tag:blogger.com,1999:blog-7131761677406025498.post8345798157271966733..comments2023-10-22T07:29:23.630-04:00Comments on EconBlog Review: 25% Already Regret Turning in Their "Clunker""DoctoRx"http://www.blogger.com/profile/07864962793726539567noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-7131761677406025498.post-3453048945810625812009-08-27T21:25:54.527-04:002009-08-27T21:25:54.527-04:00After all of the hype over the last month and a ha...After all of the hype over the last month and a half about the program starting up, then running out of money, then restarting, and about all those "lucky" people who cashed in their old cars, I'm glad that someone has finally thought to ask the new car owners about their shiny new debt. We just witnessed about 700,000 people trading a paid-off, working automobile for $10,000 or more in new debt, and likely an average of $250-300 a month in new payments.<br /> Don't get me wrong, when I heard there was money being thrown away I looked up the info to see if I could get my piece of the action. I have an 11-year-old pickup that is paid off, has 160k miles, and gets 16-17 MPG, and I'd love to get a no-questions $4500 check for it while also picking up a newer truck that gets better gas mileage. But when I saw that the replacement had to be a brand new car, I turned away and never looked back.<br /> Unfortunately lots of other people didn't.<br /> Two years ago I bought a 20-year-old used car for $4,000 with 91k miles that gets 25-26 MPG. If the goal of CfC was to help the environment, then I did better because I got a 50% improvement in MPG over the pickup truck, AND I saved a used car from the scrap yard. It was also cheap enough for me to pay cash, so I didn't add more debt to the system and never risked defaulting a loan and hurting the economy. And it's no "clunker" either - it's an '87 Porsche 944, that passed its Colorado emissions test with flying colors last month.<br /><br /> So now we have 700,000 people who surprised themselves with a new car payment - hoping the economy is recovering, and praying they will continue to be able to make the payments.<br /> I hope so too, I really do.<br /> I want the economy to do better.<br /> I want these people to pay off their new debt-mobiles.<br /> I want all that tax money to have been well-spent.<br /> But I'm not feeling good about all those people being put at risk, and taking the financial sector along for the ride.<br /><br /> If anything goes wrong, if the economy doesn't pick up as expected, if investors panic when the numbers spike & dip again following this program, and if anything happens to all those new debt-owners, will it cause another pull back? And if it does, will it be worse than what we have been through?<br /><br /> Unfortunately, while I'm an optimistic person, I can be a little cynical too. I want the best to happen, but I don't expect it to happen. So I have this odd feeling that in about 3-6 months the auto loan defaults will be piling up, and the repo-men will be having a very busy Christmas season.<br /> Until then, I'll drive my 22-year-old, 25-MPG, un-clunker, or maybe the 11-year-old, 17-MPG kinda-clunker, without worrying about a single car payment.<br /><br />-JAnonymousnoreply@blogger.com