The Golden Truth: It's Confirmed: Cash 4 Clunkers Was Another Government Failure

Tuesday, September 1, 2009

It's Confirmed: Cash 4 Clunkers Was Another Government Failure

Auto sales for August were released today. Overall, the SAAR (Seasonally Adjusted Annual Rate of sales) was boosted for the month of August, although it fell well below expectations. Goldman Sachs had been forecasting SAAR for August would be 15.5% - it came in at 13.7 million (this is the annualized rate of sales based on actual sales for the month).   Worse yet, the numbers for the domestic producers, Ford, GM and Chrysler, fell way below expectations.   Ford's sales rose 17% in August vs. 2008, but a 38% rise was anticipated. GM's sales dropped 20% from a year ago and Chrysler's fell 15%.

How did this happen? Here's the top-10 cars sold by brand, according to Edmunds.com:   1) Toyota Corolla 2) Honda Civic 3) Ford Focus 4) Toyota Camry 5) Toyota Prius 6) Hyundai Elantra 7) Ford Escape 8) Honda Fit 9) Nissan Versa 10) Honda CR-V

You can see the problem here. U.S. taxpayers largely subsidized the new car sales of Toyota, Honda, Hyundai and Nissan.  And not only did the sales goals of C4C fall well short of expectations, but like every other heavily subsidized sales program, C4C has "pulled" future sales into a few short weeks. The question going forward is not whether or not the sales rate will drop off, but by how much. Several auto companies announced ramped up production based on August sales. But to whom will they be selling that production?   I anticipate another cliff-dive in the economy this fall.

One more issue I'd like to address. I would like to see the credit scores of those who actually purchased a vehicle using the C4C program. In all likelihood, the average person who could have benefitted from turning in a late-model gas-guzzler most likely did not qualify for financing, even with the $4500 credit. And I suspect that a large portion of the buyers who participated would have been able to buy a new car and qualify for financing even without the $4500 kicked in by the taxpayer. Seems a bit ironic that Obama's program to subsidize automobile purchases and stimulate sales at Ford, GM and Chrysler, benefitted higher income Americans and foreign car manufacturers - all at a multi-billion dollar cost to the taxpayers.

1 comment:

EconomicDisconnectWednesday, 02 September, 2009
Last post I chimed in:
"I am watching Gold $980 and Silver $15 as breakout zones." which happened today. I will have a write up on this later, but I think a breakout may not be at hand at this time.
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Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.