the Ponzi scheme. It is now known as the


...


GLENZI scheme. It should not only work really well, but it's going to save a whole bunch of printing costs. And paper. Which saves trees. And ink. Which saves, black stuff. Man, this is a GLENZI :mexwave: GREENI

PLAN. Something this fine is a definitely a plan not simply a scheme.

It makes perfect sense to me since in effect, the privately owned non-governmental Federal Reserve system makes money out of nothing (Fiat), actually most all of it never exists since virtually none is even printed, it's just a credit/debit in binary code. Then the "Fed" ("No more Federal than Federal Express") charges interest and receives bonds for
"repayment" of the "money" the privately held Federal Reserve arbitrarily created literally out of nothing with nothing (Fiat) to back it up. One of the grandest of illusions. It's amazing really that the scheme continues to be allowed to happen.

Chris L

:roflmao :roflmao :roflmao

sweet

So how is that working Glen?

is the program DOING something (can I get a new truck cheaper?)

I'm thinking about buying a truck :OT

You guys forgot the part where the 100$ goes to Walmart and then China. It is a great illustrative point.

Good story. I think it works like this: If I owe you $100 and you owe me $100 then we really don't owe anything. The tourist and his $100 is just a ruse.

...Do you have the name of that prostitute?

The government taxed the rich guy to the point that he didn't have the extra $100.00 to spare on a hotel room. Nobody paid off any debts in the town.

But the rich guys taxes did provide employment for a government sponsored researcher 600 miles away from the town studying the smell of pigs.

Quote:

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Originally Posted by VeeDubb65

Actualy, that IS the point in a way.

Nobody actually paid anything off to anyone else. Paper was shuffled, a big show was made, and in the end, nothing had changed.

Wouldn't decreasing debt by default increase personal wealth? If your debt is paid, all you need now is one paying customer in the town to have disposable income.

Right now, the government is borrowing money from the people to bail the people out of debt. It makes absolutely no sense in the long term.
And by "the people" I assume you mean the Chinese. They are the ones buying all the financial assets the treasury can put out. Well, them and the Fed. This whole thing is how they are increasing the nominal money supply.

In fact, it's makes as much financial sense and Glen's story.

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Glen, I would really like more info on cash 4 clunkers. We just did a huge project on the Ford Motor Company in my Econ class. It is in a lot better shape than the rest of the big three which I hope is good for you. So what's the deal on this program?


-Rob

Info is here guys...

CARS.gov - Car Allowance Rebate System - Home - Formerly Referred to as &ldquo;Cash for Clunkers&rdquo;


It is rather strictly administrated also, I just dumped a deal because the lady didn't have continual insurance coverage for the previous 12 months, she had let her coverage lapse during Sept - Oct 2008 so no deal....

The object is to take older smog burning low fuel economy rigs off the road not off the back 40, so they are being pretty strict with the requirements....
Which honestly they should be, as many car guys are NOT all that honest, and if there is a loophole, they will use it....

Right now, the government is borrowing money from the people to bail the people out of debt. It makes absolutely no sense in the long term.

VeeDubb65


...of the "money" the privately held Federal Reserve arbitrarily created literally out of nothing with nothing (Fiat) to back it up. One of the grandest of illusions. It's amazing really that the scheme continues to be allowed to happen.

Chris L


VeeDubb, you can bet the farm that there is a healthy percentage of that 'money' being sucked up in 'Administrative Costs.'

Chris L, if you or I tried to pull a stunt like that, we'd be whisked off to Prison so fast it'd make your head spin. But since the dirty deed is being done by "Public Servants" that's different. Kinda like the difference in a woman being raped by a Gang member, or being raped by a Senator.

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Quote:

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Originally Posted by Brother Jeeter

Right now, the government is borrowing money from the people to bail the people out of debt. It makes absolutely no sense in the long term.

VeeDubb65


...of the "money" the privately held Federal Reserve arbitrarily created literally out of nothing with nothing (Fiat) to back it up. One of the grandest of illusions. It's amazing really that the scheme continues to be allowed to happen.

Chris L


VeeDubb, you can bet the farm that there is a healthy percentage of that 'money' being sucked up in 'Administrative Costs.'

Chris L, if you or I tried to pull a stunt like that, we'd be whisked off to Prison so fast it'd make your head spin. But since the dirty deed is being done by "Public Servants" that's different. Kinda like the difference in a woman being raped by a Gang member, or being raped by a Senator.

<!-- / message --><!-- sig -->

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Increasing the nominal money supply is the only way the Fed (which is not a for profit bank) can affect the interest rate (and there is some doubt that they are able to do that now.) They don't arbitrarily coin money, they supply new money by engaging in open market operations. Recently, they bought back not only treasury bills, they also bought a lot of so called "toxic assets" from banks. It hasn't done tons of good really.

If anything, the Fed needs to be further distanced from the Government. The less any group of senators can affect monetary (not fiscal mind you) policy the better.

-Rob

The program is already out of money, so Congress is trying to spend another $2 billion on it

House passes $2B 'cash for clunkers' bill - Patrick O'Connor and Martin Kady II - POLITICO.com

OK gents here are some numbers to work on

cost to taxpayers $1 BILLION
Money to dealers thus far $0
Money to "Go" to Dealers $500 Million
Money to go to Administer the program $500 Million
$1 billion from US taxpayer go to Japan??? Korea??? Germany????
Hmmmmmm who's brilliant Idea was this????
Why are foreign car companies making money on a bailout plan for GM and Chrysler wait we bailed them out already....

Some more facts, the EPA went in to the CARS program on the 28th and changed vehicle ratings, some of those deals that had been processed changed in midstream this costs the dealerships either $$$ or customer satisfaction... People don't want to hear that they owe another $1000 after they went home with their new car even though it was the government not the dealer that changed stuff...

The dealer groups are seriously contemplating not doing "Phase 2" with the next $2 billion.... Americans want the foreign car dealers excluded on the new $2 billion... "American tax money only should go to American companies if we are going to do this...

The process to claim the money is really, really, bad now that dealers are starting to process deals.... No deals could even be entered into the system until the 29th, over 50% of the deals entered are being rejected....

These are things I am hearing right now in the trades....

yeah sounds like a cluster ****

you know what the gov needs to help them sort all this out?


hospitals
that's right HOSPITALS



oh... sorry I was joking (pointing it out for the slow ones)

Is that INSURANCE or is it a valid registration Glen (I'll just og look it up)

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Originally Posted by gratewhitehuntr

Is that INSURANCE or is it a valid registration Glen (I'll just og look it up)

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Both... basically you must prove Registration for July 31st 2008-July 31st 2009 (if you were buying today) and the same for Insurance (does not have to be full coverage)