Perhaps, except that your mileage comparison is ludicrous. How many people drive 50,000 miles a year? The average is somewhere around 12-14,000.
Trading the Accord for a CTS was an EXAMPLE. If you don’t want a newer car, then don’t get one. Take your voucher and put it on ebay, or craigslist, or trade it for whatever you want.
They are free to transfer their voucher to anyone, for whatever price they negotiate. The contractor you hire to build an additional room might do it for 20,000 cash, or 12,500 and your car voucher. He needs to buy an additional work van anyway, for the new superintendent he is hiring to oversee all the jobs he is getting because everyone wants to trade their voucher for his work.
We also kicked around the idea that the voucher would be worth a small amount (maybe 5,000) to purchase one of the new vehicles once they start rolling out.
That was hobscrk who was fussing about the Accord.
I’m dubious about that. I have a voucher for $10k; I’m not guaranteed to get the full $10k if I sell it on ebay or trade it as a payment for something. It’s unfair to people who don’t want or need a new car.
I may have changed my mind on this one. One of the things I’ve always detested about the withholding tax is that it ensures that the average wage-earning American doesn’t really have a feeling for how much income tax he or she is paying. Sure, there’s a number on the paystub, but that’s really just an abstraction - the money represented thereby never gets to the worker.
However, suddenly this money is in the paycheck, and then into the taxpayer’s hands. But now when anything is purchased a BIG chunk of it is yanked right back by the government for taxes. The wage earner suddenly realizes just how much this benevolent government is costing him. And what will be the reaction when a $100 restaurant tab overnight becomes a $125 (or, maybe even a $135) tab? Or a $16,000 auto suddenly costs $20,000? I predict that either we’ll have a tax revolt that makes Shay’s Rebellion look like a picnic, or folks will really clamp down on discretionary spending, and we’ve got another Great Depression on our hands.
If the government ever lets the taxpayer see how much it’s taking, it will be one of the worst mistakes they could possibly make. Let’s try it.
A high-inflation policy is beginning to look more and more attractive. It encourages spending and it helps people with debt (including the US government) because they repay with devalued dollars. It screws people with savings but hey, someone’s gotta pay for the mess and it may as well be those who were naive enough to save (and that includes all holders of US debt) when everyone was living beyond their means.
I have to disagree with you here. I think any “abstraction” is purely in your mind. I know exactly how much the government is “taking” (your word). As you say, it’s printed right on my pay stub.
The real problem we are facing is that the supply of credit has dried up because the banks have a lot of toxic assets they do not know the value of. One of the problems with the sub-prime market is that these loans were bundled up with a whole lot of other debt and sold and resold in the Derivatives market without anyone knowing the real value of them.
Here the Black-Scholes equation used to price an equity simply failed once confidence was lost. George Soros was right when he stayed out of this Derivatives market on the sound principle that you never invest in what you don’t understand.
Therefore they are attempting to rebuild their cash reserves by saying ‘thank you very much’ to all the cash we throw at them but by charging high interest rates for short term lending to each other they are effectively freezing the credit market.
Businesses cannot borrow. New businesses cannot start up. Consumers cannot buy.
This is what makes it all the more galling that they continue to reward themselves with our money when they have presided over the biggest financial screw up since 1929.
The Economist magazine’s Special Report on the future of finance (called Greed and Fear) is both essential and frightening reading. (See all the bits in the sidebar)
A financial commentator on TV today said that the financial grandees at Davos arrived scared and after talking with each other have left petrified with fear.
Things are much worse than most of us understand and will get very much worse.
We simply do not know what to do. The crisis is unprecedented. With effectively 0% interest rates we’ve thrown the empty rifle at the charging bear.
As the old saying goes - if you are not panicking you do not understand the severity of the problem.
Damn - posted my last message to the wrong thread. Sorry - should have gone to the one about getting rid of the income tax.
Unbelievably wasteful.
What are we expected to do with the 150 million scrapped cars?
It would be cheaper, and equally effective at economic stimulation, to hire people to go around breaking windows.
Well, it looks like the German Government has bought into my plan: you scrap your old car and get 3250 euos direct from the government! Stimulating consumer demad is the only way-giving monet to banks is just plain stupid.
That sounds like an incentive to get rid of old cars and drive sales of new ones. Not like a mandatory scrapping of working autos that would hammer the poor much harder than anyone else and would saddle people that need cars with thousands of dollars of extra, useless debt.
Of course I have no idea about the details of the German plan, since no one posted a link.
Cough. Cough.
Several European countries are considering or have anounced similar measures and have simutaneously challenged those by other countries as illegal subsidies. A lot of disccussing and litigating is on the horizon.
No, the German government has NOT bought into your plan.
As Lobohan points out, offering subsidies to people who choose to replace an old car is quite different from a system whereby old cars are forcibly removed from the road and people are forced to pay money they don’t have for a new one.
Giving money to the banks might be stupid (although, as has been pointed out already in this thread, the money is not a gift), but the plan you outlined in the OP makes it look positively Einsteinian by comparison.
I was going to say, wouldn’t a coupon for domestic cars basically be a tariff but in reverse?
Let’s assume that runaway inflation is the only solution to the recession…people with savings should be moving that money into a more stable item, so what should it be?
I’ve never studied extreme inflationary periods of history, but what is to stop people from taking out real estate options (say a 10 year option at a price 2x todays market value) that would be laughably cheap after a few years of extreme inflation?
in case I’m not being clear–I go offer $500 to purchase an option on a riverfront home that is worth $700,000 right now. I tell the owner that, if at any time in the next 10 years I wish to purchase the property for say, $2 million, I have that option. In 8 years, $2million has the same value as $100,000 today…am I a shrewd investor with an eye on the future? a speculator who got lucky? a scam artist?